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2018 Broadband Trends in Africa

Broadband is being increasingly considered as a necessity for future socio-economic development, with some parties viewing it as a basic human right. Essentially, without broadband connectivity, the digital divide in the social and business spheres (between businesses / households / individuals who have access to broadband vs. those that do not) will continue to widen to the point where the have nots will be left out of mainstream development altogether.

This presents a significant problem in many countries in Africa which have limited financial resources for telecommunications infrastructure builds on the one hand and continue to experience relatively low levels of socio-economic development on the other hand. Private sector telecoms infrastructure operators tend to build where they can generate a reasonable return on their investment (ROI) while large segments of the population and many small / micro businesses struggle cannot afford proper broadband connectivity or sufficient quantity of broadband services.

Implementation of Polices and Programmes

To remedy this situation, a number of national governments have been developing and implementing policies and programmes to build out broadband infrastructure as widely as possible and to decrease the prices of broadband services to a point where ultimately can afford them in sufficient quantity. To achieve this, they need to involve private sector operators while remaining mindful of the fact that private entities need to remain profitable to maintain sustainable operations.

While most countries in Africa now have access to good quality and adequate bandwidth on international, national long-haul and metro infrastructure (albeit in some markets still expensive), the constraint is now focused on broadband access infrastructure. In some regions of the continent inland backbone networks also need to be improved, although a number of projects are underway to address this.

Although broadband penetration has shown steady growth over the past several years, penetration levels of fixed broadband remain very low at approximately 7% of households on the continent, while mobile broadband has demonstrated a notable decline in growth and plateauing of the penetration rate. These trends are illustrated below.

Note: For the purposes of this analysis mobile 3G is considered a broadband service, although in many instances speeds achieved on a 3G connection would not be reflective of a good quality broadband service.

The Challenge

The challenge to higher fixed broadband penetration is the speed of deployment of fixed broadband infrastructure, to a large degree dictated by sales opportunities. A barrier to entry into the mobile broadband market is often still the price of a 3G or 4G phone. Mobile operators typically pursue a strategy of making lower cost handsets available as much as possible to lower this barrier.

Additionally, mobile broadband coverage (even 3G) is still not available across parts of the continent, particularly in rural / remote areas. Build-out of 4G infrastructure in sub-1GHz spectrum holds promise of providing coverage in such areas but in many markets 4G is still at an early stage of deployment, focusing on the larger urban environment.

Broadband Access Technologies

A range of broadband access technologies is used by operators in Africa to provide services, although the vast majority of connections is wireless and most of the connections are mobile.

The map provides an indication of key broadband technologies deployed. Most of the markets have seen implementation of multiple technologies, with various fixed wireless access (FWA) present in all markets. However, the geographic footprint of these technologies, in particular fixed technologies, remains very limited in most of the markets.

The mix of technologies used for the delivery of broadband services is changing. Older FWA technologies such as pre-WiMAX and WiMAX are being replaced with fixed LTE / LTE-A, while historical copper lines (where they exist) are gradually giving way to fibre (FTTH and FTTB), although on a very limited scale at present, with the exception of a few countries.

In the mobile space, the focus will be on 4G infrastructure footprint build-out far more extensive than currently, with 5G hovering on the distant horizon.

Only South Africa has begun to pilot 5G technology, with first commercial services expected to be offered in the second half of 2019. However, wider 5G implementation is also a couple / few years away in that market.

Broadband Adoption will grow

As the use cases for true broadband connectivity grow, so will adoption of broadband across the consumer and business markets in Africa. This will be aided by decreasing prices of broadband connectivity (in time, all of the connectivity will become commoditised) and government-led initiatives aimed at wider broadband availability.

Broader socio-economic development, supported by good GDP growth in many countries in Africa, will also contribute to making broadband services more affordable and increasingly indispensable to sustain this development.
The opportunity for expansion of broadband penetration is there, as evidenced, for instance by the total mobile penetration rate (80% in mid-2018 for Africa) vs. mobile broadband penetration of 53% at the same time.

There is room for growth

Fixed broadband adoption will need to compete with mobile broadband, certainly in the consumer / residential market and in the micro / small company market.

However, certain drivers such as migration to cloud services and accessing online content in large quantities will create a demand for fixed broadband services.

It would also be sensible for operators in Africa to consider moving to a more open access network environment in the fixed wireline space, where wholesale infrastructure operators would host a number of retail service providers on their networks to stimulate service-based competition.