Pan-African initiatives are only way to solve its connectivity conundrum

Connecting the unconnected is an ongoing challenge for anyone in the African telecoms industry, but where do you find the $435 billion to plug the holes?

It might sound like an extraordinary number, but when you consider the size of Africa, 30,37 million km², and the population, 1,216 billion, it starts to look a bit more reasonable. This is a challenge which has been discussed extensively over the last few years, though a viable solution has not been tabled.

This is not to say there is no progress. This week, Liquid Telecom announced it had completed the construction of a new high-capacity fibre link running 2,600-kilometre (km) across the Democratic Republic of Congo (DRC), while Orange is about to begin work on an international backbone network in West Africa, connecting eight countries. These are promising steps forward, but the monumental scale of the challenge suggests such projects are little more than a drop in the ocean.

With such a significant mountain to climb, new ideas and new approaches need to be considered. Speaking at AfricaCom, Carole Wamuyu Wainaina of Africa50 has called for greater harmonisation between the 54 nations across the continent.

One of the challenges with developing a communications infrastructure to take Africa into the digital era is the moving parts. 54 sovereign states, most of which are not the wealthiest, are moving forward with independent connectivity plans. There is nothing wrong with this, but a common strategy would be significantly more efficient, both in terms of time and money.

This is not necessarily a new idea, Europe relies on the power of many after all, and there are initiatives in place in Africa. Wainaina pointed to some small-scale joint-initiatives to deploy electricity infrastructure as an example, but these are limited in their nature. For success to accelerated, a genuine pan-African approach should be considered. Pooling resources, talent and ideas could realise significant efficiencies.

The last few years have seen an attempt to create some cohesion between the nations, meetings between the ICT Ministers are not uncommon, but this seems to be all they are at the moment; meetings. At some point, the talking will have to stop, and action will have to be taken. Few government officials like to do anything new or innovative, though big challenges require big actions.

The creation of a pan-African deployment plan might be the only way to deploy connectivity infrastructure which spans the width and breadth of the continent, but rhetoric will have to turn into action sooner or later. Politicians like to talk, promise and posture, but that achieves nothing.

Spectrum shortage is killing African digital ambitions

Telcos complaining about government regulation and policies is not unique to the African continent, though they never seem to get along here.

Through the years there have always been complaints from the telcos at AfricaCom. Whether it is import tax making devices unaffordable or policies which don’t attract international investment, the bureaucrats constantly seem to be on the backfoot. This year’s event saw a global pain-point hit the keynote conference agenda; spectrum availability.

This is of course a gripe of almost every telco around the world; there isn’t enough spectrum available to deliver the digital economy which politicians have promised voters. However, when you breakdown the numbers, there are some valid concerns. Looking at the South African landscape demonstrates the point.

  Telco holding
Spectrum band Vodacom MTN Cell C Telkom Rain
900 MHz 22 MHz 22 MHz 22 MHz
1800 MHz 24 MHz 24 MHz 24 MHz 24 MHz 34 MHz
2100 MHz 30 MHz 30 MHz 30 MHz 30 MHz
2300 MHz 68 MHz
2600 MHz 15 MHz
3500 MHz 28 MHz 142 MHz
Total 76 MHz 76 MHz 76 MHz 150 MHz 191 MHz

Speaking during the keynote sessions, MTN CEO Rob Shuter highlighted the South African Government is demanding more from the telcos, without offering more of this valuable asset to deliver. The MTN business has been working with the same spectrum allocation for decades, a situation which cannot continue. More spectrum is needed.

This is one example, though the story is pretty consistent across the continent. The issue is apparent when you compare it to the UK.

