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At a time of gloomy reports from the world\u2019s financial markets, the news that mobile telephony is nearing the end of its worldwide period of double-digit growth has barely been noticed. According to the International Telecommunication Union\u2019s (ITU) 2010 world statistics, however, this growth should not have gone under the radar.<\/p>\n
Mobile telephony growth rates decreased from more than 20 percent in 2005 and 2006 to around 10 percent in 2009 and 2010 \u2014 a drop of more than 10 percentage points in a period of five years.<\/p>\n
The global picture of diminishing growth, however, belies regional realities marked by major differences. At the end of 2010, the African region\u2019s mobile telephony penetration rates had reached an estimated 41 percent, compared with 76 percent globally. At the same time, Internet penetration reached 9.6 percent of the population, far behind the world average of 30 percent and the developing world\u2019s country average of 21 percent \u2014 Arab states notched 24.9 percent.<\/p>\n
When it comes to fixed broadband, Africa lags even further behind with a penetration rate of less than 1 percent illustrating the challenges that persist in increasing access to high-speed, high-capacity Internet access in the region. With a penetration rate of less than 5 percent, Arab states fare better than Africa, though not much better. By comparison, Europe\u2019s penetration rate is about 25 percent.<\/p>\n
The silver lining is, because of their current low penetration levels in Information and Communication Technologies (ICTs), regions such as Africa and the Arab States have a significant potential for growth. Conversely, in mature markets such as Western Europe and North America, this potential is markedly smaller. This represents a major opportunity for the satellite sector.<\/p>\n
\u201cI see demand for telecom satellite services continuing to outstrip forecasted supply in Africa and the Middle East,\u201d comments John Finney, chief commercial officer, O3b.<\/p>\n
There is little doubt that the telecom sector is bubbling in the Middle East and Africa. In 2010 and 2011, new undersea fiber rollouts such as ACE, MainOne, Eassy, Teams Cables, to name a few, triggered significant changes in the market. This new capacity, for example, has ignited the interests of mobile operators to deploy 3G broadband networks in the regions.<\/p>\n
\u201cFiber is making high-speed Internet available and affordable to large parts of Africa,\u201d comments Aidan Baigrie, head of business development, Seacom, a privately owned and operated pan-African ICT enabler. \u201cIt is having an impact similar to that of the railways in the 19th century: it is infrastructure that brings development,\u201d he says. <\/p>\n
Yet, besides coastal areas, most of the region remains underserved by fiber, leaving a host of opportunities for satellite solutions, explains Idan Segal, chief investment officer, Convergence Partners, an investment management and advisory firm focused on the telecommunications, media and technology sector in Africa. \u201cThis rollout has surprised many market participants in terms of speed and reach, although the Continent remains predominantly wireless. This is due to the vast distances, difficult terrain and challenging economics, which render links between major cities difficult and rural deployments generally unfeasible, on a commercial basis, at this time.\u201d<\/p>\n
Universal Service Obligations (USOs) and rural connectivity goals set by the regions\u2019 governments, for example, drive the development of satellite backhaul and other services. This is particularly true for landlocked Africa where USO investments and public sector funding is leaning towards satellite to guarantee supply at confirmed rates void of cross border taxes and challenging operational issues associated with fiber optic cables.<\/p>\n
\u201cWhile sub-Saharan Africa has six fiber cables to date, landlocked countries are very unlikely to benefit from fiber in a reliable way due, in the majority of cases, to the lack of telecoms regulation and disagreements between interconnection, border rights and accountability for security \u2014 all of which result in high prices and limited availability,\u201d comments Finney. \u201cMost worryingly, for the operators concerned there is a lack of certainty around future prices as governments can levy taxes on fiber routes at will.\u201d<\/p>\n
This is an analysis widely shared by the region\u2019s ICT service providers that have the pulse of the market. \u201cSatellite solutions are used primarily for enterprise broadband access and GSM backhaul and, of course, as international gateways in some countries,\u201d explains Job Ndege, managing director, iWayAfrica Services. \u201cSatellite use in the broadband IP and GSM backhaul is growing, while for other enterprise use it is stagnating due to the increased availability of in-country terrestrial networks, limited cross border activities for firms in the region and non-coordinated licensing.\u201d<\/p>\n
