JOHANNESBURG, South Africa-High on the agenda of issues raised by African ministers at Africa Telecom ’98 held here in May was using satellite technology for boosting African economies and low telephone-penetration rates.
Africa presents an ideal candidate for Mobile Satellite Services (MSS). The continent is home to over 700 million people, a figure expected to more than double by 2025 to 1.5 billion. Only 35 percent of the population resides in urban areas, leaving 455 million inhabitants in rural areas. Wireline penetration, according to Pyramid Research, averages approximately 0.4 lines per 100 inhabitants in Sub-Saharan Africa.
Promising affordable rates and ease of deployment, MSS operators have begun to target the continent, positioning themselves by creating alliances with governments and PTTs, establishing local distribution networks and developing marketing strategies.
“MSS is targeting two primary audiences in Africa,” said Jilani Zeribi, research associate with Pyramid Research in the United States. “It is marketed as a high-end service. Operators are aiming their services at affluent subscribers willing to pay high premiums for connectivity across the world,” he said. “In the same vein, wealthy industries that do not have access to advanced data and networking facilities-such as mining and oil exploration-are potential candidates for the satellite-based system.
“Initially limited to high-profile operators and equipment vendors with deep pockets, the list of satellite systems expected to cut over service in the next five to seven years has grown substantially,” said Zeribi.
In the Middle East, for example, the United Arab Emirates has launched the Thuraya Satellite Telecommunications Co. to target the Arab world, as well as parts of Europe and India, with fixed and mobile satellite services.
The second audience for satellite services will be no-frills basic service subscribers. A number of operators tout themselves as the ideal solution provider for rural telephony, capable of penetrating the most isolated regions of the continent at a fraction of the cost of traditional solutions.
One of the many drawbacks foreseen by African PTTs and new operators in deploying satellite services for that type of customer market is the cost of services. Other potential problems are capacity constraints, regulatory restrictions and high handset casts.
Globalstar L.P., an MSS company that explicitly has indicated its will target underserved markets, plans to charge between US$0.25 and $0.35 wholesale for airtime. Due to profit margins, interconnect and service provider fees, Globalstar estimates the customer will pay US$0.65 per minute for domestic calls and approximately US$1.65 per minute for international calls.
Motorola Inc.’s Iridium L.L.C., which markets itself primarily as a high-end global mobility service provider, is expected to charge US$3 a minute.
One solution to high tariffs is for governments to subsidize the cost of rural telephony by creating a Universal Service Fund based on fees levied from the operators in the telecom sector. This solution already has been explored by the governments of Ivory Coast and South Africa.
“The development of digital networks in Sub-Saharan Africa raises a number of important social issues,” said Thomas E. Jacquette, vice president of Gemini Consulting, the Netherlands. “The most significant is how to provide access to a wide variety of people regardless of income, education or geography.
“We’ve already seen how telecom operators have traditionally favored more affluent populations. It would be a pity to see digital access become the prerogative of the privileged few just as countries are making large commitments to increase teledensities in underdeveloped areas.”
Terrestrial digital wireless technologies, however, are seen by many African countries as the immediate, least expensive solution to surpass the traditional copper development process and reach wider audiences. For example, cellular telephony networks currently operate in more than 19 Sub-Saharan African countries, and growth has increased in a number of markets since digital GSM (Global System for Mobile communications) technologies were introduced.
South Africa’s two GSM networks, Vodacom and MTN with 1.5 million subscribers between them, account for approximately 70 percent of the cellular traffic in Africa.
Meanwhile, basic services provider Telkom S.A. is pioneering the use of DECT (Digital Enhanced Cordless Telecommunications) technologies in South Africa to deploy telephony in communities that historically had little or no access to such services.
Said Helmut Schroder, Telkom’s program manager for Wireless Local Loop (WLL) implementation: “South Africa has an advanced network infrastructure and with the high traffic density required is therefore ideally suited for a radio-based digital solution which is relatively cheaper than a satellite-based solution.
“A higher bandwidth would require a greater number of satellites and therefore increase costs. Terrestrial-based wireless WLL solutions are ideal for fulfilling Universal Service accessibility and for fixed subscribers in either the residential or business environment.
“However, choosing exclusively one technology never provides the optimum solution.” Schroder did say that if Telkom did not meet is roll-out plans in accordance with its license agreement by the time its exclusivity period ends, it might be forced to look at other technologies such as satellite to fulfill its obligations.
Professor Famirai Takawira from the University of Natal in South Africa stresses that WLL systems in Africa have had the opportunity to mature as technologies, more so than MSS, where only a few systems currently are functional. He said he believes each African country should choose the kind of technology that would best suit its level of development and backbone infrastructure.
Takawira gave the example of Uganda, which does not have much backbone, but has the traffic density: “It makes sense to use MSS in this case.”
U.S.-based Qualcomm Inc., which supplies turnkey terrestrial-based CDMA (Code Division Multiple Access) WLL and mobile solutions and is a founding member of the Globalstar consortium, believes it is not really a matter of choosing exclusively one technology over another because satellite and terrestrial-based systems complement each other.
Said Michelle French, marketing manager for Qualcomm: “With CDMA technology, cellular and PCS (Personal Communications Services) operators can provide both mobile and terrestrial-based WLL services. Globalstar utilizes phones that register on AMPS (Advanced Mobile Phone Service) or CDMA terrestrial networks where such service is not available, and then (can) switch over to satellite mode where no terrestrial service is available.”
She added that the type of service to be provided may depend on current regulatory or licensing situations in a specific country. In areas where the government is trying to promote a drastic increase in teledensity, as is required in many African nations, the state may deregulate and/or privatize the local/basic service to allow competition and promote the expansion of the telecommunications network through terrestrial-based WLL systems.
She said that in Nigeria, for example, Qualcomm is deploying a CDMA WLL system in Lagos that will serve both business and residential users. “In this scenario, the operator is focused on alleviating pent-up demand for basic telephone services…
“In the Democratic Republic of Congo, we are deploying a CDMA WLL system to cover large portions of the country,” she continued. “In the Congo, teledensity is very low and the operator is striving to provide service to cover many of the 46 million people in the country.”
star is one of the operators pushing the use of its network on a larger scale for rural telephony. Terrestrial ope
rators can build a network in a remote area using copper or WLL, and a satellite gateway can be installed to provide the hop to the national network, similar to Very Small Aperture Terminal (VSAT)-based solutions employed in other regions of the world.
It remains to be seen, however, whether such a scheme for rural areas will be profitable enough to drive investments. Unless competition and economies of scale lower MSS tariffs to make service provision competitive with other terrestrial WLL technologies, the long-term use of MSS for rural areas will be relegated to exceptional cases in extremely remote areas.