AfricaFocus (Washington, DC)

4 February 2009

Africa: Internet Growth Accelerating

analysis

Washington, DC — "Until recently, the experience of the internet in Africa has been like having to eat a three-course meal by sucking it through a straw: time-consuming, unreliable and expensive. .. [but prices are dropping] and cheap international bandwidth is an essential component for any developing country to remain competitive in a changing world." - Russell Southwood, in Global Information Society Watch 2008

Southwood goes on to note that new undersea cables, two of them due to be completed this year, are predicted to cut international bandwidth prices for some African countries by as much as 90%, and that there will be strong pressure for reducing costs inside countries as well, as well as for finding new ways to bring cheaper connections to neglected rural areas.

Although Africa still remains last among world regions in estimated internet penetration (5.4% of the population as compared to the world average of 23.4%, according to end-2008 figures from Internet World Stats - see article below), it also features a growth rate of over 1,000% between 2000 and mid-2008, with an estimated 19.8% growth rate between end 2007 and end 2008. Internet World Stats now estimates more than 51 million internet users in Africa, while leading expert Southwood estimates an even higher user/population rate, if usage at internet cafes is fully taken into account.

This AfricaFocus Bulletin contains excerpts from two recent articles on global internet usage, the first from the commercial firm ComScore (http://www.comscore.com) and the second from the web site Internet World States (http://www.internetworldstats.com), which also provides more detailed estimates by country. The Bulletin also contains excerpts from Russell Southwood's article on Trends in Technology, from the Global Information Society Watch 2008 report, released in December. Additional articles from GISW 2008 are available for download at http://giswatch.org, and a press release on the report is at http://www.apc.org/en/node/7558

Of particular interest among the other GISW reports is that on Africa, by Abiodun Jagun at http://www.giswatch.org/gisw2008/regional/Africa.html

Internet statistics for individual African countries, as of mid- 2008, are given at http://www.internetworldstats.com/stats1.htm

For previous AfricaFocus Bulletins on internet and related issues, as well as a custom search of recommended sites on Africa & ICT, visit http://www.africafocus.org/ictexp.php

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Announcement: MysteryPlaces.Net

For that fraction of AfricaFocus readers who also happen to be readers of mystery novels (a significant number based on my unscientific sample of AfricaFocus readers I know), I am pleased to announce a new website that I am also running: http://www.mysteryplaces.net

The site focuses on mystery novels with a sense of place, and is organized by country, state (in the United States), and author.

There are not too many from Africa, to start with, but hopefully that will grow; among African authors that may be less familiar, who have written in the genre, are Moussa Konaté (http://www.mysteryplaces.net/countries/mali.php), Yasmina Khadra (http://www.mysteryplaces.net/countries/algeria.php), and Michael Stanley, who joins the better-known Alexander McCall Smith with another series set in Botswana (http://www.mysteryplaces.net/countries/botswana.php). And of course there are a few from South Africa ( http://www.mysteryplaces.net/countries/south_africa.php - a couple are old enough not to have covers in Amazon, so you need to use the links at the bottom of the page.)

I've put in links for the authors to Amazon (using book covers, similar to those on http://www.africafocus.org/books/afbooks.php, and also added links to background on the authors and to the international book exchange site BookMooch (http://www.bookmooch.com). On Bookmooch you can give away books, gaining points, and receive books, spending points - unlike some other such sites, it operates internationally as well as in the United States. And if you have a points surplus, you can offer it to be used by charities, such as libraries in Madagascar and the Philippines.

I'm doing the site partly for fun, and because it was easy to set it up and maintain it with minimal time input, using the same programming tools used for AfricaFocus Bookshop (http://www.africafocus.org/books/afbooks.php). In addition, any small proceeds coming from Amazon commissions help to support the work of AfricaFocus. So, if you like to read such books, I hope you'll visit often. If not, I'm sure you have friends who do; I would appreciate it if you pass this link on to them:

http://www.mysteryplaces.net

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Global Internet Audience Surpasses 1 billion Visitors, According to comScore

Asia-Pacific Region Accounts for 41 Percent of Internet Users

China Ranks as Largest Internet Population in the World

http://www.comscore.com/press/release.asp?press=2698

LONDON, U.K., January 23, 2009 - comScore, Inc., a leader in measuring the digital world, today reported that total global Internet audience (age 15 and older from home and work computers) has surpassed 1 billion visitors in December 2008, based on data from the comScore World Metrix audience measurement service.

The Asia-Pacific region accounted for the highest share of global Internet users at 41 percent, followed by Europe (28 percent share), North America (18 percent share), Latin-America (7 percent share), and the Middle East & Africa (5 percent share).

[for table see web link above - note that Comscore estimates do not include traffic from public computers such as internet cafes, or users under 15 years old]

Chinese Internet Audience Outranks U.S.

China represented the largest online audience in the world in December 2008 with 180 million Internet users, representing nearly 18 percent of the total worldwide Internet audience, followed by the U.S. (16.2 percent share), Japan (6.0 percent share), Germany (3.7 percent share) and the U.K. (3.6 percent share).

