Satellite Access in Africa: The Next ‘Big’ Thing

By David Hartshorn

Anyone who has traversed Africa – whether by plane, train or beast of burden – knows the continent is vast. Those who recently have traveled there in the pursuit of satellite business know Africa’s market potential also is vast. More than ever, satellite companies – manufacturers, system integrators and bandwidth providers — are profiting from African demand for cost-effective communications.

A good example was provided recently during the COMSYS VSAT 2003 conference in London, where an impassioned presentation was given by Sandeep Jayaswal, managing director of Nigeria’s Direct On PC. The business opportunities in Africa are indicated by the growth of Direct On PC during the last 18 months. The company has spurted from five employees with 9 MHz of space segment, providing 4 Mbps of VSAT-based Internet backbone service in Lagos, to 100 employees with a presence in 85 cities, and 1,000 satellite-service customers. Those customers include Texaco-Chevron, Nicon Hilton, Abuja Sheraton, Michelin, Alan Dick & Co., and Con Oil. In addition, dozens of cyber cafes use the company’s service and are able to pay cash for connectivity.

Breaking Barriers

This rapid growth of Nigeria’s Direct On PC does not suggest that Africa’s satellite business could not be bigger or easier to transact. Indeed, operational “difficulties” endured by the company in maintaining a remote site led to the death of one of its engineers. In addition, market access remains woefully restricted — particularly in west and central Africa. A further barrier is that regulatory requirements too often are not in place to facilitate the deployment of new satellite services in the region.

Access to VSATs, for example, is prohibited outright in some African countries. Other nations charge hefty licensing fees. For Internet services, up to 35 percent of ISP expenditures go to VSAT license fees and monthly levies. Licensing fees in Africa can run as high as $10,000 a year per terminal for a 128 Kbps link. Policies for low-cost satellite Internet access are not clear in many nations. The recent surge in use of voice-over-IP by consumers and the continued decline in state-owned telecom carrier revenue streams have complicated matters. Government policies often don’t keep up with technological developments, and many countries are still protecting their monopoly national carriers at the expense of affordable and universally accessible services.

Such revelations are not new. What is new is the increasing resolve with which the private and public sectors are moving to overcome satellite market-access and regulatory problems. The most recent expression of this resolve was the launch of a program called Catalyzing Access to ICT in Africa (CATIA). The program aims to enable Africans to benefit from the opportunities offered by satellite and other information and communication technologies (ICTs).

In support of CATIA, the Global VSAT Forum (GVF) was awarded a contract this month to lead a research program examining the licensing and use of VSATs for African economic development. The team that put together the research program includes KPMG – the project coordinator – as well as the U.K. Department for International Development (DFID), Canada’s International Development Research Centre (IDRC) and others working in this area. The research program has two primary objectives:

• End prohibitions against private use of VSAT solutions; and
• Develop a regional consensus and an information system that supports public access to regulatory information, while promoting blanket licensing and mutual recognition of type- approvals for Ku- and Ka-band VSAT terminals to provide Internet access.

The program builds on existing work in this area, such as the Global VSAT Forum’s regulatory database and lobbying efforts through inter-governmental groups. Thus far, the program is beginning to fill gaps in research and analysis about the state of VSAT regulatory frameworks, end-user applications, cost structures and technical issues.

The research program would:

• Investigate the actual and potential application of VSAT technology for social and economic development, particularly for health, education and business in Africa;
• Analyze licensing, policy and regulatory issues relevant to VSATs, in particular, and to wireless technology, in general. This analysis includes taxation of VSAT equipment;
• Investigate available bandwidth at global, regional and local levels, patterns of bandwidth use, and ownership of VSAT technology in Africa;
• Explore technical and human resources for deploying VSAT services in Africa; and
• Examine commercial aspects of VSAT technology, including costs.

Once the report has been finalized, it will be made publicly available. Also part of the CATIA program is the creation of a one-stop-shop so that satellite service providers can have a single point of contact for information about licensing requirements across the continent.

Is reform likely to have any practical impact? According to research by DTT Consulting, Africa accounted for less than 10 percent of the world market for ISP links in 1998. Two years later, no less than 47 percent of African ISPs were linked via satellite. Only Latin America — with 66 percent – was higher.

Mass deployment of high bandwidth VSATs will have significant impact on small businesses that currently are constrained by slow and sometimes unreliable dial-up connections. The availability of uplink bandwidth of about 100 Kbps and downlink of 400 Kbps, combined with a reduced licensing fee and terminal and monthly charges, will open a vast array of opportunities for institutions to make their bandwidth intensive development applications available to users. Large organizations already are exploring committed information rate services at up to 2Mbps to create virtual private networks. Ninety percent of Africa’s private sector consists of small institutions that could greatly benefit from sharing VSAT links among a group of enterprises.

Certainly, much regulatory work remains to be done. But the pace of deregulation at the sub-regional level is accelerating. Satellite network solutions are being implemented at an unprecedented rate, and the stage has been set for more concerted action at the pan-African level.

David Hartshorn is general secretary of the U.K.-based Global VSAT Forum. He can be reached by phone, +44 1727 884739, or by e-mail, [email protected].