17 Nov 2014

Collaboration, affordability, data, investment – Business is Booming at AfricaCom 2014

Cape Town, 11-13 November 2014 - Apparent in the number of visitors and quality of stands at this year’s show, business is booming in the telecommunications, ICT and digital media ecosystem. 

OTT-operators: collaboration is the order of the day

The conference started on day 1 with a debate on the evolving relationships between mobile operators (represented by Airtel, MTN, Millicom, Orange) and OTT players (represented by facebook and Twitter).

Historically there has been friction between these two sectors as operators have seen their own subscribers increasingly use OTT services in preference to their own, but at AfricaCom 2014 there were strong signs that we’re entering a new, more collaborative phase. “It was an excellent forum”, Ahmad Farroukh, CEO of MTN SA said. “I came with sharpened weapons, a bit, but I was very happily surprised by Facebook in the way they put things into perspective. I think the approach is completely different now, telcos are not just the pipe – we need to cooperate for our mutual benefit  for three billion people to have more access to the internet”.
Farroukh’s experience was echoed by Arthur Bastings, Executive Vice President Africa at Millicom. “It was a really interesting panel, which featured a more conciliatory stance on the part of the telecoms industry. With players such as facebook, I think historically the relationship has been a bit more fraught, with tension over who gets to participate in what, and how. What I’m seeing is much more realism: as the industry is embracing the realities of the African market, it’s obvious to everyone that facebook in particular is a great entry point to the internet for African customers, so partnerships are in the interest of everyone”. MarcRennard, EVP of Middle East, Africa and Asia at Orange Group, called for more cooperation in investing in networks and services: “we need to work together to target rural areas, to reduce costs, and all stakeholders in the ecosystem must participate in this effort”.

Matthew Reed, Practice Leader, Middle East and Africa at industry analysts Ovum, commented on the discussion: “we are seeing a growing number of partnerships between operators and OTT providers in African markets, but it is still early days in the developments of these new business models, and it is not clear to what extent they will indeed be ‘win-win’”.

Bringing internet to Africa with LTE

The second day of the conference was all about data: how to deliver better and more affordable access to data, what services to introduce, and what devices to support it. The session opened with an inspiring presentation from Fredrik Jejdling, Head of Sub-Saharan Africa at Ericsson, who said: “we believe it is a basic human need to communicate”.

A panel of operator discussed the importance of LTE in Africa’s digital economy. The panel featured representatives of historic mobeil operators Vodacom and Unitel Angola, alongside new LTE-only operators YooMee, Surfline and Smile.the discussion focused mainly on the advantages LTE offers the region, stressing that bandwidth leads to services, and that mobile broadband is the only internet access most consumers are likely to get. But even if you leave aside the small matter of building the infrastructure, there are a number of other obstacles to be overcome, such as shortage of low-frequency spectrum for rural coverage, and the need to lower prices and simplify tariffs.

Dov Bar-Gera, CEO of YooMee, said “95% of the homes in sub-Saharan Africa don’t have internet access, so there is a huge market potential: having such a platform that is dedicated to a large quantity of data means we can bring entertainment to the home of the consumer. If we want to bring internet to the region we have to make access very low cost, so that people can start to make their own content”.

Debates on LTE developments continued in more details in the 3-da LTE conference taking place at AfricaCom, with operators such as MTN, Safaricom, Neotel as well as major vendors Ericsson, Alcatel-Lucent, Huawei and more. There was a great sense of expectation and optimism at the show regarding the the positive impact LTE can have on the region, and companies such as those are working hard to bring as many African people as possible into the digital economy, which can only benefit all concerned.

Investment must be supported by governments and regulators

As African operators embark in a new wave of investment to deliver access to mobile broadband, there was a widespread call for more support from governments and regulators. This was the main point in a panel discussion on broadband on the first day, bringing together operators, investors and carriers

Léon-Charles Ciss, Marketing Director at Orange said “We need huge investment. We can’t do miracles; we have to convince governments and regulatory authorities in Africa to take political decisions about tax and investment”.

Spectrum availability is another crucial point hindering broadband developments across Africa, particularly in the largely underserved rural areas. Andile Mcgaba, Chairman of Convergence Partners, said "When authorities do not release spectrum, we are unable to connect rural people and that costs Africa investments to the tune of about $30 billion a year."

