BY JAMES RATEMO
Fixed line telephony is headed for a major comeback following establishment of fibre optic cables across the region.
In a new analysis from Frost & Sullivan, a research company, earnings from fixed-line telecommunications market in sub-Saharan Africa is estimated to reach reach $12.25 billion in 2015 up from $6.78 billion in 2008.
And the International consulting firm Global Insight has compiled the latest world statistics on trade in ICT.
The statistics, availed at the on-going World Congress in Information Technology in Amsterdam indicate that Kenya is ranked 6th out of 9 African countries surveyed with cumulative ICT spending in 2008 of US$2,175.6m.
The total IT spend in Africa during the period was US$64,628.6m and the global spend was US$3,626,121.9m.
In Africa the big spenders on ICT include South Africa: US$28,501.2m, Nigeria: US$14,449.4m, Morocco: US$9,785.6m, Algeria: US$3,848.3m, Tunisia: US$ 2,303.6m, Kenya: US$2,175.6, Senegal: US$1,634.5m, Cameroon: US$1,152.6m and Zimbabwe: US$777.9m.
The Frost and Sullivan survey shows Sub-Saharan Africa has the lowest fixed-line penetration rate in the world, a scenario which incumbent operators attribute to low investments in copper-wire network infrastructure in the past.
However, a series of fibre-optic cables that are being placed along the east and west coasts of the continent are expected to give a second life to fixed-line telecommunications and cater to the rising demand for data and broadband Internet services.
Increasing Demand
“The key growth drivers for wire-line telecommunications are the increasing demand for data and Internet services, cost-effective deployment of fixed-wireless technologies, and the introduction of fibre-optic cables,”says Frost & Sullivan ICT analyst Jiaqi Sun.
“Corporate customers are the major revenue contributor for fixed-line services, particularly data and Internet services and fixed-wireless technologies.”
Fixed-wireless technologies such as WiMAX and CDMA have overcome the requirements of capital-intensive copper-wire infrastructure investments to achieve less time-to-market
of new services.
Additionally, fibre-optic cables will reduce costs and increase the bandwidth capacity of Internet services in the next three to five years.
“Corporate customers continue to prefer superior fixed-line to mobile services,” Sun
notes. “Traditional fixed-line operators are in the process of deregulating and migrating
to fixed and/or fixed-wireless technologies.”
He expects that the combination of fixed-line strength with innovative mobile offerings
will help to retain existing customers as well as attract new ones. In addition, data and
Internet services will be the future revenue generators for fixed-line telecommunications.
Reliable power missing
However, the dearth of reliable power supply is hampering network performance.
Furthermore, high incremental costs of fixed-line infrastructure are inhibiting network
rollout and market monopoly is restraining competition.
“The lack of physical infrastructure such as power generation plants in sub-Saharan
Africa limits the expansion of wire-line networks,” explains Sun.
“Conventional fixed-line telecommunications also relies on expensive copper wire-lines. Fixed-line operators find it difficult to improve the quality of services as there is a lack of
private investments to fund the infrastructure rollouts.”
In addition, the majority stakes of incumbent operators are still controlled by national governments in sub-Saharan African countries.
Therefore, the slow progress in deregulation of national incumbents restricts the growth of fixed-line telecommunications, because governments have a limited funding for the development of the capital-intensive fixed-line network infrastructure.
Frost & Sullivan believes that traditional incumbent operators should gradually migrate
to fixed-wireless and/or mobile technologies to diversify their service portfolios.
“Combining the quality of fixed-line services with the mobility of wireless ones will
give fixed-line operators a competitive edge to increase customer loyalty and
consequently service uptake,” concludes Sun.
“It is imperative for fixed-line operators to enhance the quality of customer services, which will help retain existing customers and attract new ones.”
Survival Strategies for Fixed-line Telecommunications Operators in Sub-Saharan Africa is
part of the Communications Services Growth Partnership Services programme, which also
includes research in Kenya’s Carrier Ethernet Market, Mozambique Broadband Market, West Africa and East Africa Carrier Ethernet Market, Sub-Saharan Africa CDMA Market, and African Transponder Demand Outlook.