[Others in the top 15 countries included France and India, each with over 3% of the world audience; Russia, Brazil, South Korea, Canada, and Italy, each with over 2% of the world audience; and Mexico and the Netherlands, each with 1.2% of the world audience.]

[Internet World Stats says internet users number over 1.5 billion]

Internet World Stats News

January 25, 2009

Note that these are early figures, and that breakdowns by country are not yet available in this database for end-2008. More complete data is available for mid-2008 at

http://www.internetworldstats.com/stats.htm]

Internet users in the world already hit one and a half billion persons approximately in July of 2008. The current estimates of Internet users for 2008 year-end (2008Q4) according to our database, which includes ALL the Internet users universe, comprises over 1,573,269,743 persons worldwide. The Internet Penetration Rate is 23.4%, considering a global population of 6,708,755,756 persons according to the U.S. Census Bureau data.

2008Q4 World Internet Stats

The following table, displayed for the first time, gives the yearly growth rate (2007 vs. 2008) for each region of the world, based on the Internet World Stats database figures, the estimated number of users and the penetration rates.

Internet World Users Report - Year-end 2008 by World Regions

Region;                      2008;           2007;        Growth;    P.R.

Africa                     53,136,930; 44,361,940;     19.8%;     5.4%

America, Caribbean 7,994,300;   5,985,209;       33.6%;   19.8%

America, Central     28,814,000; 25,997,600;     10.8%;   19.0%

Region;                      2008;           2007;        Growth;    P.R.

America, North     246,328,977; 238,015,529;    3.5%;    73.0%

America, South     127,296,284; 77,978,800;     63.2%;   32.7%

Asia                      647,168,227; 510,478,743;    26.8%; 17.1%

Europe                  396,834,928; 348,125,847;   14.0%;  49.4%

Middle East              45,101,346; 33,510,500;     34.6%;  22.9%

Oceania, Australia    20,594,751; 19,175,836;     7.4%;    59.9%

Total World        1,573,269,743; 1,319,872,109; 19.2%; 23.4%

Source: Internet World Stats Database, accessed on December 31, 2008. Comparison figures are 2007 and 2008 year-end data. Please Note: Mexico is included in Central America, and Turkey is included in Europe. P.R. is the Penetration Rate. Copyright 2009, Miniwatts Marketing Group.

[Criteria used for deriving these estimates are given at http://www.internetworldstats.com/surfing.htm]

Bandwidth, the petrol of the new global economy

by Russell Southwood

Editor, Balancing Act

http://www.balancingact-africa.com

[Excerpts: for full text with more technical detail, references, and links to other articles from Global Information Society Watch 2008 see http://www.giswatch.org/gisw2008/thematic/TrendsInTechnology.html]

Put simply, bandwidth is what carries voice and data from one place to another. Bandwidth is the petrol of the new global economy; and cheap international bandwidth is an essential component for any developing country to remain competitive in a changing world.

...

Cheap and accessible bandwidth encourages information, ideas and money to flow quickly within a country and between countries.

Despite the best efforts of backward-looking governments, it allows a country's citizens to know what is happening in the world and what the world thinks about what is happening in their country. The world's tyrants may still be able to dominate their citizens, but they are that bit more vulnerable when faced with a freer flow of information about their deeds. Recent crises in places as diverse as Burma, Tibet and Zimbabwe attest to the power of information to influence those in power, even if it does not necessarily change who is in power.

There is a connection between the social and the economic. If it costs your country USD 7,000-10,000 per megabit per second (Mbps ) per month - one of the units used to price bandwidth - to communicate with the rest of the world, you are likely to do less of it than another country where the same bandwidth sells for below USD 1,000 per Mbps per month. Those developing countries that have access to cheap bandwidth have some chance of staying ahead in the "dog eat dog" world of the new global economy. They can respond to new needs in the global economy and not simply rely on the changeable fortunes of selling agricultural produce, minerals and tourism.

Used strategically, bandwidth can create new "think work" industries like business process outsourcing (BPO) and call centres. For example, a single company in Ghana, ACS, employs 1,200 people doing data processing. The Indian Ocean island of Mauritius employs between 4,000 and 5,000 people in a combination of BPO and call centres. Over 10,000 people in the South African city of Cape Town work in these sectors.

If communications costs are not lowered, then the cost of financing trade and ultimately the price of the goods themselves will be higher than necessary for everyone. Many African countries rely on goods traded between themselves and nearby neighbours. The goods traded are not simply luxury goods, but also essential foodstuffs that make up the daily diet of all citizens. Cheap and accessible bandwidth encourages regional trade integration that helps reduce air miles: the product grown to meet local demand is not one that needs to be imported or exported half way round the world.