  Telco holding
Spectrum band EE Vodafone Three O2
800 MHz 10 MHz 20 MHz 10 MHz 20 MHz
900 MHz 34.8 MHz 34.8 MHz
1500 MHz 20 MHz 20 MHz
1800 MHz 90 MHz 11.6 MHz 30 MHz 11.6 MHz
1900 MHz 10 MHz   5.4 MHz 5 MHz
2100 MHz 40 MHz 29.6 MHz 29.2 MHz 20 MHz
2300 MHz 40 MHz
2600 MHz 70 MHz 45 MHz 55 MHz
3500 MHz 40 MHz 50 MHz 60 MHz 40 MHz
3700 MHz 80 MHz
Total 260 MHz 211 MHz 289.6 MHz 171.4 MHz

Not only is there more spectrum available, it is broadly spread across a range of spectrum bands to address different usecases and challenges. Soon enough another spectrum auction will take place in the 700 MHz and 3600-3800 MHz spectrum bands.

This is of course a very simplistic way to look at the landscape. South Africa is a very unique country, and spectrum is allocated with conditions, such as minority ownership of the telco. There is an on-going conflict between the major telcos and the government regarding the obligations placed on spectrum allocation, but the end result is still the same; a scarcity of an incredibly valuable resource.

There is perhaps a glimmer of hope however. In recent weeks, the government published an ‘Information Memorandum’ outlining plans for additional spectrum to bolster 4G connectivity and pave way for 5G in the future, though attendees at AfricaCom are not exactly enthralled by the situation. For some, this is just more talk in place of action. Confidence in the governments ability to sort out this mess in a timely manner is not particularly high.

This sceptical view is perhaps supported by the 800 MHz spectrum band. Currently being used by broadcasters, there have been promises to clean the airwaves for use in the mobile world, though little of this promise has translated into assistance for the telcos. The frustration continues.

South Africa seems to have an ‘us versus them’ situation currently. Governments and telcos are rarely best of friends elsewhere, but there is a collaborative environment to ensure an effective connectivity landscape. The Shared Rural Network proposal in the UK is an excellent example of bringing together various different parties with compromises being made to achieve a common goal. This collaborative environment does not seem to exist in South Africa.

If South Africa, and African nations in general, are to compete with other regions in the digital economy, or drive digital inclusion across society, the spectrum conundrum needs to be addressed. But looking at the bigger picture, telcos and governments need to reduce the friction and create a more collaborative environment. These are not parties who are ever likely to be the best of friends, but they should at least be able to tolerate each other in the pursuit of a common objective.

Attracting investment to Africa is not the issue, keeping the value is

Europe has been rubbing the White House up the wrong way with the diabolical intention of reforming regulation, and now it appears Africa might be heading the same direction.

Digital regulation and policy are turning into sticky topics nowadays. With the likes of Amazon, Google and Facebook generating almost thinkable profits, while playing hide-and-seek with the taxman, numerous nations are hitting back. New regulatory regimes are being created, much to the irritation of the US, to ensure value is retained in the country it is created and this trend is making its way across to Africa.

“We need to dictate the rules to the technology giants if they want to apply their technology,” said Nanjira Sambuli, Senior Policy Manager at The Web Foundation, at AfricaCom.

Founded by Sir Tim Berners-Lee, The Web Foundation has tasked itself with creating a more evenly distributed digital economy, ensuring the benefits and value of the internet are fairly shared across the world. In turn, Sambuli leads the Web Foundation’s policy advocacy to promote digital equality in access to and use of the web.

Herein lies the issue which is challenging regulators and policy makers in Africa currently; attracting foreign investment dollars to African start-ups and incubators is not necessarily an issue, but retaining the value created certainly is.

Although Africa might not be the most attractive of regions to some multi-national corporations, there is certainly plenty of opportunity. With only a third of the continent connected to the internet, there are some 800 million individuals who are sitting outside the digital society. And with 60% of the population under the age of 24, there are profits to be made once the digital revolution generates more momentum.

During the opening keynote sessions at AfricaCom, MTN Rob Shuter highlighted the next three years could see a surge in the adoption internet adoption across the continent, and in turn, profits will be generated as these new users get sucked into the same digital rabbit holes.

But like Europe, Sambuli highlighted the African governments and regulators are keen to see the value, both societal and financial, retained in the economies which create it. Silicon Valley might dictate the speed of the revolution, but it seems it will not wield the financial freedoms of yesteryear.

