London — 1 November 2019
I started publishing Balancing Act's News Update in 2000. Every Sunday I would pick over a range of websites in English and French to edit a series of news items to create an e-letter. It was originally sent out as an email until the number of subscribers meant I had to find a more effective way of doing it.
It's hard to believe but this happened almost twenty years ago. At that time Sub-Saharan Africa was said to have less phone lines than Manhattan. Nigeria had only an estimated 2,000 internet subscribers. In some countries civil servants got free fixed lines and free calls but for the ordinary citizen it took three months or more (and often a bribe) to have a fixed line installed.
In 2001 SAT3/WASC/SAFE, the international fibre cable that connected the West coast of Africa, was launched. It cost US$12,500 to buy 1 mbps and each country landing party operated as a monopoly. Satellite was at this point the main platform for connectivity and prices were equally high, if not higher.
Shortages ruled and the speed of communications was more like a freeze-frame film than an instant response. The absence of instant communications provided many excuses for things undone and little incentive for action. But in just over 5 short years, Africa went from having almost no phones to a position where over 100 million Africans had access to a mobile phone.
Voice was the first wave of Africa's communications revolution. By themselves, mobile phones would not have created this revolution. It took mobile operators who shaped business models to make them work for Africa. MTN first started a successful pre-paid subscription model in Uganda and the rest is history.
Operators began to move from a high price/low (elite) user model to a low price/mass market model. Lastly, newly launched telecoms regulators began to insist that all operators interconnected and "network effects" began to open up communications to ever-larger numbers of Africans.
The second wave of this communications revolution was mobile money in 2007. People had begun to notice how people were transferring money using mobile credits. Part of the UK aid agency DFID put up the money to develop mPesa, which has now become known as a Kenyan success throughout the continent.
But even with a service that was as obviously useful as mPesa it has taken over a decade to develop a critical mass and a supporting ecosystem: it went from 1 million users in its launch year of 2007 to 33.4 million users in 2018. Behavior changes move more slowly than technology and even this type of SMS to cash transfer service has moved more slowly in other parts of the continent.
The third wave of the African communications revolution also started in 2007 but did not become clear until 3-5 years later. A whole series of new international fibre cables were built to the continent and instead of being operated as monopolies, they begin to be offered on something much more like an "open access" basis. The price of fibre access is a bit like the price of oil: the lower it is, the more you can use it. The drop in wholesale prices took several years to feed through into cheaper retail prices for data.
By about the mid 2010s, the arrival of cheap smartphones, cheaper data prices, wider data coverage and greater take-up of mobile money services meant that an enormous number of Africans had access to a whole range of new services. The most widespread of these was social media: the rise of Facebook swept through the continent like a tornado over three years.
This data wave gave birth to the rise of tech-assisted start-ups and those investing in them. Earlier examples like Africa Online existed but until there was a reasonable level of connectivity, it was hard to sell the dream of digital services. Even now, the behavior changes needed for digital services are slow to develop.
Throughout this journey, I have worked as a consultant trying to understand what was happening and predict the pace of change. Some things were easy to predict: if you bought down the price of services (voice or data), more people would use them. Others - like social media and the "Arab Spring effect" - caught many unawares and there are still arguments over what has really happened.
Each successive wave of developments was accompanied by a ferocious level of hype: the tech industry loves the roar of the BS and the smell of the crowd J But many Africans were (and sometimes still are) caught in a fundamental pessimism about what they (and their rulers) can achieve. I remember being at an ITU event in Maputo where an African official sucked his teeth and said:"Broadband?...Not in my village." Even communications activists, academics and analysts often seemed to operate on the principle that Africa would somehow make do with less than anyone anywhere else.
So where will Africa's communications industry go next? The items below are my attempt at identifying some threads that may yet have the same profound impact as the wave of changes described above.
Satellite bandwidth prices go down to almost fibre levels: A combination of HTS and constellation satellite arrays is likely to see prices for wholesale satellite connectivity come down to almost present fibre levels. MTN's recent RFP for 5,000 ultra rural and ultra ultra rural sites demonstrates that this has now gone from being a "nice idea" to something that might now make business sense.
New generation international fibre cables and sub-US$5 a meg capacity: The newest generation of international fibre cables (from Google, Facebook and others) will push down the price of international wholesale capacity, which in turn will enable operators to offer something much more like an Africa price for data. As a result, use will increase enormously and revenues from voice will decline further.
The slow death of voice and SMS?: It seems like an outrageous proposition but look how far things have come. This morning I had a crystal clear WhatsApp call with someone in Ethiopia and for a pittance I can message people on my contacts list. As with many things, this depends on how fast all users shift to featurephones or smartphones and have the literacy to use them.
Where's mobile money 2.0?: mPesa and other mobile money services are a wonderful thing but they are really a way of transferring analog cash. The next generation of mobile money needs to have a seamless and easy to use interface. Have you ever watched the queue's reactions behind someone paying with mPesa in Nakumatt? It needs to be based on a wallet or equivalent and be capable of being used to pay and accept payment: perhaps the African equivalent of Apple Pay with a simple KYC identity to validate and cheap mobile phone POS systems for retailers, which are already widely available in the USA and Europe.
Re-engineering the business model - Imagine an operator that delivers all its services - voice, messaging, streaming, payment, etc - using an efficient and cost-effective data network. Imagine a dense array of Wi-Fi hot-spots using Wi-Fi 6 that allows large numbers of people to connect. Imagine a phone that hands off seamlessly to a Wi-Fi hotspot when you're connected to data. Imagine hundreds of thousands of people with high-speed home connections using fibre and 5G. Imagine an African telecoms market that allows smaller companies to innovate without the pressure of legacy businesses. You may say I'm a dreamer but I'm not the only one...