On the whole, many believe that the arrival of fiber has disrupted certain satellite applications, notably international bulk connectivity from cities at or close to the coast. However, to an extent this loss of market share for satellite is made up in other ways. An explosion in demand as bulk\/wholesale pricing drops and massive capacity increases due to fiber connectivity brings new users and new applications into the market, which can benefit satellite applications.<\/p>\n
\u201cHistory has given us examples of where initial drops in satellite usage in countries that get fiber connectivity for the first time are more than compensated for by overall market growth within 24 months,\u201d says Segal. \u201cFor the medium-term, much of Africa will remain uneconomic to connect in any manner other than satellite.\u201d<\/p>\n
The relationship between satellite and fiber seems to be one of cooperation rather than competition. \u201cFiber deployments are forcing satellite to look introspectively at its strengths, as satellite is not suited for providing large amounts of bandwidth,\u201d says Baigrie. \u201cJust two of Seacom\u2019s customers in Africa, for example, soak up as much bandwidth as that made available by satellites over the entire region.\u201d<\/p>\n
Yet, this leaves plenty of room for collaboration as satellite has plenty of opportunities in reaching remote locations, or in applications involving the transfer of highly sensitive, critical information, according to Baigrie.<\/p>\n
Demand for satellite services in the region remains high. Mobile operators such as Bharti, Orange, MTN, Qtel and Etisalat all have a clear roadmap for 3G in Africa. The infrastructure contracts are being announced to support these deployments, the most recent being Bharti\u2019s contract with Huawei for 3G infrastructure and supported by a significant contract award to Comtech for related satellite backhaul.<\/p>\n
There are other areas, though, where growth is expected. \u201cThe mining and oil exploration sector, for example, and applications for the financial sector,\u201d explains Ndege. \u201cThe use of satellite for multi-site enterprise networking, however, is declining; only firms that require very high reliability still use satellite for WANs even where alternative terrestrial services are available.\u201d<\/p>\n
In this landscape, satellite operators with a strong presence in the orbital slots overlooking the region are already making a push in the region. \u201cWe see developing markets such as Africa and the Middle East as critical to SES\u2019 future,\u201d says Nicolas Baravalle, SES\u2019 vice president of sales for Africa. SES has already been actively closing deals in the market. In June 2011, it announced it had joined forces with Kenyan television and broadband operator Wananchi to launch a new DTH line-up called Zuku TV in East Africa. According to Wananchi Group\u2019s CEO Richard Bell, East Africa is rapidly becoming the Silicon Valley of Africa.<\/p>\n
\u201cThere has been tremendous growth here over the last few years, particularly with the arrival of undersea cable,\u201d he says. \u201cMedia and IT industries have started to grow explosively on the back of this growing sophisticated middle class.\u201d<\/p>\n
The success enjoyed by mobile telephony in the region certainly bodes well for the entire spectrum of ICT services. Wananchi is taking advantage of this favorable landscape, emulating triple-play providers from the developed world. \u201cWe have a cable operation so we are very much into broadband as well as TV. We could look to bundle broadband with our satellite TV service,\u201d says Bell.<\/p>\n
Observers should not be deceived by the relative low income levels of the region\u2019s population, Bell warns, because, as the case of mobile telephony clearly shows, peoples\u2019 spending habits do not necessarily follow them. \u201cPeople will prioritize where to spend their small amounts of disposable income, and mobile phones were something that people really wanted and were prepared to spend a large amount of their income on.\u201d<\/p>\n
Meanwhile, Intelsat is also eyeing up the African market, says Jonathan Osler, managing director of Intelsat\u2019s Africa Sales team. \u201cThe market is strong as there are opportunities in all of the region\u2019s areas, similarly to what happened in Latin America in the recent past. We see a transition taking place; one going from data networks to a media-centric marketplace.\u201d <\/p>\n
