“The African market is slowly transitioning from a purely voice-centric to an increasingly data-centric market,” says Rajesh Mishra, Co-Founder, President and CTO, Parallel Wireless. With the number of mobile internet subscribers likely to increase from 300 million in 2015 to 550 million by 2020, according to GSMA Intelligence report, there is a corresponding increase in the mobile data revenue for the operators as well. Mobile data revenue from the sub-Saharan region is likely to increase from $6.4 billion in 2015 to $13.7 billion in 2021.
Mr Mishra adds that “The launch of a number of new mobile broadband networks recently is a key driver of this trend. The ever-increasing demand for the internet services coupled with a drop in the prices of devices is further fuelling this growth.”
Not surprisingly, mobile has emerged as a platform of choice for consuming innovative digital solutions and services in Africa. The expansion of advanced mobile infrastructure in the region is also inspiring local and global innovators and tech entrepreneurs to come up with mobile-based solutions.
All this puts immense pressure on the service providers and the networks. The telecom infrastructure needs to be upgraded to meet the growing demands of the end consumer. The ever increasing capex is hard to justify, as there is little chance to improve the tariff because of the hypercompetitive market and also because of the low paying capacity of the people. Africans pay as much as ten times of their salary for broadband as people in the rest of the world. Besides the service providers also need to fight growing competition from Over-The-Top (OTT) players like WhatsApp, Facebook, among others. The telcos need to rethink their network strategy, so they can meet the increasing demands even as they control their capital and operational expenditure.
In this scenario, the service providers need to bring down the cost of deploying infrastructure to truly maximize the potential of increasing data usage in the African market. The capital-intensive strategy that worked in the 2G or voice market is not going to be as effective in the data-centric market. It is also important to realize that the developing countries have different demands, so implementing what has worked in developed countries, where the Average Revenue Per User (ARPU) is typically high, may not be an effective strategy.
So, What Kind Of Solutions Do Telcos Really Need?
The African service providers need innovative but at the same time cost-effective solutions to provide affordable mobile broadband in the region. Solutions, which are easy to install and maintain and use modern technologies, like automation and cloud, to bring down the network operational cost will enable the service providers to address the data demand in keeping with the low-profitability potential of the region.
One of the most critical problems faced by the region is widespread power outage, which hampers the services providers from running base stations, data centers, computers and other equipment. It also adds to the high cost of conducting business as service providers are forced to use generators to keep the network up and running. Some of the mobile operators have been forced to curtail services in the recent past because of power outages. It is then crucial that the service providers go for solutions that use minimum possible power. Base stations powered by alternate sources of energy like solar or wind would be then perfect for Africa.
Based on our experience of working in the African region, we believe that telcos need a modern 2G solution to meet the demands of the market. More than 60% of the subscribers are on 2G network on the continent, and 43% of the subscribers will be using the 2G network even by 2020, according to GSMA report. So, based on general assumption, 2G is not going anywhere for a very long time. However, the African service providers do need a more efficient and advanced 2G network, which uses modern-day concepts like Virtualization and empowers them to migrate without any additional investment to 4G when the market is ready.
Since many technologies, 2G, 3G, and 4G are likely to co-exist in the African market for a very long time; service providers can also bring down their expenditure by opting for form factors that support multiple technologies.
The service providers of the region can hardly maximize the revenue from data services if they are unable to tackle the extensive problem of indoor signaling. Effective use of small cells can help in addressing this challenge. Cost-effective self-configuring and self-optimizing indoor multi-technology cellular solutions, which are also easy to deploy can enable service providers to resolve the problem of indoor coverage.
The mobile ecosystem makes a vital contribution to the economies in Africa, in terms of economic growth and job creation. A significant population accesses internet through mobile for the first time in Africa. Mobile networks in the continent are not just providing connectivity but are harbingers of major social and economic change.
Connectivity is life transforming and its impact can hardly be exaggerated. It allows people to keep in touch without traveling, plays a crucial role in enhancing the quality of education and most importantly it includes people in global economy, which potentially opens up an array of opportunities for people from all strata of the society. It is not a coincidence that the only unicorn (a private company with more than $1 billion revenue), Africa Internet Group or Jumia, from the continent leverages internet technology.
The onus is then on telecom service providers to explore and adopt solutions which not only promote this change but also allow them to maximize the revenue potential of mobile broadband. Creative and scalable network solutions are the need of the hour and are crucial for speedier and cost-effective network rollout and consequently, in bridging the digital gap.