That is worth noting, is this is not just a Non-profit organisation posturing for attention. Sitting alongside Sambuli on the panel was Stella Tembisa Ndabeni-Abrahams, the Communications Minister for South Africa. Echoing the statement, Ndabeni-Abrahams suggested new policies were on the horizon to ensure South Africa’s entry role in the global digital economy is on South Africa’s terms.

For the moment, this is nothing more than rhetoric. Bureaucrats around the world have found it is incredibly difficult to hold Big Tech accountable, and the Silicon Valley lawyers are as slippery as ever. This is a bold statement though. Ndabeni-Abrahams and Sambuli both highlighted investments to create immediate value will no-longer appease rule makers. The free-wheeling residents of Silicon Valley might have more regulatory headaches to account for.

Government policy has held UK back in pursuit of digital economy

While the investment climate for connectivity infrastructure has certainly been improving in recent years, a proactive and prioritised government is critical to ensure rapid evolution to the digital economy.

Across the world, the climate for investment in connectivity infrastructure is improving. There is plenty of demand from both the consumer and governments to build the business case for deployment of fibre infrastructure, though more could still be done in certain markets.

“The digital economy does not work without the government, especially in the rural areas,” said Dick Van Schooneveld of Mahler Corporate Finance at Total Telecom Congress this week.

This is the challenge which some telcos and governments are facing when it comes to attracting investment; the political and regulatory environment is not always very helpful. There are some bright spots across the world, Portugal for example as well as Sweden or South Africa, but some are lagging considerably.

According to Mikael Sandberg, Chairman of VX Fiber, the political and regulatory climate in some nations, such as the UK, has been a point of suffocation when it comes to investments in connectivity infrastructure. This has allowed other nations to leap-frog the UK in pursuit of the riches promised by the digital economy.

The difference between these nations which have made strong progress and those who are lagging, is the ambition of the governments involved and the ability to see the bigger picture. In Portugal or Sweden for example, public/private partnerships to invest in full-fibre infrastructure might expensive but it is very attractive in the long-run.

Sandberg suggested more than 50% of Swedish enterprise organizations have adopted full-fibre connectivity products and the benefits are significant from a productivity perspective. The more successful these businesses are, the more jobs which are brought into the economy and the more tax which is contributed back to the government.

The gains are quite clear both in terms of revenue for the public coffers and political capital gained in the eyes of voting citizens.

And while there are clear and measurable benefits through prioritising such investments, the likes of the UK and Germany have suffered. There have been policies in play which have steered the government away from such lavish spending, austerity measures in the UK for example, though the repercussions of these decisions are perhaps being felt now.

There are still many questions which need to be addressed to fully understand and appreciate the impact of the digital economy, and of course many areas which need to be tackled to mitigate the risks. However, will the right political climate, connectivity infrastructure is looking like an attractive investment to the money men. Unfortunately, there are still countries which haven’t balanced the equation.

100% of telcos are investigating the promise of OpenRAN – survey

With monstrous investments on the horizon, it seems the telco community is keeping a close eye on the development of OpenRAN technologies.

While you always have to take survey results with a pinch of salt, Mavenir and Senza Fili are claiming momentum is gathering behind the Telecom Infra Project’s (TIP) OpenRAN initiative. 100% of the respondents to the survey suggested they were investigating the application of OpenRAN for one scenario or another.

What is worth noting, is that trialling and testing the technology is very different from commercial deployment, thought the results do perhaps suggest the industry is sick of the status quo and would welcome some sort of disruption to ease the financial burden.

68% of the respondents claim they or the wider business is exploring OpenRAN for densification demands, 47% pointed towards greenfield deployments in urban environments, 42% are looking to replace their incumbent suppliers and 5% are seeking validation in the rural areas.

Whatever the reason, the tier-one vendors in the network infrastructure segments should watch these developments with care.

Interestingly enough, the results of this survey are being touted at the same time as a Vodafone win for the OpenRAN initiative. The telco recently announced plans to trial OpenRAN deployments in 100+ rural locations across the UK. The reasoning behind this trial; to reduce the cost of network deployment and create new opportunities to work with alternative suppliers.