It was noted that the countries who are most successful at promoting broadband developments are those with a clear National Broadband Plan such as Nigeria and Ghana, and panellists called for governments to develop clear strategies to support the industry, including public-private partnerships and lower taxation.

Devices: Affordability and local features are key

Devices are a major part of enabling Africans to access communications services and affordability is crucial, as was discussed in a panel including operators Airtel Africa and Millicom as well as Mozilla (Firefox) and handset manufacturer Tecno. Rick Fant, VP Planning and Ecosystem at Mozilla announced that their $33 data phones should come to all markets including Africa soon. Arif Chowdhury, VP at Tecno also announced the launch of a $30 smartphone in Africa in 2015.
However the key element that will increase smartphone penetration, even more so than cost, is the availability of local features: understanding local customers’ needs and making features and content available in local languages make the biggest impact. Raul Martinez, Commercial Director Africa at operator Millicom (Tigo) said “It’s important to understand what makes customers tick and to help them discover the content and features that are available to them”. Operators in Africa are getting more and more involved in handset strategies. Sagar Darbari, Head of Segments & Devices at Airtel Africa, said the group made a call six months ago to launch an Airtel-branded device: “it was tough for a telco to do, particularly in terms of logistics, but it’s been a revelation”.

Monetising services

With better access to data comes the opportunity to deliver more and better services to consumers, be they entertainment, financial services or new revenue streams.

The changing digital ecosystem and collaboration between its stakeholders was once again a major point of debate. Arun Nagar, CEO of VAS platform provider Spice VAS called for the industry to “work together: competition makes the pie bigger for all of us”.  There is still friction between mobile operators and content providers in terms of revenue sharing, as was made clear in the day 3 keynote panel on monetizing content, with representatives from operators Airtel and Vodacom and media groups Ole!, Platco and Apurimac Media.

The consensus was that the industry is going through a transformation and new business models are emerging. Neeraj Gala, Head of Content & Alliances at Airtel Africa, asserted that “The first entertainment device for consumers in Africa is the mobile phone so operators have a strong role to play in building a seamless, uncomplicated ecosystem”, while Herman Singh, Managing Executive at Vodacom eluded the question of revenue sharing by pointing out that “we’re moving to a world of ‘eat as much as you can’ data”. On the content provider side, the focus was more on the changes in the digital ecosystem: Will Green, Founder & CEO of Apurimac Media said “there is a need for a radical shift in the business models”.

Mobile Money still a major opportunity

A two-day event covered the opportunities in Africa's evolving mobile money market, with representatives from mobile operators, regulators, platform providers, banks and alternative players debating new mobile financial services, including mobile bnking for the unbanked.
The debates got off to a philosophical start focusing on what exactly mobile money is and should be. Fredrik Jejdling of Ericsson described banking as a basic human need, and the conference debates concluded that “Mobile money is emotional – it should be quick and easy, turning each individual into an agent, into an ATM”. The debate also covered interoperability and customer service, as well as regulation and cross-border transactions.
New buzz words and acronyms
It wouldn’t be a tech show without acronyms and jargon, and AfricaCom 2014 was no exception.

IoT – the Internet of Things – is the new development of M2M services and was covered in the opening keynote by Ian Kennedy, VP at Cisco as well as in a keynote session on day 3. An entertaining presentation from Edward Makwana, Group Automotive Communications Manager at BMW showcased the features of their ConnectedDrive car, launched in South Africa this year. A panel discussion followed, with representatives of operators (Orange and Vodacom), m-health initiative MAMA, and Google, whose representative Brett StClair gave a live example of the IoT by receiving a call on his Google Glass while on stage.

SDN was another major acronym making an entrance at AfricaCom: software-defined networking was described as the biggest revolution in telecoms since the introduction of IP and offers great opportunities for operators to reduce costs and increase flexibility and time-to–market. The subject is still an emerging topic and will be given more prominence at AfricaCom 2015 with ‘proof of concept’ demos.

A great buzz at the event

AfricaCom’s Conference Director, Julie Rey’s comment perhaps best encapsulates what went down here this year: “There has been a palpable buzz across the whole event. As organisers we are getting the impression that the event has grown to another level. All the very different industry players are talking collaboration and next year we look forward to seeing the industry embarking on the next phase of its digital transformation.”
AfricaCom will return to Cape Town on 17-19 November 2015. For more infrmation visit www.comworldseries.com