African Fixed Communications Briefing
February 2005
Paul Budde writes:
Africa is the world’s second largest continent after Asia, with a total surface area of 30 million square kilometres. The continent consists of 54 countries and territories housing close to 900 million people at the beginning of 2005.
While the continent presents an enormous market that has seen excellent growth rates in recent years especially in the mobile sector, it is still a long way from matching the levels of the industrialised world in terms of telecommunications. Close to three million Africans are currently on waiting lists for a fixed telephone line, and the African Telecommunications Union (ATU) estimates that there is demand to support an additional 60 million lines. Basic telephony provision remains a major need in many parts of the continent.
Many African governments have realised the importance of telecommunications and the fact that private investment is the way forward. Alternative technologies such as satellite, wireless and cellular are now making the task of connecting Africa far easier than it has been with the traditional cable-based services, and growth rates have been phenomenal. Second, an in some cases Third national operators (SNOs, TNOs) have been licensed or are going to in the near future, to compete with the incumbent telcos in all sectors of the telecommunications market.
Mobile communications have been open to competition in most African countries for years with up to four operators in some markets, and the number of mobile phones quickly outnumbered fixed lines by far. Fixed-line teledensity in Africa stood at around 3% in early-2005 while mobile penetration has reached 8%. This suggests that fixed-line access may become an outdated measure of a maturing telecommunications infrastructure, and follow-on services like Internet access are likely to focus on mobile handsets instead.
Africa’s data traffic is experiencing strong growth, particularly in South Africa. Very Small Aperture Terminal (VSAT) satellite technology has established itself as a viable option for networking as well as Internet connectivity. While Internet uptake is growing steadily, market penetration is still very low due to the lack of reliable phone lines. Nevertheless, several African countries have experienced triple-digit growth rates in Internet usage in 2003 and 2004 and this trend is expected to continue during 2005. Various broadband initiatives have been launched and the number of African countries offering commercial Asymmetrical Digital Subscriber Line (ADSL) services has tripled to 15 during 2004.
Voice over Internet Protocol (VoIP) telephony is finally starting to take off in Africa following steady improvements in Internet bandwidth, deregulation in several countries and the growing number of VoIP service providers entering the market. International IP telephony wholesalers have seen a huge surge in voice traffic to and from Africa since 2001. Several countries have liberalised VoIP in 2004, opening up opportunities for many smaller service providers, including South Africa and Kenya, with Uganda and Tanzania set to follow in their footsteps with new competition frameworks in 2005. This development is expected to create a ripple effect across the continent and trigger the much needed reduction of the traditionally high telecommunication costs in Africa.
