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Africa chokes telecoms growth

Nov 25 2012 18:54 Reuters

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Cape Town - African governments are stifling telecoms development by failing to sell more bandwidth to mobile phone operators, a mistake that could undermine growth in the world's poorest continent.

After an explosion in the use of mobiles for phone calls, consumers in countries such as South Africa, Nigeria and Kenya are increasingly using them to access the internet.

That requires more spectrum, the range of radio waves set aside for cellular networks. But many governments in sub Saharan Africa lack the motivation, know-how and money needed to auction more bandwidth to meet the demand, industry participants and analysts say, which bodes ill for economies.

The World Bank estimates that with every 10% growth in broadband penetration, African economies grow by a corresponding 1.4%.

"The governments do not know how to release it and do not see the importance of prioritising the release of spectrum," said Peter Lyons, a director of spectrum policy at GSMA, a UK-based mobile industry body.       

There is little fixed-line broadband infrastructure to carry the rising data traffic on the continent, so the growing demand for internet connection can only be delivered through mobile networks. More than half of internet activity is on handsets.

Mobile data is expected to grow by 46% annually over the next four years, according to GSMA. It also expects Africa's 35 million 3G connections to grow nearly five-fold to 160 million by 2016.

"Governments and regulators are not prepared for the coming growth because they have been dragging their feet in allocating spectrum to support the mobile data networks," said Lyons.

Many African authorities lack the expertise to run auctions for spectrum licences. The few engineers and lawyers that have telecoms experience are already working for the mobile phone firms and many governments can't afford to hire advisors from abroad.

Even when they are in a position to seek outside help, red tape can get in the way.

In South Africa, the continent's most advanced economy, telecoms regulator Icasa has to get the communications minister's permission to recruit foreign experts. One such request sat on the desk of successive ministers for years.

Icasa says the process of licensing additional spectrum started last year, but was delayed because it had to consider a policy paper from the minister.

"Icasa will continue with its process as soon as the policy direction has been concluded and published," a spokesperson for the regulator said.

Dobek Pater, a telecoms analyst at South Africa-based consultancy Africa Analysis, said another problem is that some governments need to find out who holds what spectrum and whether it can be reallocated from other users, such as the military or analog television.

"There are spectrum constraints that we have been running into in most countries across Africa," Pater said.

Some analysts say many African governments do not fully appreciate the correlation between mobile growth and economic expansion.

GSMA calculates that if the top six markets released new spectrum, it would create $34bn in economic growth between 2015-2020, which could translate into 15 million jobs.

In 2011, the industry accounted for 4.5% of sub-Saharan GDP and contributed $32bn to economies there, including $12bn in tax revenue, GSMA said.

"The mobile networks are not necessarily cows to be milked but a horse to pull the nation forward. And if that horse cannot breathe, it cannot move forward as fast as it could," GSMA's Lyons said. 

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