9 October 2003

South Africa: Cellphone Solution for Internet

Johannesburg — The wireless option can offer Africa the access to the web that lack of fixed-line phones hinders

INSATIABLE demand for internet access in Africa could be met by the continent's cellular network operators, letting citizens connect to the internet by wireless instead of fixed-line telephones.

Several cellular operators are assessing a new technology package being offered by Airborn, a division of SA's network operator MTN, and its partners Sun Microsystems and Systemsfusion.

Although cellular access to the internet is nothing new, it has not caught on in Africa. That is largely because it has been sold as a way for users to display internet content on a cellphone itself, with its tiny screen making very unappealing viewing.

Now the trio of firms is touting the technology as a way for computer or laptop owners to connect that to the internet by using their cellphone as a modem. Web pages and e-mail would be displayed on their computer screen, with software designed to pep up the access speed included in the package.

Meeting that pent-up demand for internet access could create a huge opportunity for network operators to generate new revenue by becoming internet service providers as well as carriers of voice and basic text messages.

"The cellular business case is all about revenue generation, and it is the mission of every mobile operator in the continent to generate a higher average revenue per user," says Zak van der Merwe, the business development manager for Airborn.

Most African nations have a teledensity of less than 5%, while internet penetration stands at a paltry 1%.

That is mainly due to the lack of fixed-line infrastructure, the lack of computers and the lack of funds to pay for access.

With this package, at least the infrastructure problem could be solved. The offering includes the hardware, software and technology skills to let an operator install a system to support 50000 users for about $250000.

So far most African cellular operators have concentrated on carrying voice traffic, and the cost of rolling out sophisticated technology to carry data has rarely been justified. But companies and entrepreneurs need internet access and e-mail, and wireless technologies are the answer, says Van der Merwe.

"There is a definite need for internet access in Africa and the annual growth rate is 400%-500% in some countries. We have reduced the barriers to entry and mobile operators such as MTN and Vodacom are poised to take the internet to the next stage. They have a large footprint and the cash to address this desperate need by setting up as internet service providers." Operators should see a return on investment within a few months.

"Communication over long distances is a primary need, and the amount that people are willing to spend on communications is disproportionate to their income," he says.

The service could quickly appeal to the multinational companies operating in Africa that need reliable internet access and email, and often resort to expensive satellite-based services.

Other customers could be small businesses that use computers but do not have the fixedline services to link them together. Wireless connectivity via a cellphone could resolve that, and let employees transmit data between branches. The system could also let entrepreneurs set up internet cafes in rural areas where there are no landlines.

If the network operators do not want to offer such services themselves, they could strike a deal for internet service providers or private firms to run that service over their networks.

"There have been hundreds of internet service providers in SA but the rest of Africa missed that wave," said Jan Dry, the solutions and technology manager for Sun Microsystems SA.

"There were a few start-ups, but there were never enough fixed-line phones to support them. Now there are world-class GSM (global system for mobile communication) networks and internet service providers can tap into that connectivity," Dry said.

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