Media stakeholders meeting

Telecommunication trend in Africa and new media service: Opportunities and challenges

HOTEL SOURCE DU NIL, BUJUMBURA, BURUNDI: 28TH MAY, 2012

Presented by : Eng. Andrew J Kisaka

Agenda Background of Africa Telecommunication sector

Liberalization of telecom sector in Africa and its impact in economy growth

Submarine cable in Africa

East Africa tariff structure for telecom services

Convergence of technologies and new media services

Opportunity or threats

Conclusion and the way forward

Background of telecommunication sector Before the years of 90’s, African telecommunication

Companies were 100% owned by the Government

There was monopoly of service provision

The African telecommunication services were mainly relied on Fixed landline telephone

The fixed telephone land line penetration was very low. Example in Tanzania, in 1990’s the penetration was 0.4%

Telecommunication services were very poor and not efficient

After Market Liberalization of the African telecommunication sector

Market liberalization of sector In the late 1990’s some of the African Countries started to

review their policies and liberalized investment in many sectors

Private companies were allowed to invest in various sectors including telecommunication

African Government refrained/ abstained from doing business

Many private Companies started to invest in African telecommunication sector either by 100% share capital or partnership with local Companies

Most African Countries introduced telecommunication regulatory bodies

Market liberalization of the sector Market liberalization attracted introduction of cellular

mobile phone in Africa

During 2002 African telecommunication market grew at a compound annual growth rate of 49.3% while that of French was only 7.5%

In 2008 Libya became the first countries to pass Mobile phone penetration of 100% while South Africa was 98%

In the same year, there were six Countries with penetration levels higher than 80% ( Libya, Tunisia, Algeria, Gabon, Syschell and South Africa)

Other African Countries penetration level were below 20% Source: GSM association

0

5

10

15

20

Fig.3:Voice Telecom Subscriptions (Millions)

UGANDA 0.25 0.33 0.56 0.84 1.24 1.62 2.82 5.33 8.72

TANZANIA 0.3 0.45 0.77 1.44 2.09 3.54 5.77 8.5 13.13

KENYA 0.42 0.91 1.65 1.87 4.42 5.55 7.63 11.8 16.8

2000 2001 2002 2003 2004 2005 2006 2007 2008

Telecom Subscriptions in Tanzania

VodaCom AirTel Tigo ZanTel TTCL Benson SasaTel TOTAL

October 8,521,990 5,967,169 4,604,586 1,632,045 252,720 2,560 23,744 21,004,814

November 8,583,565 6,010,210 4,546,149 1,658,273 250,602 2,386 24,254 21,075,439

December 8,670,536 6,021,091 4,477,510 1,715,985 246,019 2,396 24,827 21,158,364

January 8,711,628 5,966,283 4,539,071 1,346,970 227,851 2,321 8,469 20,802,593

February 8,572,468 5,948,380 4,564,393 1,360,897 226,034 2,190 8,222 20,682,584

March 9,014,195 5,927,417 4,671,263 1,354,098 226,153 2,074 8,498 21,203,698

VOICE TELECOM SUBSCRIPTIONS

Total Mobile TTCL Fixed Zantel Fixed Total Fixed TOTAL

October 20,831,951 157,419 15,444 172,863 21,004,814

November 20,901,066 158,927 15,446 174,373 21,075,439

December 20,983,853 159,054 15,457 174,511 21,158,364

January 20,628,169 158,942 15,482 174,424 20,802,593

February 20,507,895 159,129 15,560 174,689 20,682,584

March 21,028,821 159,254 15,623 174,877 21,203,698

SUBSCRIPTIONS TO FIXED MOBILE NETWORKS 2010/11

VodaCom 31%

AirTel 22%

Tigo 33%

ZanTel 3%

TTCL 10,7%

Benson 0,01%

SasaTel 0,004%

Fig3.1.2b: On Net Calls (Oct-Dec 2010)

Market liberalization of the sector

Voice telecom subscription has grown significantly for the short period

Penetration of telephone services has increased significantly up to the rural areas

Telephone mobile services have found many application which has reduced cost of living

- Paying electricity bill

- Money transfer i.e M pesa, Tigo pesa

On line application for business license, admission in Universities, company registrations and others.

