1. Future of Broadband in
Africa
Christoph Stork, Enrico Calandro, Ranmalee
Gamage
Monday, 20 May 13

2. Approach
Nationally representative household and
individual surveys in 12 African countries
(Census Sample Frame)
Basket methodology for Fixed -wired and
mobile broadband data prices
Monday, 20 May 13

3. Share of households with fixed-lines
South Africa
Namibia
Ethiopia
Ghana
Kenya
Tanzania
Nigeria 0.3%
0.4%
0.6%
1.8%
4.0%
11.5%
18.0%
0.9%
2.3%
2.6%
7.6%
17.4%
18.2%
2007/8 2011/12
Residential fixed-lines on the way out except Botswana,
Cameroon, Uganda and Rwanda
Botswana
Cameroon
Uganda
Rwanda 0.2%
1.5%
2.2%
15.0%
0.1%
0.3%
1.8%
11.0%
Monday, 20 May 13

4. Share of households with a
working computer
South Africa
Botswana
Namibia
Kenya
Cameroon
Ghana
Nigeria
Uganda
Rwanda
Tanzania
Ethiopia 0.7%
1.6%
2.0%
2.2%
6.6%
8.5%
8.6%
12.7%
14.7%
15.7%
24.5%
Share of households with a
working Internet connection
South Africa
Kenya
Namibia
Botswana
Nigeria
Ghana
Cameroon
Uganda
Tanzania
Rwanda
Ethiopia 0.5%
0.7%
0.8%
0.9%
1.3%
2.7%
3.4%
8.6%
11.5%
12.7%
19.7%
Less than a quarter of households have a computer and even
fewer Internet access, but more households have Internet access
than have fixed-lines
Monday, 20 May 13

5. !"!!
!5!!
!10!!
!15!!
!20!!
!25!!
!30!!
1996! 1997! 1998! 1999! 2000! 2001! 2002! 2003! 2004! 2005! 2006! 2007! 2008! 2009! 2010!
Botswana! Cameroon!
Ethiopia! Ghana!
Kenya! Mozambique!
Namibia! Nigeria!
Rwanda! South!Africa!
Tanzania! Uganda!
ITU
data:
Percentage
of
individuals
using
the
Internet
Monday, 20 May 13

6. Ethiopia
Tanzania
Rwanda
Uganda
Ghana
Cameroon
Namibia
Nigeria
Kenya
Botswana
South Africa 15%
6%
15%
9%
13%
6%
2%
2%
2%
1% Internet
use (15+)
more than
doubled
within 4
years
34%
29%
26%
18%
16%
14%
13%
8%
6%
4%
3%
2007/8 2011/12
Monday, 20 May 13

7. Internet Access Models
Old Internet
New
Internet
Hardware
Billing
Skill
requirement
Electricity
Location
Computer / Laptop Mobile
Postpaid (monthly Internet
subscription)
Prepaid
High
(Windows + Internet explorer
+ Viruses)
Low
electricity mostly required at
location of Internet use
not required at
home
Work, school, Internet cafe Anywhere
Monday, 20 May 13

8. Where was the Internet used first?
Cameroon
Rwanda
Botswana
Ghana
Kenya
South Africa
Namibia
Tanzania
Nigeria
Ethiopia
Uganda 71.8%
66.7%
54.8%
54.2%
49.9%
34.9%
31.1%
29.5%
29.4%
29.2%
17.9%
28.2%
33.3%
45.2%
45.8%
50.1%
65.1%
68.9%
70.5%
70.6%
70.8%
82.1%
Computer Mobile phone
Monday, 20 May 13

9. Where the Internet was used in past 12 monthsCameroon
Ghana
Botswana
SouthAfrica
Rwanda
Tanzania
Nigeria
Kenya
Ethiopia
Uganda
Namibia
23%
74%
42%
72%
45%
63%50%
33%
58%
85%
80%
36%
51%
21%
39%
20%
24%31%
21%
32%
51%
20%
48%55%
17%31%29%45%52%
36%51%
35%
10%
87%81%81%78%75%75%71%71%64%61%
30%
Mobile phone Work Place of education Internet cafe
Monday, 20 May 13

10. Broadband Pricing
Baskets to analyze:
Monthly cost of 1 GB use per month with at least
256kbps connection for a period of 24 months (ITU
basket)
Monthly cost of 5 GB use per month with at least
256kbps connection for a period of 24 months.
Monthly cost of uncapped use per month with at
least 256kbps connection for a period of 24 months.
Monday, 20 May 13

11. Botswana
Mozambique
Cameroon
South Africa
Namibia
Ghana
Kenya
Uganda
Ethiopia
Tanzania
Nigeria
Rwanda 11.9
20.1
13.0
14.5
8.7
6.2
38.5
12.6
40.9
25.1
78.8
29.4
20.1
13.0
21.1
18.7
7.3
14.4
51.3
12.1
50.8
30.4
26.7
19.2
22.8
23.8
37.9
40.8
48.7
51.5
59.4
62.1
66.6
Fixed Mobile Postpaid Mobile prepaid
1 GB per month basket
Monday, 20 May 13