But perhaps the most crucial impact cheap bandwidth - taken together with competition - may have is on the cost of transferring money. There is considerable movement of people both between neighbouring countries and internationally. Take the example of West Africa. According to a report by the Organisation for Economic Co-operation and Development (OECD) Sahel and West Africa Club (SWAC), there are three waves of population movement. Since the early 1960s, 80 million people have moved to the cities from rural areas. Populations also move from one country to another in West Africa, and this represents 90% of inter-regional migration.

Finally, West Africans represent 3% of immigrants from non-OECD countries living in Europe.

Each of these people needs to be able to communicate with their family. The son who has gone overseas rings his mother back in West Africa. That same mother rings her grandmother in the village.

Financial remittances flow all the way down this chain of communication and, according to the International Fund for Agricultural Development (IFAD), in 2006 these were worth USD 10 billion to West African countries. These remittances exceed the amount of money spent by international donors. But the cost of sending that money is around 12% of the total, whereas elsewhere in the world, such as Latin America, it has fallen to 6%. Cheaper communications and competition can bring cheaper transaction costs, and more of this money will arrive in developing countries.

The first wave of the communications revolution in Africa was the spread of mobile phones, which are now within reach of 60-70% of the continent's population. By contrast, the internet is only accessed by 12-15% of the population. Until recently, the experience of the internet in Africa has been like having to eat a three-course meal by sucking it through a straw: time-consuming, unreliable and expensive.

While new mobile interfaces will increasingly allow mobile internet access, the second wave of the communications revolution will be the spread of relatively cheap internet use. For developing countries, particularly in Africa, the internet has been the poor cousin of much more widely distributed technologies like mobile phones and radio. However, despite the limitations of speed and cost, a surprisingly large number of people use it.

Based on national survey samples from a range of twelve African countries of different income levels, between 2-15% of the population use the internet (except in the two poorest countries) and 1-8% use it on a daily basis (except for the four poorest countries). On this basis, there might easily be tens of thousands or hundreds of thousands of broadband subscribers depending on the size of country. Literacy plays a part, but probably not as big a part as price.

There is a clear link between the price of international bandwidth and the retail price of voice and internet services to the consumer. However, this link is not just a result of the price of international bandwidth, but also a reflection of both its cost and availability within a country. Cheaper international bandwidth means that there should be cheaper national bandwidth. Indeed, without this occurring, anomalies are found, such as where it costs more to communicate between neighbouring countries or two cities within a country than it does to link the capital and a European or North American destination.

Except with widely distributed rural populations where satellite is more appropriate, the cheapest bandwidth can be delivered using fibre.

International bandwidth prices in Africa have come down for a number of reasons. There has been an extended discussion about how to ensure open and competitive access to new international fibre-optic cables currently being built. As part of this process, national internet service provider (ISP) associations have lobbied the telecoms companies selling bandwidth and achieved price reductions. At the same time, the presence of two to three cable projects on either side of the continent ensures that each offers competitive pricing.

Through a combination of these factors, the price of bandwidth has gone from USD 7,000-10,000 per Mbps per month to USD 500-1,000 per Mbps per month due to two new cables (called SEACOM and TEAMS) that will be completed in mid-2009. These low international prices will put pressure on national operators to lower national prices, as it will be difficult to charge more for taking traffic between cities in an African country than for going all the way from that country to Europe.

Although market pressure has done a lot of the work in lowering prices, international organisations and African governments have also played their part. The World Bank's involvement in financing one of the cables (called EASSy) in a way that ensured open and fair access set the terms of the debate and also helped shape the market. In addition, the South African government declared a landing station for the SAT-3 cable, over which it has a monopoly, an "essential national facility". This has enabled the country's regulator to insist on co-location for a new competitor company, Neotel. The Mauritius regulator ICTA instituted a price determination against the monopoly fibre operator Mauritius Telecom that enabled much cheaper prices to be put in place.

Once a fibre cable has reached the coast of a country, the key problem is then getting a truly national backbone in place. On the evidence so far, the private sector will only deliver national backbone capacity to a relatively small percentage of the population. Understandably, operators have to have a sufficient return to justify investing in relatively expensive capital projects like infrastructure. Except in the markets of larger countries or in the wealthier segments of national markets, there has been little incentive to invest. The effect of this is that traditionally there has only been one infrastructure operator, or "one and a half" infrastructure operators - the latter case being where competitors spring up in metro areas and on routes between main metro cities. So the issue is: how does one incentivise wider national roll-out without simply returning to the uncompetitive, monopoly position that was in place before liberalisation, and which resulted in high national rates?

While infrastructure competition does produce some level of price competition, its impact is limited. Two competitors on national backbone prices - even over busy national routes - rarely produce more than a 10-20% difference in price over the mid to long term.

For example, in Uganda, where there are two infrastructure operators, the reduction in prices over three years has been 13%.

Africa's policy-makers and regulators have adopted a range of different approaches to creating infrastructure competition, not all of which are coherent, but will affect national backbone prices. ...

But whether the policy route taken is to create a national fibre network or simply "in-fill" those places the market will not reach, these different approaches may all go some significant way to extending cheap bandwidth to nearly all of a developing country's citizens.

...

AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

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