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When it comes to ICTs, Government's role is to create and sustain a conducive environment through regulation and legislation.

In addition, a sound government strategy should also consider making strategic investments (aka stimulus plans in the financial and economics world), promoting home grown ICT private sector and addressing appropriate skills development in the education and training sector.

Lastly, any government strategy or intervention should recognize and address the critical facets of the ICT eco-system which I would roughly categorize as infrastructure, content and applications and services.

Government ICT Seriousness Ranking

This leads me then to craft my own ICT "seriousness" criteria (if you want a more scientific set of criteria, then consider the Networked Readiness Index or other related indices) we can use to roughly and unscientifically judge how "serious" a government is about ICTs:

1. Enabling regulatory environment and legislation that takes into consideration all the major facets of the ICT eco-system
2. Clear strategic investments that address all facets of the ICT eco-system
3. promoting home grown ICT sector
4. addressing skills development and relevance of the education system.

How do African countries measure up against these ICT seriousness criteria?

Open competition - AccessKenya Fibre ad in Nairobi Kenya

A cursory review would reveal that most (but certainly not all) African countries have taken steps to enact conducive ICT legislation and provide an enabling ICT regulatory regime, promoting open and somewhat fair competition and private sector participation. Witness the mobile phone growth phenomenon in Africa, liberal telecommunication licensing regimes or the fact that many countries are exempting taxes on ICT hardware and software.

Many countries in Africa are also making some strategic investments in infrastructure in the form of national backbone networks partly thanks to Chinese money. But few are actually taking active steps to promote and invest in local content, applications and services even though the rhetoric at major ICT conferences often centers on promoting local content and languages so as to avoid "digital neo-colonization".

Even fewer are actively promoting the local ICT private sector as far as I know. And while ICT skills development is increasingly on the lips of many African education officials, few countries are walking the talk.

Kenya is distinguishing its self by "walking the talk" on many of these issues.

Minister Kenyatta putting ICT in the budget

Take infrastructure investments- not only has the country invested in a national fiber backbone, it went one further with its own submarine fiber (TEAMS). Talk of promoting the local ICT private sector and consider that the government is subsidizing satellite connectivity for the BPO sector until prices come down with fiber roll out and providing other subsidies for office space and training. There are challenges to be sure but at least the government is taking active measures.

The recent announcement by the government to stimulate the local content and application development is most likely ground breaking in the region.

On the skills development front, the government is taking active measures: the 300 computers for schools in every Kenyan constituency in the recent budget, the one million laptops programme initially targeting university students and various skills development programmes underway in the country.

The government is also moving to tackle "anti-competition" issues in the ICT sector in a bid to open up the sector for more players. A recent comparative review of ICT uptake in Kenya and Tanzania in balancing-act Africa also reveals quite clearly why Kenya is ahead of its peers.

eGovernment investment

One factor, not included in my seriousness criteria above, by which I usually judge a countries' seriousness about ICT is the extent to which the government itself is adopting ICTs- aka e-government. After all, charity should begin at home.

I believe that Kenya is taking e-government seriously:

• All government ministries have fairly well staffed ICT departments courtesy of the e-government directorate in the office of the president set up to coordinate e-government issues
• Local area networks have been upgraded
• Most ministries now have website which are regularly updated
• Key services are increasingly being digitized
• Mobile phone services are being integrated into the e-government strategy
• Even more importantly, concrete investment in the necessary infrastructure and applications is being and continues to be made.

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Other notable ICT aware countries

Rolling out fiber networks in Rwanda

If we look around sub-Saharan African, another country in the region that would score quite highly on these "seriousness" criteria would be Rwanda which shouldn't be surprising since its development strategy hinges on ICTs.

To be fair, other countries in Africa outside North Africa, Mauritius and South Africa are making some strides. The other East African Community members Uganda and Tanzania have liberalized their telecommunications sectors and investments in national high speed backbones are underway in both countries.