12. Botswana
Mozambique
Cameroon
Uganda
South Africa
Namibia
Ghana
Ethiopia
Kenya
Tanzania
Nigeria
Rwanda 25.8
51.8
16.2
34.1
36.1
143.7
21.9
40.8
100.5
57.3
29.4
51.8
16.2
7.3
64.3
36.1
51.3
26.6
37.8
50.8
68.0
133.5
19.2
37.9
39.8
40.8
48.7
51.5
53.7
59.4
62.1
133.3
Fixed Mobile Postpaid Mobile prepaid
5 GB per month basket
Botswana prepaid mobile not displayed: 380 USD
Monday, 20 May 13

13. Ghana
South Africa
Cameroon
Namibia
Kenya
Tanzania
Rwanda
Uganda 37.8
29.4
22.6
7.3
122.9
50.8
32.8
19.2
37.9
48.7
59.4
64.9
103.4
Fixed Mobile Postpaid
uncapped GB per month basket
Monday, 20 May 13

14. Download Speed (kbps) Upload Speed (kbps) Latency (ms)
262216
586
135
2,716
9,227
156
863
4,753
Fixed
Mobile
Fixed-wireless
South Africa:
Broadband.co.za 75,000 measurements 2013
Monday, 20 May 13

15. Options for fixed-line
incumbents?
The response of fixed-line incumbents is
often to leave the sinking ship and start
mobile services
Other options exist that may be more
profitable
More beneficial to broader economic
development goals
Monday, 20 May 13

16. Focus on Corporate
Developmentally, the least desirable option for
African
Leaves the residential market to mobile
operators and hence to less competition and
poorer quality of service offerings
A strategy already adopted by some incumbents
but also by new kids on the block such a Neotel
in South Africa
Monday, 20 May 13

17. Data flat rate pricing: voice
free app
Focus on data only through flat rate pricing, and
ignore traditional voice revenues altogether
Converting all existing fixed-lines into data lines
would increase broadband penetration drastically in
Botswana, Namibia and South Africa
Flat rate pricing also solves the billing problem,
something mobile operators are good in and fixed-
line incumbents are not
Monday, 20 May 13

18. Example Namibia
Telecom Namibia’s revenues by segment in
million N$
2009 2010 2011
452417
297
304029
183204
240
Post- paid services Pre- paid services
Data and IP services
Monday, 20 May 13

19. Data and voice flat rate simulation
based on current users number
Technology
Current prices
N$ 24 months
(Speedlink
Business)
New
Price N
$
Price
drop
No of
curren
t Lines
New
revenue in
million N$
512kbps Speedlink
Home
1Mbps Speedlink
Home
4 Mbps Speedlink
Business
10 Mbps Speedlink
Business
Total per month
Total per Year
599 75 87% 20,000 1.5
699 150 79% 20,000 3.0
3099 350 89% 10,000 3.5
7499 650 91% 100,000 65.0
73
876
* Based on10Mbps product of TN* Based on10Mbps product of TN* Based on10Mbps product of TN* Based on10Mbps product of TN* Based on10Mbps product of TN
Monday, 20 May 13

20. Data and voice flat rate simulation
assuming price elasticity
Technology
Current
prices N$
24 months
New
Price N$
Price
change
Lines
Revenue
in million
N$
512kbps Speedlink
Home
1Mbps Speedlink
Home
4 Mbps Speedlink
Business
10 Mbps Speedlink
Business
Total per month
Total per Year
599 75 87% 37,496 2.8
699 150 79% 35,708 5.4
3099 350 89% 18,871 6.6
7499 650 91% 191,332 124.4
139
1,670
* based on10Mbps product of TN* based on10Mbps product of TN* based on10Mbps product of TN* based on10Mbps product of TN* based on10Mbps product of TN
Monday, 20 May 13

21. Triple Play - Premium TV content
Add premium content TV and
replace copper with fibre
Fibre to the home (FTTH) may
be able to compete if it is able
to match satellite TV content-
wise
The competition for premium
TV content would also reduce
prices, bringing them closer to
European levels instead of the
current USD 80+
An average ARPU of USD50
still good enough for premium
content and uncapped fast
Internet
Botswana
Cameroon
Ethiopia
Ghana
Kenya
Mozambique
Namibia
Nigeria
Rwanda
South Africa
Tanzania
Uganda 88.3
83.5
72.0
78.0
69.8
72.0
63.4
84.6
84.4
78.0
78.0
68.1
DSTV Premium Package in USD per month
Monday, 20 May 13

22. Fixed lines = value add for ADSL, contrary to Europe were ADSL
has been a reason not to cut the cord
The voice battle was lost by fixed-line in Africa in the last decade,
the data battle may be lost soon as well
Fixed-line operators mostly offer ADSL, which can no longer
compete with mobile broadband speeds
Fixed-line operators need to invest into new technologies, VDSL or
fibre to the home to stand a chance against mobile broadband
Fleeing the sinking ship and start mobile services instead may not
address longer term connectivity issues and may be not the most
profitable option either
This should hence attract the attention of policy makers, who not
seldomly represent state owned shares in fixed-line incumbents
Conclusion
Monday, 20 May 13

23. Regulatory initiatives
Carrier pre-selection and local loop unbundling will
not increase competition by much for most countries
Who wants to be part of a dying busies?
Structural separation and making the national
backbone and all end user leased lines a separate
business based on open access principles may
remove the biggest competitive bottle neck in Africa
at present
Monday, 20 May 13