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Cell operators key for African Internet penetration


In a continent where restrictive regulations, high operating costs and widespread poverty makes Internet services unaffordable, low literacy among its population limits demand, and poor telecoms infrastructure hinders penetration, Africa's cellular operators have a key role to play in boosting Internet usage.

Frost & Sullivan research analyst, Spiwe Chireka, says that while Africa is experiencing double-digit growth of Internet usage, ISPs can significantly enhance this by aligning themselves with cellular operators.
"Moving forward, ISPs will need to consolidate their efforts and create strategic relationships with cellular operators," says Chireka. "The further development and increasing penetration of cellular networks would allow ISPs to offer mobile internet access and boost penetration of their services, thus reducing the high initial investment costs involved."
At the same time, mobile handset operators need to partner with ISPs to provide affordable tools for mobile internet access. To develop a sound market share in the limited market base characteristic of Africa, there is a need for product differentiation to increase consumer’s switching costs.
"In addition, ISPs need to target markets outside the major urban areas, since these areas are currently saturated in terms of operators," says Chireka. "Accordingly, partnerships with cellular operators would go a long way to address this challenge. Besides, low cost and high speed access will also be crucial to ensuring market growth."
Chireka says that the current double-digit growth is predicted on a narrow base, with the overall number of Internet users remaining limited.
In some cases, ISPs, with the help of governments, are gradually designing coping strategies around restrictive licensing regimes, poor telecoms infrastructure and low affordability of services. Promisingly, both governments and private telecoms operators are making significant investments in infrastructure. Such initiatives are setting the stage to leverage the exciting growth potential of the African Internet market.
"Most governments have embarked on ICT-led development strategies, aimed at developing e-governance and subsequently internet penetration," Chireka says.
Markets such as Kenya, Tanzania, Uganda, Senegal, Angola and Mozambique are set to enjoy high growth levels, given their technology neutral licensing regimes, independent regulators, high levels of FDI and highly liberalised markets. Ghana and Nigeria have high growth potential, but this is hindered by poor economic performance and poor licensing regimes, which have limited foreign investment into these markets.
By partnering with highly successful cellular operators in regions such as these, ISPs could quickly negate some of these barriers.