Impact of telecommunication in African economies

Increase of formal employment

Most of the media (TV and Radio) are benefiting from commercial adverts of the Mobile phone companies (MTN, SAFARICOM, VODACOM, AIRTEL etc)

10% increase of the telephone penetration results in 1.2% increase of GDP in emerging market like Africa and 0.6% developed countries (Source: GSM association)

Angola has seen an annual GDP rate of 20% when penetration of mobile grew from 14% in 2006 to 31% in 2008

Digital divide 70% of the population sub sahara Africa still living in

rural area

Challenges is to reach remote pockets with cost effective cost way

Some of the African Countries have introduced Universal Communication Access Fund as the strategy to provide services in under served area

All telecom operators contribute a small percentage of their revenue to this fund

Mobile penetration globally 2007: One out of 4 African has a mobile phone

2007: One out of 3 Asian has a mobile phone

By end of 2007: 45 out of 100 inhabitants in the developing world have mobile phones

2008: ITU data suggest that About half of the world’s population (over 3 billion) does not have mobile phone

2008: 5.2 billions people are not using internet

19

Connectivity of Submarine Cables in Eastern and Southern Africa Region to

the NICTBB in Tanzania

Submarine cable Voice may remain to be the largest contributor to operators

revenue in medium term but arrival of submarine cable should be a catalyst of other added values; e- Government, e- learning.; e- medicine etc.

The submarine optic fiber cable have landed in Africa

- Seacom

- EASSy

- Team

Many operators and Government in Africa are building National and Metropolitan fiber networks to enable easy access to the networks

21

SEACOM

EASSy

TEAMs

LION

LION2

SEAS (Q2 2012)

SAT3/SAFE

WACS (Q2 2012)

ACE (Q3 2012)

Status of International Submarine CLS connectivity in EAC and SADC17

22

FORECASTED GROWTH

TANZANIA

KENYA

UGANDA DRC

ANGOLA

NAMIBIA

SOUTH AFRICA

LESOTHO

BOTSWANA

ZIMBABWE

MOZAMBIQUE

MADAGASCAR

ZAMBIA

BURUNDI

RWANDA

SWAZILAND

MAURITIUS

MALAWI

294.7Gbps

12.8Gbps

78.4Gbps

425.5Gbps 294.7Gbps

294.7Gbps

251.9Gbps

92.7Gbps

72.3Gbps

69.9Gbps

132.4Gbps

127.7Gbps

8.1Gbps

11.5Gbps

12.2Gbps 7.8Gbps

Based on current trends, by 2027 uptake levels in Southern Africa is estimated to be average penetration of 20% of the population with high-speed broadband and 60Kbps per subscriber of required international capacity and 120Kbps per subscriber of domestic capacity. Total international capacity for SADC as a group is estimated to be about 1.6 Tbps.

Source: SADC RIDMP draft diagnostic report

SAD

C

Mem

ber:

19

Popula

tion:

350.8

M

EAC

Mem

ber: 5

Popula

tion: 1

33.1

m

23

Nimule

Gulu

Lira

Soroti

Mbale

Loboi

Garisa

Thika

Nairobi

Moyale

Marsabit

Namanga

Arusha

Tanga

Pangani

Himo

Zanzibar

Dar-es-Salaam

Dodoma

Singida

Tabora

Kahama

Geita

Muleba

Bukoba Kyaka

Magu

Musoma Tarime

Kisii Sotik

Kisumu

Kericho

Kakamega

Kitale

Lokichogio

Lodwar

Kampala

Entebbe

Mombasa

Voi

Mtito Andei

Nakuru

Nanyuki

Same

Tunduma

Kondoa

Babati

Mpanda

Kasulu

Kigoma

Masaka

UGANDA KENYA

TANZANIA

Sumbawanga

Mbeya

Mbamba Bay

Songea

Tunduru

Lindi

Mtwara

Masasi

Mozambique Malawi

Zambia

Congo

Dem. Rep.

South Sudan Ethiopia

Mandera

Pemba

Kibondo

Som

alia

Jinja

Kigali

RWANDA

Mbarara

Kabale

Lake

Tanganyika

Lake

Victoria

Lake

Nyasa

Nzega

Manyoni

Tororo Malaba

Gatuna

Rusumo Biharamulo Murusenyi

Nyeri

Mwanza

Congo

Dem. Rep.

Korogwe

Shinyanga

Moshi

Morogoro

BURUNDI

Bujumbura

Iringa

Eldoret

Kajiado

Mutukula Embu

Meru Nyahururu

OFBI Operational

OFBI construction complete

OFBI Planned

National Capital

Town

LEGEND

Status of Implementation of Optical Fibre Backbone Infrastructure (OFBI) - April 2012

Source: EAC BIN Project Mission Report - 2012

24

International Submarine Cable’s Tariffs

TEAMs:

Data not obtained

LION2

Data not obtained

Tariff structure for both SEACOM & EASSy

Capacity Service Average Price (USD)

per Month

STM-1 55,000 – 60,000

STM-4 120,000 – 180,000

SEACOM

Average Price

(USD) per Month

per Mbps

Broadband Whole Sale 900 – 950

Capacity Service

IRU Average Price

(USD) BTWN

10 - 20 Yrs

STM-4 4 M

STM-16 11 M

Telecom tariff structure in East Africa

Fig. 4: Tariffs for On Net Calls

TANZANIA

KENYA

UGANDA

0

50

100

150

200

250

300

350

400

450

500

Ts

hs

TANZANIA 385 340 311 322 323 300 322

KENYA 421 437 363 375 434 392 210

UGANDA 199 201 220 243 236 284 302

2002 2003 2004 2005 2006 2007 2008

Fig.5: Tariffs for Off Net Mobile Calls

TANZANIA

KENYA

UGANDA

0

100

200

300

400

500

600

700

Ts

hs

TANZANIA 492 472 412 426 419 417 407

KENYA 600 617 583 534 613 549 310

UGANDA 240 243 265 294 292 387 321

2002 2003 2004 2005 2006 2007 2008

Fig.6: Tariffs for Off Net Fixed Calls

TANZANIA

KENYA

UGANDA

0

100

200

300

400

500

600

700 T

sh

s

TANZANIA 514 474 438 472 419 431 491

KENYA 603 590 517 537 586 549 273

UGANDA 217 219 239 265 236 347 319

2002 2003 2004 2005 2006 2007 2008

Challenges on provision of telecommunication services

Challenges Governance including regulatory challenges

Political structure and stability

Reliable power supplies

Affordability

Convergence of technologies

Convergence of technologies.. Convergence of technologies have become possible

due to digitalization of ICT networks

No boundaries between telecommunication and broadcasting networks (Convergence of technology);

No distinction between telecom and broadcast receivers.

Content may be available on broadcasting or telecommunication networks

Convergence of devices and services

Types of Convergence

18th November, 2011

A B C D

Services

-Content

TV

Network

Facilities – Transmitter links,

fibre cable, booster

stations, satellite etc

Cable

Satellite

.

Radio

Licensing framework before digitalization

-Broadcasting Structure – service specific

Operators

Convergence of technologies Convergence of technologies have lead to adoption of

converged or unified licensing framework

- Content

- Network facility

- Network services

- Application services

Impact of digital revolution: Telecom and Media perspective

Impact of digital revolution; telecommunication perspective

Tele- conference now is possible among the people living in different geographical area

Tele workers: Companies are operating without physical location offices provided there are broadband facilities connected at home

Growing number of mobile content users (Over 40 million mobile telephone subscribers in EAC)

Over 10 million East African access and use internet and most of them access using mobile

Radio broadcast on mobile telephone

Social benefits; Mobile phones have brought people closer.

Impact of digital revolution: Media perspective

Creation of the new media services

Advertising industry has increased

Small film industry starts to grow

Mobile TV with good quality is now available in the market

More professionals in the market

More choice and variety content

Digital dividend

Increasing opportunity of trade, travel and tourism due to expansion of media

Emerging of multimedia services New media are internet based application that allows

exchange of user generated content

They take the form of digital text , images and video with web links ,creative participation, interactive and feedback

It is Digital data is susceptible to manipulation by software

Accessibility to content is anytime, anywhere and anyhow.

Emerging multimedia services

Video sharing: You tube, daily motion

Music and audio sharing

Blogs : e.g Opendiary ,vox , Issa Michuzi

Social Networking sites: e.g LinkedIn, Facebook, Xing, Myspace

IPTV

The Role of the regulator

To Facilitate development of the sector- Licensing

To over see fair play and level play field

To prepare regulations, rules and guidelines for the sector

To manage scarce resource (Radio frequency and numbering)

enforcement

Regulatory challenges on new media services

Policy Frameworks

Policies overtaken by New Media services-management, content regulation, organisation

Licensing and Registration

Coverage

Regulatory challenges on new media services

Regulatory Frameworks

Licensing issues

C0ntent Regulation-legal liabilities

Economic Regulation –Tariffs, competition

Technical Regulation-standardization

Opportunity

Threats

Creation of employment (i.e air time voucher for telecom/broadcast)

More players and diversity of revenue streams

More choice of content and more variety

Creation of new media services (content available any where, any time any how)

Reduction of cost of living ( tele workers and distance) learning

Freed spectrum

Hiking into people privacy information

Theft of documents and financial information is growing in the region.

In west digital content laws enacted are largely ineffective

Erosion of culture Digital rights management

becomes difficult to enforce Regulating the sector

becomes more complex

Conclusion To put emphasis on opportunities and reap benefits of

digitalization

Collective and joint efforts to address threats

Ensure reliable broadband infrastructure and affordable services

Review Policies on how media should be organized , Managed and regulated to accommodate New Media services

Redefine Regulatory Frameworks to provide for regulation of New Media services

Broadcasting organizations should adopt new business models

Thank you very much for your attention !