When you consider the majority of network deployment investment is geared towards the access network, you can start to see why a lack of competition is concerning telcos. Another factor to consider is the role of Huawei. If the US Government gets its way, either bankrupting the Chinese vendor or getting it banned from markets, there is even less competition, enhancing the risk of increased prices.

However, those privileged vendors sitting comfortably at the top of the ecosystem might be given some relief. Firstly, these are only trials not commercial deployment. OpenRAN might be a nice idea, but telcos will be hard-pushed to replace a tried and tested solution; interest and signing cheques are two very different matters.

Secondly, the industry is still clearly concerned with how much of a valid alternative OpenRAN actually is. When looking at the barriers, 28% are worried the performance won’t match the status quo, while 14% are focused on interoperability and 11% on maturity. It isn’t clear whether this is maturity of the technology or the new vendors entering the ecosystem, but both would be a concern for anyone handing over vast sums of cash.

OpenRAN does seem to be gathering pace, and while there is still a lot to prove when it comes to overhauling proven relationships and suppliers, the quest for more efficient investments is clear to see.

What did we learn from the Tory Party Conference?

In a couple of words; not a lot.

Considering there was the big claim of £5 billion investment into rural broadband, Prime Minister Boris Johnson has promised a rapid acceleration of fibre investment and 5G is on everyone’s lips, not a huge amount of homage was paid to the telecoms and technology industry.

Perhaps we should not be surprised. Brexit is dominating the headlines and politicians seem more interesting in insulting those on the other side of the Commons than addressing actual policies. There were of course passing references to things that matter, but this is the spearhead of the political circus.

Andrea Leadsom, Secretary of State for Business, Energy and Industrial Strategy

Leadsom might not hit the headlines for telecoms and technology news that often, but her department is one which we should pay considerable attention to. In a brief address, the message was simple; success in-hand with the Government not in-spite of it. How this works out remains to be seen, there are plenty of sceptics out there.

“We’re standing on the cusp of a new industrial revolution, and for the first time since the first industrial revolution, the UK is positioned to lead in extraordinary new ways,” said Leadsom.

“Those memories shaped my politics, but it was Margaret Thatcher’s vision of a shareholding democracy and her introduction of the right to buy that shaped my personal ambition -and that is to help everybody to build a secure life for themselves and their families.

“So, I want to see a better environment for business, less red tape and lower taxes to incentivise them.”

This is a claim many business leaders will want to see. Lower taxes and less regulation to worry about. What is worth noting, this is a very generalist claim. The telecoms and technology segments are overdue a regulatory overhaul and this will not change because a politician is chasing headlines with a soundbite.

One area which is worth paying attention to is the idea of automation. This segment of the speech was directed more towards autonomous vehicles and drones as opposed to a workforce overhaul, though it could indicate there are some new policies in the pipeline. This Government has been very keen on gaining a leadership position in the growing world of autonomous driving and drone management already, and it would not surprise us to see another incremental step forward soon enough.

Sajid Javid, Chancellor of the Exchequer

This is the speech many in the telecommunications and technology world would have been paying attention to, and it might well have fallen short of expectations.

Over the weekend, it was reported Javid was going to announce new investment to encourage investment in the UK’s hardest to reach areas. $5 billion to ensure the UK does not create another digital divide which the Government has been working to correct ever since. The investment was confirmed, though little else was offered to add colour to the new policy.

The investment will be used to ensure fibre deployments reach the most difficult 20% of households and businesses throughout the UK. But like his colleagues, Javid elected to concentrate the majority of his speech on a bit of Corbyn-bashing.

One area which could be worth keeping an eye on is the promise to continue the devolution of power throughout England. Although this will please some in the regions, those who seek regulatory consistency will perhaps exhale deeply.

There will of course be regional variances in how regulations are designed and implementing, Cowbridge is very different to London after all, however the risk of devolution is a mix-match of red-tape. Negotiations with hundreds of councils throughout the UK, all of which have their own demands and requirements. It is the stuff of nightmares for a cash-intensive industry.

Nicky Morgan, Secretary of State for Digital, Culture, Media and Sport

Amazingly, the person with the most relevance had the least to say.