But active measures to promote local content and services or even local private sector and measures to address skills development seem to be limited. The Nigerian government is also beginning to make the right noises and to put its money where its mouth is. So is Mozambique and Senegal.

I get the sense that the many other countries, including the other southern African countries, do say the right things but have yet to show serious commitments to ICTs according to my seriousness criteria above. But then again, every country has it own development strategy and ICTs (except for the mobile phone sub sector) are not necessarily a priority for many.

Evidence of this can be gleamed by perusing the Poverty Reduction Strategy Papers (PRSPs) for the least developed African countries which include most sub Saharan African countries. While many of the PRSPs make some mention of "developing the ICT sector" and/or recognize the ICT sector as a "growth" sector, only a handful including those for Nigeria, Kenya, Rwanda and Mozambique and to some extent Ghana, Tanzania, Malawi and Ethiopia seem to pay particular emphasis to ICTs in their core strategies.

One hopes that the trend towards greater integration of Africa means that countries are watching out for what their peers are doing right (and wrong) and that over the short term (1-5 years), there will be dramatic positive developments in the ICT sphere across Africa.

It’s been about 12 months since Africa was the only continent without submarine fiber telecommunication links to the rest of the world on all of its coasts. The east coast did not have any fiber links while the west coast had only one fiber link, the (in)famous SAT3 cable.

Satellite was slow and expensive

There were a couple of fiber links in North Africa. Go back 3 to 5 years and even fiber inside African countries outside a few countries in Southern and North Africa was scarce. The only connection to the outside world for many African countries was satellite.

Pretty much anyone who used the Internet regularly knew that reliance on satellite connectivity was the cause of high prices for internet access and telephony for countries relying either exclusively or mainly on satellite connectivity. On average, accessing the Internet cost Africans 50-100 times more than what it cost consumers in Europe, Asia and North America.

The hidden connectivity barrier

What wasn’t as widely known was that local (in-country) connectivity was as expensive if not more expensive than international connectivity over satellite in most countries. If you have tried renting a “leased line” or dedicated circuit in-country in Africa then you know that the prices were astronomical and dependent on distance from the capital city.

The intra-country connectivity is important because connecting to the internet or making international phone calls involves three important network elements: the connection from the user to the local service provider’s node or office (the “local loop” or “last mile”), the national or regional high speed backbone that aggregates traffic from all the providers and users and the international link which connects to the outside world.

Then a bandwidth bonanza

The situation has changed quite dramatically in the last one to three years. First off, the east coast of Africa now boasts three, yes three cables (Seacom, EASSY and TEAMS) in just 12 months! The West African coast that has long had the SAT3 cable, infamous for its sky high prices, now has another four cables in the process of being laid or activated (MainOne, GLO1, ACE and WACS). Most of these new cables will be active in 2011.

The excitement in East Africa with the landing of these fiber cables a few months ago was incredible. Telecom companies involved in the fiber roll out were promising “affordable” high speed bandwidth with prices pegged to drop by 90%. The East African operators, governments and the international development funding agencies vowed that the new cables would not go the way of the monopolistic SAT3 cable with its super expensive prices. Optimism was high, the Promised Land had arrived.

Local telecommunication companies and governments have been investing heavily in in-country fiber network backbones; the latter with soft Chinese money. Most African countries now boast of a fiber backbone network or one on the way in a year or so.

Yet prices still high

Despite all the initial excitement that greeted the landing or announcement of new cables and backbone networks in Africa, disappointment is setting in. Prices for Internet access have gone down by a factor of 2 rather than 10 as expected. Indeed prices are still high in most of Africa outside a few North Africa countries and others like Senegal. South Africa is a most puzzling case where prices are still higher than even East Africa with its new found fiber.

So with most African countries now boasting of fiber in the backbone and fiber available on all the African coasts, why are prices still high? Why do countries like South Africa and Namibia with world class intra-country fiber networks and good external connectivity (at least for South Africa) still have some of the highest connectivity costs in Africa? Why has all the fanfare and promises of low connectivity costs in East Africa not materialized with two fiber cables already operational and a third on the way?