Established satellite operators like SES, Eutelsat and Intelsat are clearly focusing on the region\u2019s growth potential, but they are not alone. Besides traditional players, new operators are also emerging, says Jawad Abbassi, founder and general manager, Arab Advisors Group, a Middle East-based telecom consultancy company. \u201cYahsat has entered the market, while Qatar is also planning to launch its own satellite operator. They add to established regional players like Arabsat and Nilesat, that have a strong presence in the Middle Eastern markets and are now making inroads in Africa. Their strategy includes availing new capacity and new technologies to their coverage area,\u201d he says.<\/p>\n
The situation is creating new dynamics in the market, with possible conflicts looming ahead. In coming years, all operators will closely watch demand dynamics to avoid price wars, Abbassi adds. On the demand side, it is interesting to note that it is the higher frequency bands that are expected to attract much interest.<\/p>\n
\u201cWe are seeing a significant amount of interference issues in the market in particular around C-band and terrestrial systems such as WiMAX. This is driving interest in Ku- and Ka-band offerings as the link availability is free from such interference issues,\u201d says Finney.<\/p>\n
Whatever the bandwidth, it is becoming clear that satellite will play a significant role in meeting the region\u2019s telecom needs. \u201cIn Central African countries satellite delivers unhindered capacity to the heart of the operators\u2019 network,\u201d comments Finney. \u201cIn addition, regions with some geopolitical conflicts, such as Iraq, continue to show significant demand for high-capacity satellite services, either because the deployment of fiber is too challenging from an operational point of view, or because the infrastructure such as power plants required to repeat and regenerate optical signals is still several years away,\u201d he says.<\/p>\n
Other experts identify other drivers for satellite solutions. \u201cVertical industries such as transportation and oil and gas are still driving demand all over the region, but especially so in countries like Saudi Arabia, the Middle East\u2019s largest market,\u201d says Abbassi. <\/p>\n
Tourism is driving demand in traditional destinations like Egypt and the rest of Northern Africa. \u201cBroadcasting and VSAT connectivity are also all rising applications,\u201d Abbassi adds. The deployment of fiber is seen as an opportunity in its own right, as satellite capacity is often used as redundancy for fiber links. \u201cMany links have suffered outages, which can be complex and time-consuming to restore, making satellite a key component in stable, resilient networks,\u201d says Segal.<\/p>\n
In addition, satellite\u2019s proposition remains strong in point-to-multipoint applications. \u201cThis is a unique application for satellite that presents it with continued strong growth prospects,\u201d explains Segal. \u201cParticular media platforms such as DTH and corporate networking are likely to perform very strongly in the future. There is also significant new investment and increasing hype around new consumer broadband via satellite services.\u201d<\/p>\n
Market players with a traditional strong presence in DTH clearly identify this as a unique opportunity and bandwidth-heavy applications are seen as on the rise. \u201cWe see strong growth ahead for DTH,\u201d says Baravalle. \u201cIn three to five years from now, the region\u2019s DTH landscape will have changed dramatically. Broadband and rural connectivity are also expected to grow.\u201d<\/p>\n
Osler adds, \u201cThe migration to video applications is driven by DTH, of course, but also education, with school programs that aim at bridging the digital divide between cities and rural Africa, being rolled out in many countries.\u201d<\/p>\n
Giovanni Verlini is a communication executive and freelance journalist based in Europe. Email: giovanniverlini@hotmail.com<\/p>\n","protected":false},"excerpt":{"rendered":"
The Middle East and Africa remain fertile grounds for satellite with the demand for capacity significantly increasing. Yet, with fiber rollouts growing, do these markets still represent a golden opportunity for satellite? At a time of gloomy reports from the world\u2019s financial markets, the news that mobile telephony is nearing the end of its worldwide […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2],"tags":[],"class_list":["post-84017","post","type-post","status-publish","format-standard","hentry","category-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/84017"}],"collection":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/comments?post=84017"}],"version-history":[{"count":0,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/84017\/revisions"}],"wp:attachment":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media?parent=84017"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/categories?post=84017"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/tags?post=84017"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}