26 April 2019

Ghana: The Challenges of Being a Small ISP in Ghana - 'the Regulator Looks After Larger Operators Rather Than Competition Through Local Entrepreneurs...these Would Provide More Jobs and Choice for Local Users'

London — Being a small ISP in Sub-Saharan Africa is tough in a world dominated by MNOs. This week Russell Southwood talks to the new Managing Director of AfricaOnline Ghana about how the market is changing and finding a niche.

Plender is a telecoms veteran who grew up in the UK and worked for both BT and Cable & Wireless. His move to Africa came when he was seconded under contract with Cable & Wireless to BTC in Botswana and he stayed on with BTC after the contract ended.

He then spent a period on the contracting side of major communications infrastructure projects in Southern Africa. From working as a consultant he became COO for Gondwana International Networks, the company that acquired Africa Online and his latest appointment is as Managing Director of AfricaOnline Ghana.

So what's the niche position for small ISPs?: "I'm not seeing it. Small ISPs are at an immediate disadvantage. They've not got the deep pockets of the MNOs like MTN and Vodafone. The regulator looks after the larger operators rather than competition through local entrepreneurs. However, these would provide more jobs and choice for local users".

His argument is that a smaller ISP can draw strength from being part of a group:" Because it's a bigger group of people, I can call on a wider range of experiences. For example, how did a product work in Kenya? We also have tech resources we can call on in the Group that are at a higher level than you might find in a one-country ISP. We also have master service agreements with vendors so can get a better price".

The company is also very focused on the corporate market:"We're not a mass-market supplier. We're purely SOHO and SME. That's our niche. The consumer business is a totally separate business. Moving forward we'll expand into newer technologies - like IoT - and see what we can do. We want to have different value-adds - like cyber-security - for existing and new customers. We have a different approach than the MNOs". It has its own data centre service called iManage which offers the usual portfolio of services like co-location, off-site back-up and cloud.

AfricaOnline Ghana has just over 30 employees and offices in the capital Accra and three regional offices including Kumasi and Takoradi. It has its own fixed wireless network with its own base station, using both licensed and unlicensed spectrum and offers fixed wireless and broadband services. It gets its last mile fibre from CSquared.

In March it launched the first HYLAS4 service in Ghana, using the Avanti satellite to offer an HTS high-speed broadband service (with speeds of up to 35 mbps) called Jola right across the country. It is targeted at things like rural judiciary courts, agriculture services, eLearning initiatives, remote hospitality lodges, micro-finance institutions and CCTV and Machine2Machine (M2M) applications for construction and national manufacturing plants.

In August 2018, the group was granted Master Distributor status for its new service on the latest satellite, HYLAS4 with new market focus on West and Central Africa:"Prices will be significantly lower than Ku on Intelsat and Ka on Avanti".

But won't a high volume, low cost international bandwidth squeeze smaller ISPs out of the market?:"International is still a major part of the cost element. It's coming down but it's still high compared to East Africa. But as those prices come down, I can lower my prices and give my customers lower prices but retain the same margin. I hope those prices will come down a lot further".

AfricaOnline Ghana's customers include "blue chip" customers like Ghana Shippers, the biggest shipping authority in the country and a customer for over 20 years, Mantrac, the Caterpillar dealer in Ghana and a range of finance institutions. They all take bandwidth ranging from 5-50 mbps:"There are not many taking above that. As prices come down, people will increase their package and it may double in size. All prices are uncapped".

According to Plender, the biggest challenge for Ghana is the reliability of the rest of the network:"You've got contractors digging up fibre cables and there is no regulation of works. People are just digging willy-nilly and there are cuts on a daily basis. There are also power outages and fluctuations. The power goes off every day and there are spikes in the network".

Competition between ISPs in Ghana is intense as there are probably more of them than the market can sustain in their current form:"Most of them are chasing the same customers. We try and be one step ahead of them, particularly in terms of reliability and quality. We operate a 24/7 NOC and we have good technicians and support personnel. Often find ourselves dealing with internal customer network problems so we go the extra mile for them".

In the ISP space he sees the most serious competitors are Comsys and IS:"There are quite a lot of ISPs but many of them are running virtual networks. They are doing a bit of everything but with much lower margins".

"There are the MNOs - MTN, Vodafone and Airtel - who have a strong presence in the corporate and wholesale sectors. I buy from them for internet backbone for regional connectivity. But they are really focused on the mass market. MTN and Vodafone both have 4G offers but the merged Airtel Tigo has not yet got round to 4G. It's probably because of the huge fees for the spectrum needed".

"The MNOs are all very into Government institutions and the big banks and they dabble in everyone else's space. We have to be very conscious of them because they can often offer better prices per meg because of capacity on their network".

"The regulator should be doing more to help smaller operators. The fees for 3.3 GHz spectrum should be looked at. Also import duties. The cost of landing and clearing adds 50% to the cost of equipment across the whole country".

However, he is optimistic about the Ghanaian economy and sees the impact of new investment:"The Cedi exchange rate has dropped off a bit, going from 4.4 to 5.4 to the dollar but has held there for the last couple of months. It may come back to 5 but there has been no movement so far. There's a large amount of money going into investment in things like rail, ports and new roads. Two to three motor companies look like they will set up assembly plants for new vehicles".

"New money is flowing in terms of investment. There's the Government policy of One Factory, One District. They're talking the right language but we're yet to see the outcome".

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