In short, Morgan congratulated the Conservative party for what it had achieved thus-far, quoted figures, promised the UK is the best place in Europe for tech and talked-dirty about the Labour Party leadership.

Perhaps the most meaningless speech of the day.

Key take-aways from today at the Conference

It is difficult to cut through the noise, but we will do our best. A lot of today was hyping the Conservative Party, undermining the Labour Party and chasing headlines.

However, the idea of re-nationalism was consistently attacked. Lesser regulations have been championed. While technology and telecoms will form the central pillars of the UK economy moving forward.

There are a couple of interesting soundbites to take-away from today, and perhaps more than was offered during the Labour Party Conference, but we were hoping for more than posturing. Perhaps that was our short-coming.

Tories promise another £5 billion to fuel fibre and 5G drive

Speaking at the Conservative Party Conference in Manchester, Chancellor of the Exchequer Sajid Javid has suggested an additional £5 billion will be made available for connectivity upgrades.

Although it has been tricky to confirm any of the details, it has been reported the Tories will search for an additional £5 billion to fulfil the fanciful promises Prime Minister Boris Johnson has been making in the connectivity domain.

Speaking to the press office at the Department of Digital, Culture, Media and Sport, we were told that as this is a political matter they are not involved. Over at the Conservative Party press office, the team said they were not in a position to make any official confirmation just yet (at the time of writing).

Although this is part of a wider infrastructure message, including other areas such as road schemes and bus services, Javid has suggested the £5 billion would be used to ensure a digital divide is not created as roll-out of full-fibre, 5G and other gigabit capable networks steps-up a level.

“We want to make sure that we’re upgrading across the country, much of that can be done by the market which is a great thing,” Javid said during a Twitter message.

“But what I’m specifically focusing on today is the hardest parts of the country, some of the more rural areas and trying to make sure that no-one in this country is left out. We want to level up and make sure everyone gets the benefit of new, modern infrastructure.”

This is a common message from both the Government and the connectivity providers. There has been notable work over the last couple of years to ensure there is a fair and reasonable deployment of future-proof infrastructure. Although the telcos will be more drawn to investments in the more densely populated areas, this approach to drive ROI will not sit easily with the Government.

The Universal Service Obligation (USO) has been designed to ensure everyone across the UK has a clear, enforceable right to request high speed broadband, while the Local Full Fibre Networks (LFFN) programme offers £740 million from the National Productivity Investment Fund to entice interest in the rural communities from the private market.

Looking at the mobile side, with the release and auction of new spectrum, coverage obligations are placed on the telcos. Following the Connected Nations 2018 report, the Government has committed to extend 4G geographic mobile network coverage to 95% of the UK by 2022. As part of the 700 MHz spectrum allocation, industry has to commit to at least 500 new mobile mast stations in rural areas to improve coverage.

Details are relatively thin for the moment, though this will be taken as a minor positive by the telcos.

In promising full-fibre coverage by 2025, PM Johnson was mocked by industry. To achieve such a feat, BT has suggested the industry would have to find an additional £30 billion in CAPEX, and industry would not be keen to fund this alone. £5 billion from Javid is a start, though considering this is to be spread across both fixed and mobile, there will have to be a few more of these announcements in the pipeline.

Politics is starting to turn in favour of telco – ETNO

Despite the promises made by politicians, few in the telco, technology or media industry would believe politics is designed to help, but ETNO think the tides are turning.

At the 5G Core conference in Madrid this week, much of the attention has been directed towards the technological side of the business. Few would complain about this bias, it is a technology conference after all, however there has been a reminder of the challenging element of politics.

“We can all agree that 5G is a strategic challenge for Europe,” said Lise Fuhr, Director General of ETNO. “But there is another part and that is what is role of politics, policy and society? What are the obstacles and enablers of 5G? How do we partner with the different stakeholders to make 5G happen in a fast way?”

As mentioned above, almost every politician who is worth his or her salt has been breaching the benefits of a more favourable regulatory and policy environment to facilitate investment in the TMT segments, but there seem to be few real-world benefits. This however might well change in the near future.

