Saturday, June 14, 2008

Nigeria - the cost of broadband

Seeking Lower Cost of Broadband Access

The high cost of broadband access in Nigeria and the need to explore avenues to drive down the cost with a view to opening the gateway to seamless communication across the nation is the thrust of this analysis by Efem Nkanga

No doubt, the adaptation of Broadband technology has the potential to boost economic growth. Apart from mobile technology, experts are unanimous in their opinion that this is one sure way of bridging the existing digital divide in Africa. Yet, despite this knowledge and the stupendous growth recorded in mobile growth, the same level of growth has not been replicated in the area of Broadband. While other developed economies are gravitating to speeds of 100 megabits per second (Mbps), Africa is still groping about with speeds of 10 megabits per second.

The lack of available infrastructure across the continent has not helped matters and the focus in Africa today is the quest to replicate the success of mobile phone technology in the area of Broadband. Growth in Africa's mobile sector as at today has defied all predictions. Mobile penetration has risen from just one in 50 people at the beginning of this century to almost one third of the population today. Mobile subscribers are also now more evenly distributed across every part of the African region. In 2000, South Africa accounted for over half of all Africa's mobile subscribers, but by 2007, almost 85 per cent were in other countries. Africa has emerged as the region with the highest annual growth rate in mobile subscribers and added no less than 65 million new subscribers in 2007. At the beginning of 2008, there were over a quarter of a billion mobile subscribers on the continent. In a bid to drive Broadband, the GSM Association a month ago announced that its industry members planned to invest $50 billion between 2008 and 2012 in networks in Africa, covering 90 per cent of the population.

The association announced that the number of mobile connections in Africa has risen to 70 million in the past 12 months to 282 million. Mobile operators have ramped up investment in the region, extending GSM coverage to reach an additional 550,000 square kilometres occupied by 46 million people. This broadening coverage along with the falling cost of mobile communications has enabled millions of Africans to get connected.

The revolution of mobile technology has spawned successes driven largely by competition and improved regulatory environment in the area of e-payments, pre-paid recharging, single rate inter-regional roaming and the uptake of m-commerce applications. But the irony of this huge success is that while the mobile arm is experiencing galloping growth, with accessible and affordable access across the length and breadth of the continent, including the urban and rural areas, the area of Broadband and Internet access has not kept pace with this growth and has been relegated to the background.

There were 50 million estimated Internet users in Africa in 2007, as against the 282 million in mobile phone users. More needs to be done to increase the number of internet users by providing cheaper broadband access.

The statistics of users in the region is dismal and not encouraging. More than half of Africa's Internet users are estimated to be located in North African countries and South Africa. In sub-Saharan Africa, only three per cent of the population is online, ditto with Nigeria. This scarcity of international Internet bandwidth and lack of Internet Exchange Points (IXPs) drives up prices, making Africa the most costly continent for Internet access. The average monthly Internet subscription is almost $50 in Africa, close to 70 per cent of average per capita income.

Eric Osaikwan, a notable voice in the call for cheaper Broadband access and the Executive Secretary of African Internet Service Providers Association AfrISPA at a recent forum on Cheaper Broadband for Africa revealed that a telecom company in one of the poorest regions in Africa spends nothing less than $3.2 million on satellite transmission, of which $2.4 million is spent on routing calls within the country, with the balance spent on international calls. He added that this practice and lack of adequate broadband is responsible for Africa's annual lose of over 500 million US dollars to the practice of routing local calls internationally. He stated that this practice is one of the biggest impediment to telecoms growth in Africa and called for a stop to the practice of transiting local calls through third parties.

The need for cheaper Broadband access across the African continent is the song of the day because of the huge benefits derivable from the uptake of broadband.