Two reasons for the high prices

The main reason advanced by most operators is that fiber investment costs are very high and prices have to be high in order to recoup their investments. This is the reason given by East African operators in places like Kenya and the SAT3 operators in West Africa. Others point to a high demand-low supply as the cause.

In other places, like South Africa and Namibia, prices are high simply because of a monopoly or duopoly. Further examination reveals at least two other reasons for these high prices: the largest fiber owners in-country, have until recently, not been allowed to sell or provide services and most importantly, African service providers are still beset with archaic business models and anti-customer mindset! Let’s examine these two factors in some detail.

Reason 1: Hamstrung alternative infrastructure providers

As we saw above, intra-country connectivity costs are high and contribute to the overall high cost of Internet access. With fiber now available in-country in many countries, one should expect that prices would come down. The problem is that those with the largest amount of fiber are not allowed to sell or offer services!

You may not know but the largest fiber base in most African countries is held by the electricity companies and in some cases by oil and gas pipeline companies or rail and train operators. These companies need and laid fiber for monitoring and control of their networks. Until very recently, these electricity companies (dubbed “alternative infrastructure providers”) were not allowed to sell, lease or operate services on their existing fiber in many countries by the telecommunications regulators.

The situation is changing, rapidly in some cases, with electricity companies in Uganda, Kenya, Zambia and other countries now allowed to sell their existing fiber capacity mainly to telecommunications companies. The second National Operator in South Africa benefited from purchasing and acquiring fiber from these alternative infrastructure operators. As this fairly large fiber capacity has been brought into play, intra-country capacity has been greatly boosted and prices have come down.

African governments and regulators need to keep up with this deregulation trend and allow all the existing fiber in the hands of non-telecommunication entities to be made available for telecommunications services. Aside from making more capacity available, this new fiber also increases competition thus further lowering prices.

Reason 2: Archaic business model and mindsets

The second factor which I consider to be even more important is what I refer to as an archaic business model and business mindset. Telecommunication companies such as Internet Service Providers (ISPs) in Africa overwhelmingly rely on a small base of customers that they charge high prices. These customers (banks, large companies, multi-nationals, -collectively dubbed the “corporates,” large educational institutions, government agencies, development agencies and NGOs and a tiny number of high net worth individuals) need connectivity and are willing to pay these high prices.

This mindset still pervades the ISPs and thats why prices are still high as they “need to recoup their investments” from a small customer base. But this business model is flawed: there are millions of individual customers and small business that also need connectivity but cannot afford to pay the current high prices.

The success of mobile phone companies has taught us (and any ISP that is awake) that communication services are not the preserve of the rich and powerful. Unfortunately, the typical African ISP is unable to shift to a “large customer base, low margins” business model: drop the prices and attract a lot more customers. This is the main cause of recurring high prices.

Glo 1 landing in Nigeria

Mobile phone companies to the rescue

Fortunately for the consumer, the mobile phone companies with their understanding and masterly of the large-customer-base-low-margins business are getting into the act. These mobile phone companies understand that there is a killing to be made in providing data and internet services.

They are investing in fiber networks, purchasing most of the available capacity from alternative infrastructure providers like electricity companies and they have a tried and test last mile solution. By overlaying their 3G networks with fiber networks, they are capable of providing decent connectivity services at an affordable price.

The traditional ISPs and telecommunication companies in Africa are in for a rude shock if they stick to their existing business models. I would dare say that they will soon be extinct. And that’s a good thing too for they surely deserve what is coming to them!

And we the customers can take solace from the fact that we have cheaper internet connectivity coming to us soon. Now African governments and regulators only have to ensure that the mobile phone companies do not become new monopolies and forget the lessons learned on their meteoritic rise.