A good sign of this optimistic future are the new appointments at the European Commission.

On November 1, Ursula von der Leyen will assume office as the new President of the European Commission. Although von der Leyen is a career politician, she first assumed political office in 2001, she has at least made the advancement of the digital economy in Europe a priority.

In her ‘manifesto’, future-proofing the European economy for the digital age was listed as the third priority. 5G is a key component of this message from von der Leyen, as is artificial intelligence and high-performance computing. von der Leyen might not have experience in the technology industry, but at least she realises the importance and is prioritising advancement in the field.

The second appointment is Sylvie Goulard as Commissioner for the Internal Market. In this role, Goulard has been tasked with overseeing the progression towards a digital economy, with one component to ‘enhancing Europe’s technological sovereignty’ and another to define ‘standards for 5G networks and new-generation technologies’.

From Fuhr’s perspective, this is a sign of positive intent. From the outset of her tenure, von der Leyen has set digital as a top priority. It is an add-on as it might have been considered for other politicians, it isn’t necessarily a plug for headlines, it is a proactive progression towards the digital economy.

Looking at the policy side, the European Electronic Communications code is ‘a compromise’ according to Fuhr. The policy could have been more ambitious to help the industry, but at least it isn’t doing any harm. New spectrum will be released, ownership of licences has been extended for telcos and there is positive work in the small cells area as well.

While these are not definite signs politics and policies are going to be enablers of digital progress, there is plenty of opportunity for something to go wrong, all the right noises are being made by the European Commission. There is still plenty of risk, but it looks promising.

Sky and Liberty Global allegedly in talks for full-fibre investment

Sky is reportedly in discussions with Liberty Global to add further fuel to the full-fibre machine which is engulfing the UK at an increasing rapid rate.

After a new company, Liberty Fibre Ltd, was registered with Companies House in the UK last week, parent company Liberty Global has allegedly entered talks with Sky UK to add additional investment to the scheme. According to the Financial Times, with Sky moving away from satellite connectivity for its content proposition, the team are seeking more attractive wholesales terms, with Virgin Media providing a potential alternative.

As it stands, Openreach is the incumbent wholesale partner to Sky. The wholesale giant has enjoyed market dominance in recent years, though numerous ‘alt-nets’ and alternative providers are creating a much more competitive market. Sky is supposedly in talks with Virgin Media to use its fibre network to deliver its broadband and OTT content service, and the creation of another wholesale fibre business would further lessen the dependence on Openreach in the rural locations.

The new company, Liberty Fibre Ltd, will aim to deploy full-fibre networks in locations outside of the main urban areas, the primary focus for the vast majority of network owners. Virgin Media will become the anchor tenant of the network, though should the rumoured discussions continue as planned, Sky would become an investor in the scheme and a second customer.

For Liberty Global, attracting Sky as a customer would be a significant win.

Although it does not own any of its own network assets (fixed or mobile), Sky is one of the most successful broadband providers in the UK. Although Sky has stopped reporting total subscription numbers, most estimates put the total number of broadband customers between 6.2 million and 6.5 million. This would give Sky roughly a 20% market share, even with Virgin Media and second behind BT. Currently, Sky has a fibre penetration of 38%.

The commitment of a heavyweight such as Sky would certainly lesson the financial burden of deploying a fibre network in areas where ROI projections are certainly less attractive than the dense urban environments. The attractiveness of Sky as a customer only increases when you consider the increasingly popular OTT video drive and aggressive fibre broadband marketing campaigns.

Although Sky is still primarily known for being the premium satellite pay-TV content provider in the UK, the OTT proposition, Now TV, is becoming increasingly popular. After being acquired by Comcast, Sky is likely to attract additional advertising revenues from the parent-company to further consolidate an attractive position in the UK.

After years of neglect, the full-fibre market in the UK is gathering momentum very quickly. It is still years behind other nations across the European continent, but the creation of a new fibre wholesale player will add more fuel to the blaze as glass sweeps across the isles. Liberty Fibre Ltd is an interesting idea, and if it can nail Sky as an investor and customer, its prospects will certainly head north.