Africa on the move, but challenges remain

There is a lot of good news in Africa, especially in the mobile space, but regulatory and technical challenges remain for both mobile phones and broadband, industry organization the GSM Association (GSMA) said Tuesday.

The number of mobile connections has risen to 282 million, an increase of 70 million, in the last 12 months. Improved coverage has added another 46 million potential customers, according to GSMA.

Currently an average of 66 percent of the continent is covered, but the industry has set the bar higher: in five years that figure should be 90 percent. There are still about 300 million users, in rural areas, not covered.

"Reaching that goal, and serving those communities will be a great challenge", said Tom Phillips, the GSMA's chief government and regulatory affairs officer.

Key to growth on the continent has been increased competition, going from a monopoly to a duopoly, and even more operators battling for market share. But more can be done, Phillips said.

For example, Ethiopia is the only country which still maintains a monopoly for both mobile and fixed voice.

But Phillips' pet peeve is luxury tax -- which is added after regular value-added tax (VAT) -- for both mobile phones and usage in many countries.

Removing the tax will actually increase revenue, since phone sales increase, and usage goes up, the GSMA said, after conducting a survey on the subject.

The ones which have the best feel for the African market are the local carriers. High on Emirates Telecommunications Corp. (Etisalat) Chairman Mohammad Hassan Omran's list is a more stable regulatory environment.

It is common in certain areas for a regulator to accept something one day, only to alter the rules the next, and when there is a change of government there is a change of rules. "Money will not come unless there is confidence," he said.

Omran also said there is a need to relax rules for the use of foreign workers, which is not always allowed, and would ease the roll-out of networks.

Being able to make calls using is a mobile phone an important step, but getting data access at broadband speeds is as important. Only five African countries had broadband penetration of more than 1 percent at the end of last year, according to the ITU (International Telecommunication Union).

Currently the fundamentals to get broadband moving on a larger scale are broken, according to Sanjiv Ahuja, former CEO of Orange SA, who is starting a new company to roll out broadband in developing markets.

International bandwidth is a big challenge. "People are trying to tackle it, several submarine cables are being built, but it will not fix the problem. Inter-country connections are almost nonexistent. That means you still have to use satellite, which is both slow and expensive. As a continent there needs to a significant focus on connecting countries," he said.

The problem is exaggerated by the fact that international gateways, which connect local operators to international bandwidth, are still a monopoly in many countries.

"The impact is two-fold, there is no strategic long-term planning, and secondly the prices are very high. Sometimes availability is not high, as well," said Phillips.

Key to broadband growth will also be the use of frequencies in the lower bands, which become available when analog TV is turned off. The use of 800 MHz will cut the capital expenditure for building networks in half, which will greatly help the roll-out of mobile broadband in rural areas, since base stations can be widely spaced, Phillips said.

"In Africa they have to say that rural wireless communications are an absolute priority, not wait for the backwards and forwards negotiations that will happen with broadcasters," he said.