Alex Twinomugisha originally published Why Are African Internet Access Prices Still High? on Africa Business Source

It’s that time of the year when any expert worth their salt makes some predictions for the New Year. I too couldn’t resist a peek into my crystal ball and here I share what I believe will be the major ICT trends and some of the countries to watch this year. In general, 2010 promises to be an exciting and important year for ICTs in Africa despite the fact that the global financial situation is still uncertain.

Mobile commerce

First off, after hugely successful trials and implementations of m-banking in Kenya, Uganda, Tanzania, Ghana and South Africa in 2009, this year is set to witness m-banking implementations in almost every African country. As m-banking grows, we should expect to see m-commerce in general take off quite rapidly with buying and selling of goods and services on mobile platforms becoming quite wide spread. I suspect that this will impact the business and economic landscape quite dramatically in many countries creating new jobs, innovations and investments.

M-commerce will grow along with e-commerce fueled in part by substantial deployments of 3G broadband services by mobile telephone operators. These 3G deployments coupled with significant terrestrial and submarine fiber deployments underway and/or planned for commissioning in 2010 all over the continent will see the number of broadband connections more than triple this year. African governments will meanwhile reap billions of dollars as they sell 3G licenses to existing and new entrants into the telecommunications sector.

Mobile phone options

Gather Data mHealth solution

Competition among the mobile service providers in many countries is set to heat up considerably, driven by two major factors: an increase in the number of providers in many countries as governments move to issue more licenses and the adoption of number portability. A few studies conducted in countries like Uganda fairly recently suggest that users are locked into particular providers, despite poor service, because they would not like to change their phone number which is currently the case if they moved to another service provider.

With number portability, these users will be able to migrate to rival or alternate service providers with their existing telephone numbers. The introduction of number portability is therefore likely to threaten the bigger players while benefiting smaller players and new entrants. But analysts who follow these things agree that the bigger players will take steps to retain their customers. Either way, consumers will be the winners as quality of service is likely to improve and costs will continue to fall.

It’s also likely that we shall see some major mergers and acquisitions in the mobile and fixed telecoms industry as major global players in this field angle to take a slice of the growing African telecommunications market. The increased number of broadband connections and lower prices will also lead to increased sales of smart phones and computers. I suspect that the major computer manufacturers will release low priced computers targeted at the African market. These are likely to be a cross between netbook type PCs and smart phones.

More bandwidth brings opportunities

As access to the internet improves and costs drop dramatically due to increased competition, the nascent Business Process Outsourcing (BPO) sector in countries like Kenya and Senegal is likely to take off. Governments are also trying to stimulate this sector with various policy and regulatory sweeteners and stimuli thus making it a sector to watch carefully in 2010.

As intra-country connectivity improves, there is going to be a greater demand for local content in local languages and locally designed applications that fit the context of the different countries. Expect to see a dramatic growth of the software industry in the big markets targeting mobile phone applications. Those who have lamented the lack of African content might be in for a pleasant surprise starting this year.

Government regulation

Can't wait to know you

This year is likely to see some governments move to gain tighter control of and regulate ICT services especially as it becomes clearer that ICTs empower citizens to access information almost instantly, increase demand for accountability, make it harder to hide or gloss over human rights abuses, promote freedom of speech and strengthen political organization. Most countries taking these steps to muzzle or regulate ICT services will do so in the name of national security or fighting terrorism.

This desire to control ICT services will see a big push for SIM card registration (at the moment, one doesn’t need to identify themselves to purchase mobile phone SIM cards in most African countries) which on its own has merits, enactment of “wire-tapping” and other laws restricting broadcast media and in some cases increased censorship of internet, mobile and traditional broadcast content. This is likely to be a year where democracy and human rights activities will join hands with ICT companies to push back against what they will see as government interference in the market.

However, governments will be caught between a rock and a hard place: on the one hand, they would like to exercise control and on the other hand, the ICT sector is becoming a key sector of the economy accounting for a growing and significant portion of GDP and tax revenues as a result of deregulation, liberalization and reduced government control. This is therefore a year where governments will play a high-wire act to ensure that they don’t kill the goose that lays the golden egg while angling to gain more control.

