Whether one subscribes to the Africa Rising narrative or a more moderate outlook for the continent, the fact is that the ICT sector has the most to gain from Africa’s economic advancement, and the most to contribute to it too.
By Murray Steyn, executive head: wholesale at Internet Solutions
There isn’t a single industry – from mining to manufacturing, education to entrepreneurial endeavours of every flavour, from city construction to individual actualisation – that will not be advanced by reliable, affordable access to the Internet. I don’t think there’s another sector in the world that can make such a momentous promise.
The opportunity for ICT companies of all sizes – from neighbourhood ISPs to cross-national carriers – is significant, particularly for home-grown ICT operations that surely know our continent and its markets better than any imported from overseas. Increasingly, local ICT players are collaborating to offer competitively-priced and technologically-sound solutions that are outperforming those presented by international competitors.
Many of these would only be possible through wholesale product offerings by large network operators like Internet Solutions. This may appear to be a counter-intuitive business model but for those that invested in the infrastructure and licences on which new competitors grow their market share, there is a lot of opportunity to be had in reallocating network capacity.
Below are some of the trends we’re seeing in the wholesale ICT sector, specifically looking to Africa:
Local carriers are also entering partnerships with third-party service providers
The days of operators owning the entirety of their own networks – from first- to last-mile – are over. And that’s fine. As I’ve mentioned, where some licensees have adopted business models based on owning their infrastructure, other operators have opted to partner with existing network players to bring innovative services to the market faster.
What is interesting is that even at a very local level, where one could argue that infrastructure investment is fairly contained, ISPs are recognising the benefit of outsourcing network, data centre and other assets to experienced partners. By concentrating on what they do best, which is likely servicing their customers, even the smallest ISP has the means to build a thriving business.
Red tape and regulation still hampers cross-border operations
Africa is the continent with the most countries – 54 to be exact. It’s comprised of countless tribes, innumerable languages, political instability, infrastructure challenges and more than enough regulation to go around.
The fact is that African policy-making has not been able to keep up with the exponential growth of technology, devices and their applications. As such, regulation is reactive rather than supportive, and appears to handicap development rather than encourage it.
Perhaps the solution is that foreign companies – even African ones – get closer to policy-makers in their new markets to better mitigate the risks of changing policy. Perhaps more involvement, lobbying, and monetary and other investment from the get-go will lead to better mitigation of the risks associated with policy change.
Asian operators have their eyes on Africa too
China and India are two Asian markets that not only survived the global recession but thrived despite it.
Their respective population bases, and size of their economies, provide economies of scale that are driving the growth of their ICT sectors, while the number of science and engineering students in both countries looks to sustain this growth and innovation well into the future – and into foreign territories like Africa.
Perhaps it’s true that many African ISPs lack the financial and experiential muscle of Asian competitors, but how many of these can boast genuine pan-African development agendas, and partnerships with local companies to overcome infrastructure challenges?
As Ayanda Dlamini, business development manager at LGR Telecommunications, said recently: “Africa has both the resources and the resourcefulness to develop a thriving ICT sector delivering solutions fit for purpose in Africa. The outlook is very healthy. All we need to do is take action and seize the opportunity.”
Beware of competing on cost
When it comes to Internet connectivity and access, cheapest is not necessarily best. Consumers want speed. In our experience, the arguments against unreliable connections are about as vociferous as those against high data costs.
The fact is that the speed vs. cost debate comes down to the market one is serving. A less sophisticated market has yet to learn that fast becomes cheap, whereas an experienced market of users with more high-end devices and applications comes to realise that if they can’t get data at the price they’d prefer to pay for it (i.e. free), then speed and bandwidth capacity is something they simply won’t compromise on.
My advice to ISPs entering new African territories – whether into a new country or a new neighbourhood – is to research your market thoroughly to understand who your consumers are and what they need. Then structure and price your offering accordingly.
Doing business in Africa is complicated, but it’s far from impossible. After all, Internet Solutions has been doing so for more than 20 years. We have invested in long distance and last-mile networks – the latter is especially challenging given that customers are geographically dispersed and often in underdeveloped locales.
Importantly, we have built and maintained relationships with trusted, in-country service providers. We understand exactly how consumers use data and can project future usage patterns as populations grow and disposable income increases.
What remains is the increasingly vital component of customer service, which we entrust to our wholesale clients.