Fixed Mobile Convergence

A report by Analysys Mason surfaced Wednesday stating that retail telecom revenue in Sub-Saharan Africa will grow dramatically over the next five years, increasing from $40 billion USD in 2010 to $69 million in 2016, with most of the retail revenue coming from mobile voice services at an estimate compound annual growth (CAGR) of about nine percent annually. Compared to other global markets, telecom marketplaces in the region are heavily dominated by mobile voice services. Overall, it should continue to encourage strong competition in the region amongst mobile voice services and encourage the use of broadband networks as well.

The report predicts mobile and fixed broadband connections to increase is the region from 9 million in 2010 to 50 million in 2016. Although, this only represents a five percent penetration rate because of the lack of personal computers across the Sub-Saharan Africa region. It is expected that more mobile voice and broadband services will provide competition in the region, as most countries there have only one incumbent provider that is rarely challenged. 

The main challenges for operators in the Sub-Saharan Africa region will be to provide affordable service in price-sensitive markets and to continue to increase and expand their availability. One key will be to avoid saturation within in the market. Because of slow penetration and growth operators will need to look for solutions that will support resourceful customer loyalty plans. According to the report, “serving less-populated areas will not yield sufficient revenue to offset acquisition costs.” Due to consumers in the region being more price sensitive and net receivers of calls.

The second key will be to try to create some sort of fixed infrastructure for broadband services in the region. As most connections are via mobile networks, the region claims the one of the lowest penetration of broadband networks in the world. Once again costs are a concern with this issue as well, as mobile broadband usage rates are only expected to increase to 4.5 percent of the population by 2016.

A third key is telecom authorities must mandate or encourage wholesale models when awarding licenses that benefit the consumer. In order to increase penetration and the deployment of mobile broadband in the region, governments must offer incentives to providers and customers. Network sharing and outsourcing has also been a suggested solution to reduce costs. Governments may also mandate infrastructure sharing to enhance coverage and affordability, and encourage social development in less populated areas in the region.

The activation of new submarine cables in the region in 2012 should help to reduce operation costs and increase network capacity, which should lower end-user prices for broadband services and increase the use of broadband in a region where it is extremely scarce.