Countries to watch

Kenya
Kenya is my number one country to watch this year because of four important factors: its early and leading adoption of m-commerce, large investments in terrestrial and submarine fibre, the government’s strategy to grow the BPO sector and lastly the position of Nairobi as the “unofficial” business capital of the East African Community’s common market. These four factors are likely to lead to increased ICT investment flows into Kenya, decent growth in the ICT sector and a shakeup in the economy as m-commerce and e-commerce take root.

Rwanda
Rwanda is probably the only developing country that has staked its future on ICTs with an ICT-led economic development strategy. Rwanda remains among my top countries to watch on the ICT scene in Africa. The government has done a few things right such as promoting an investor-attractive environment, emphasizing and supporting ICT, Science and Technology education and investing in broadband infrastructure. Rwanda also has one of the most impressive ICT public awareness campaigns, and investment promotion regimes in place.

While in the past, there was a difference between government rhetoric and reality on the ground mainly due to limited human capacity and cautious moves from investors still associating the country with the Genocide, expect that gap to narrow as all of the government policies and interventions in infrastructure, science and technology education, investment policy and regulatory reforms in the last 5-10 years begin to bear fruit. It is not far stretched to expect to see local, regional and international ICT companies set up shop in Rwanda as a base to exploit the East African Common Market and Kigali take on the Silicon Valley status of Africa.

Ethiopia
Still in East Africa, Ethiopia is another country worth watching. Ethiopia still retains state control on the telecommunications sector with a monopoly state-owned telecommunications company. The government has always argued that it preferred to follow a slow and carefully thought out deregulation path instead of rushing to implement a free and open market. This may be the year when we see concrete moves to open up this space. If this happened, Ethiopia with its 80 million plus population would herald a gold rush for ICT and especially telecommunication companies into the country.

Look to Nigeria for change

Nigeria
Nigeria, often touted to as the “power house” of Africa, has in the last few years shocked the continent with an aggressive drive by its movie, banking and insurance industry to expand to the rest of the continent.

Already, Nigerian movies are by many accounts more popular than anything Hollywood could throw up in Africa and this is a trend that will continue to grow. Expect Nigerian ICT companies to begin to play a more prominent role in Africa with some of their top ICT companies already spreading their tentacles into the bigger markets in Africa. It is not too far stretched to imagine that 2010 may herald the emergence of an African ICT giant from Nigeria.

On the national scene, there are at least two submarine cables expected to land off the coast of Nigeria this year and massive fibre deployments underway in the country by the major telecommunication companies. The increased connectivity and lower prices are likely to give a tremendous boost to the nascent but impressive e-commerce sector in Nigeria.

South Africa
South Africa has made massive investments in ICT infrastructure in preparation for the World Cup which it hosts in June of this year. This investment will leave the country with one of the most developed ICT infrastructures among emerging economies in the world. This investment is likely to give the ICT sector a good boost.

Recent news coming of South Africa where foreign investments in the telecommunications sector have been blocked because of a government policy on foreign ownership restrictions in the telecommunications sector is likely to pit South Africa against other countries like Nigeria whose companies are seeking to expand into the rest of the continent. This government policy is also likely to place South African telecommunication companies that command a significant share of the sector in many other countries in Africa in an awkward place especially if the other countries enact retaliatory policies.

Senegal
Lastly, Senegal is a country that has made tremendous gains in the ICT industry in the last few years. Sonatel, the former state owned telecommunications companies now majority owned by France Telecom represents a rare breed of a former state-owned telecom company that has managed to transform itself into a viable and aggressive market player. Senegal has also positioned itself as the ICT Hub for West Africa with Sonatel building infrastructure into all its neighbours. This year, expect to see Senegal secure its position as the ICT Hub of French-speaking West Africa and a growth of the nascent BPO sector.

Alex Twinomugisha's Africa ICT Trends and Countries to Watch in 2010 is republished here with his permission