Africa: Demand High; Obstacles Remain - Page 1 of 4

Satellite-based services support everything from pay TV and cellular phone services to robust broadband and niche VSAT markets throughout Africa. While the market is growing, Africa remains a continent where even more satellite connectivity is needed urgently.

The most important goals for the Regional African Satellite Communications Organization (RASCOM) include obtaining “coverage of the entire African continent, including its islands, with one satellite; creating connectivity among African countries; rural integration and price competitiveness; and addressing the issue of affordability,” says Jones Killimbe, director general of the organization.
But while demand for satellite services continues to grow throughout Africa, many obstacles remain for those who wish to bring additional services to Africa. Satellite networking suffers from both a shortage of capacity and the absence of a single satellite that can cover the entire continent. Many African satellite service providers describe prices as too high in an increasingly competitive environment, and while the regulatory approval process is improving, it remains too slow in many countries.
African entrepreneurs who want to start new satellite-related businesses also face difficulty in gaining access to optimistic international financing institutions, Killimbe says. “While we are witnessing an exponential growth in terms of customer numbers, international financial institutions are still pessimistic about the African market,” he says.
Satellite bandwidth also remains far too expensive for the average African business or private sector to afford, says Abdul Bakhrani, London-based technical director at Intersat Africa Ltd., which offers trunking services to various Internet service providers and voice over Internet protocol (VoIP) service providers throughout Africa and the Middle East. Bakhrani wonders how service with speeds of just 512 kilobits per second can cost $10 per month in the West, while the same bandwidth will easily cost 50 times more in Africa. “If you want the market to explode, then bandwidth costs need to be addressed. If they were reduced, then there is a colossal market in Africa that is waiting to embrace satellite bandwidth,” he says
Intersat, which is headquartered in Nairobi, is among the companies trying to alleviate this problem, participating in the e-school program developed by New Partnership for Africa’s Development Africa along with Cisco, Microsoft and AMD. The program, launched in 2003, aims to provide computers and Internet access to schools throughout Africa and provides C- and Ku-band services that include SkyDSL and SkyNet provided via an iDirect VSAT platform using a hub in Washington.
But the private sector can do only so much to cut prices, which also are driven up by import duties can easily add 35 percent to the price of satellite equipment. “These absurd taxes discourage the growth of African businesses who find it difficult to justify the exorbitant costs of implementing satellite bandwidth.”
While cost must be reduced, Bakhrani also describes regulations for VSAT licenses in African countries as still quite rigid and difficult to acquire. “In those countries where you can get VSAT licenses, the process can be extremely tedious and lengthy; a lot of influence coupled with various informal methods are still required to get the licenses approved,” he says. “Licensing which is restrictive is not helping to overcome the digital divide. Licenses which do not permit VoIP telephone calls from Internet cafes limit the viability of those businesses because they cannot survive when the only business they can do is Web browsing at $1 an hour. Disruptive technologies like Skype are literally re-writing the rules for telephony — not just in Africa, but across the world.”