Stakeholders had made calls for Africa to have Broadband connectivity at affordable prices that would drive growth in the continent. One of the ways of driving this uptake of broadband was the call for optic fiber deployment across the length and breadth of the continent. Many have stressed that unless the high cost of broadband access was brought down, Africa will keep groping in the dark and will remain underdeveloped. The continued high prohibitive costs of broadband in Africa despite investments in the continent which currently stands at 6.4 billion US dollars according to Osaikwan is a cancer that must be clinically and methodically addressed.

The first move will be to build the internet infrastructure of Africa to engender growth. For Africa to have available and effective broadband at affordable prices which will drive growth, it must have adequate optic fiber highways. Paying lip service to Broadband everywhere for development will not help matters and the only solution is to remove existing monopoly and have enough deployment of Fiber optic links across the continent. The current practice whereby if someone in America pays one dollar for broadband access, another person in Africa will pay 40 times more is not acceptable.

This is why the move by Globacom, Nigeria's Second National Carrier to enable adequate broadband through its GLO-1 for West Africa project is a welcome development. Globacom has shown its financial muscle, capacity and foresight through its recent foray into the Republic of Benin to provide mobile technology services in that country building an undersea fibre optic cable from Nigeria to the United Kingdom.

The GLO-1 project, which is expected to be completed soon was said to have been scaled down due to lack of "political co-operation" for landing rights. Globacom is also said to be planning to offer its services at 50 % below the current SAT3 rates, which is a welcome development that will help Nigeria's economy.

With SAT 3 having less than 5% usage in six years because of a monopolistic approach, Globacom's foresight is commendable and stakeholders have expressed the hope that other companies will borrow a leaf from Globacom and will rise up to the challenge to offer Africa adequate Broadband to take it to the next level. The entry of more companies providing broadband infrastructure will reduce costs of E1s which is said to cost as much as $32,000 in Cameroun even though Nigeria and Ghana are still lucky to get same for $3,500.

Other African companies that have taken up the challenge of providing broadband infrastructure are Infinity Telecoms, which is said to be gearing up to join Globacom this year to launch its fibre optic cable in a move that will make Bandwidth cost the lowest in the West African region. Others include the "MaIN OnE" Fiber project of Main Street Technologies, which will interconnect countries on the Atlantic Coast from Morocco through to Angola with each other, and through Portugal to the rest of the world, TEAMS Ltd for East Africa, a point to point system connecting Mombasa, Kenya and Fujairah, and the EASSy project, a project of a Consortium of regional incumbent telecom operators in East Africa at the cost of $265 million with a target launch date of 2009. Another initiative is that of the profit association of the international satellite industry called Global VSAT Forum, a not for profit organisation that is working to double the number of earth station terminals operating in Africa by 2012. A worldwide Global body of firms are involved in the business of delivering advanced digital fixed satellite speed up development in Africa.

The initiative plans to bring in more than 20 satellites which will be brought into service to connect Africa during the next five years. Aside from the satellites, complimentary capacity building will also be delivered to governments in Africa by the GVF.

The successes of all these projects will help Africa achieve maximum coverage that will reduce cost of access and ensure that Mobiles and Banks have more reliable fibre optics links within and without Africa.

Nigerians are hungry for Broadband Access, the signs are everywhere. The benefits derived from mobile technology has whetted the appetite for more internet access which is still a dismal 3% compared to the 97% access recorded in the country in the area of mobile technology. With Bandwidth demand rising across the continent from by 19% in the 2001, 28% in 2002 and 37% in 2003, Africa and Nigeria needs to have more of such increases. The benefits of Broadband everywhere in the country will accelerate development to unquantifiable levels. It will give a boost to productivity as people will be able to achieve more quickly and efficiently. In the area of medicine, the advantages of telemedicine newly introduced into the country will be consolidated for the benefits of rural folks. Economic benefits would accrue, allowing businesses to thrive as new frontiers are conquered. In the area of education, e-learning programmes would be easier to support. Socially, beneficial interactions will be enabled and a flexible working environment will make for a more productive and efficient workforce that will translate to a more vibrant economy.

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