Today, Africa is one of the fastest growing markets for telecommunications and satellite services. The African satellite market is estimated to have grown in the last few years as much as twice more than the global average of 6-7 percent and looks to accelerate that growth in this new decade.
Just a few years ago, the African continent, home to over a Billion people, was seen as backwater for telecommunications services. Teledensity, a key indicator showing the number of telephones per 100 population were the lowest in the world at less than one percent on average.
Poor regulatory frameworks, political instability and sluggish economic growth due to widespread poverty contributed to Africa’s image as the extreme example of the digital divide.
The situation led to an shortage of satellite capacity for basic services which pushed the price of transponders to astronomical heights of up to US $ 6,000.00 per MHz.
What a difference a few years make. Today, Africa is one of the fastest growing markets for telecommunications and satellite services. The African satellite market is estimated to have grown in the last few years as much as twice more than the global average of 6-7 percent and looks to accelerate that growth in this new decade.
Driving demand for satellite services are growing demand for cellular backhaul, internet connectivity and enterprise and government markets. Africa’s population is concentrated in major cities with very sparsely populated and dispersed rural areas—an ideal environment for satellite solutions. The opportunities are not lost on satellite companies, who are always looking for new and emerging markets and have been slowly expanding into the potentially lucrative African market.
One major shift in African economies is the change in emphasis on building more sustainable economic models based on developing local economies and lessening dependence on foreign aid. "Trade not Aid" is the new mantra in Africa.
One of the first companies to see the potential in the African market was Malaysian satellite operator MEASAT, which moved its MEASAT-1 satellite in 2007 from the crowded South East Asian market to the 460 E location to serve the African market. It later renamed the satellite "Africasat-1" and moved its MEASAT-2 satellite in similar fashion earlier this year and renamed it Africasat-2.
Almost all the major satellite operators have staked their claim on the African continent. An estimated 20 new satellites with coverage in Africa will be launched in the next five years, which should address the current capacity shortage. Among these are Ka-Band systems such as the O3B Networks constellation which aims to serve underdeveloped regions in Africa, Asia and Latin America. Most of the pre-launch contracts announced by O3B in 2009 were aimed at services for African countries such as their deals with Vizada Networks, Intersat Africa and the Congo’s leading ISP, Global Broadband Solution.
Intelsat, the first operator to serve Africa since the late ’60s, announced a new satellite venture called New Dawn Satellite dedicated to the African market which is expected to launch in 2011. The majority of the funding for the New Dawn satellite venture came from local African sources namely the African Development Bank, South Africa’s Nedbank Capital and the Industrial Development Corporation of South Africa.The world’s second largest operator, SES, launched NSS-12 satellite in the 570 E location to service Europe, Africa and the Middle East. SES also signed an agreement with Intersat Africa to bring its ASTRA2Connect satellite broadband internet service to the African continent.
Israel-based satellite operator, Spacecom has also expanded its fleet to cover most of Africa with is Amos-5 satellites which become operational in January 2010. Spacecom’s CEO David Pollack said that they are very optimistic of the potentials of the African satellite market. He said that they are seeing a shift in demand from basic telecommunication services to more sophisticated applications. "With cable starting to be introduced in the major African centers, there is a need for more broadcast distribution throughout Africa and we aim to provide these with our satellites," said Pollack.
Middle East satellite operators Arabsat and Dubai-base Al Yahsat have also announced plans to launch satellites within the next two years with coverage in Africa. Arabsat’s upcoming Badr-5 series satellites will have extensive coverage of Africa. While Al Yahsat’s planned all-Ka-Band satellites will specifically target the provision of broadband services for the Middle East and most of Africa.
This June, the spotlight will be on Africa with the Soccer World Cup to be held in Johannesburg, South Africa. Most of the matches will be broadcast on HDTV and some even in 3D.
With rising incomes and more liberalized societies, Direct-to-Home (DTH)services are poised to take off in Africa. However, this may be a longer term proposition. DTH is already well established in relatively affluent South Africa, but will take a little more time in the rest of Africa.
Demand for satellite services in Africa is being driven by internet access and mobile telephony. There are now over 300 million cellular subscribers in Africa. A study called "Balancing Act’s African Satellite Markets" revealed that 29 out of 55 African countries and territories get more than 80% of their total international internet bandwidth by satellite, and many fixed and mobile operators in the region are also dependent on satellite for their domestic communications.
Growth in the market for cellular backhaul services provided by satellite is being driven as a result of the rapid roll-out by mobile operators of coverage to secondary urban and rural areas beyond the reach of terrestrial networks. Mobile operators often have to build transmission networks spanning large distances over challenging terrain in order to reach major towns or cities, and in addition often also have to build their own transmission and associated infrastructure such as power and roads to service base stations.
Base stations are often deployed which connected by VSAT, then as the microwave network being built by the operator catches up, VSATs are then moved to new base stations and so on in a leap-frog fashion. VSAT is used to connect base stations in remote or hard to reach locations, where satellite-based backhaul remains the most practical and economically feasible means of connecting cell sites.
VSATs in Africa now connect enterprises and several vertical markets such as oil and gas, and applications such as distance learning, telemedicine, emergency management, internet access and e-government applications.
The Global VSAT Forum (GVF) is closely supporting the ITU’s "Connect Africa" Initiativewhich aims to double the availability of VSAT earth station terminals by 2012 from its 2008 levels. GVF Secretary-General David Hartshorn said that progress has been made in terms of liberalization, transparency and a commitment to satellite regulatory harmonization in the region and is cautiously optimistic that Africa will reach the goal set by the ITU.
Africa has indeed made great progress in the last 10 years. In 2000, there were only 11 million cellular subscribers in the region. That number is now over 300 million. However, this only reaches about 33 percent of the population-still far below the world’s average cellular penetration rates which is over 60 percent in most developed countries. In the case of broadband internet subscribers the situation is even more stark-there are only 40 million internet subscribers today in Africa—a continent with over 1 Billion people. Only a very small percentage of internet subscribers access what would be considered broadband connections.
The influx of new satellites serving the African market will help meet the growing demands of the region and address the Digital Divide. However, more still needs to be done in liberalizing the markets and implementing rational regulatory frameworks in many countries. "Indeed, the digital divide between the African region and the rest of the world is much more pronounced than the divide within the region, with very few countries reaching ICT levels comparable to global averages," according to an recent ITU report.
The ITU research shows that African countries are facing a number of challenges in increasing ICT levels. These include the lack of full liberalization of markets and the limited availability of infrastructure, such as shortage of international Internet bandwidth. "In addition, prices for ICT services remain very high compared to income levels," according to the report.
There are obviously many regulatory, economic and even social and political issues that need to be addressed more aggressively in this new decade in order for Africa to meet its full potential. One thing is certain, though—after the dramatic progress made by Africa in the last ten years in terms of broadening access to telecommunications services, the demand for these types of services as in many other regions will only continue to rise.
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Virgil Labrador is the Editor-in-Chief of Satellite Markets and Research based in Los Angeles, California. He is the author of two books on the satellite industry and has been covering the industry for various publications since 1998. Before that he worked in various capacities in the industry, including a stint as marketing director for the Asia Broadcast Center, a full-service teleport based in Singapore. He can be reached at virgil@satellitemarkets.com
