May III 2008

Fredric Morris
Editor-In-Chief
Connect-World

Africa – growing up, hard answers to hard problems

Africa is the birthplace of humanity, but in too many ways it is an infant that never grew up. There are many reasons for this, many sad reasons, historical reasons, geographical and ecological reasons, diseases, disorganisation, colonisation and a long list of accidental occurrences that have impeded Africa’s development. Much of Africa’s history has worked against its development. Today, there is a ray of hope, if we can only catch it.

It has been often said, so often it is almost a cliché, that information and communications technology (ICT) can be the catalyst that puts the continent on the path of meaningful development. The continent has made important strides in recent years; many regions have made great progress, but in others far too little has been accomplished. Serious health problems abound, the economic infrastructure of much of the continent is weak, practically inexistent in some parts, governments grope in the dark to deal with massive problems, food production in some regions is so precarious that fights break out over land and tribal rivalries, driven by despair, become genocidal wars.

In contrast with China, India and South Asia where the World Bank reports a dramatically decreasing incidence of extreme poverty (survival on less than US$1 per day), extreme poverty is growing in Sub-Saharan Africa. Obviously, ICTs cannot transform the world for these people overnight, but its use can help improve agricultural development, support health programmes that fight disease, improve the efficiency of governments, shore up small businesses, greatly improve access to top-grade education and information and put the continent on the path towards economic growth through effective integration with the global economy.

Earlier this month (May 12-15) in Cairo, Egypt, the International Telecommunications Union, the ITU, held its ITU Telecom Africa 2008 event. The ITU, the arm of the United Nations dedicated to ICT, organised the World Summit on the Information Society (WSIS) and is responsible for the ITU Telecom series of regional and global conferences and exhibitions. According to the ITU’s Secretary-General, Dr Hamadoun Touré, “…there needs to be an organisation that safeguards everyone’s fundamental right to communicate. ITU is that organisation.”

President Hosni Mubarak of Egypt inaugurated TELECOM AFRICA 2008, a forum for high-level debate among regional leaders of government and industry and a “…networking platform for both governments and the private sector to chart the future course of the ICT industry”. According to Dr Tarek Kamel, Minister of Communications and Information Technology of Egypt, “It is our obligation to pave the way for African citizens who are not yet online, investigate what the barriers are, work on overcoming them and make sure to maximize Africa’s share of the next billion users of the cyber world.” He added, “It is our obligation to encourage and attract further investments from Africa and from the rest of the world to make use of the growing market opportunities.”

ITU Telecom Africa 2008, fittingly, was dedicated to promoting ICTs as drivers of African development. As usual at ITU events, the ITU Forum conference programme and the ITU’s Youth Forum were the highlights of the event.

At the ITU Telecom Africa opening ceremony, Dr Ahmed Nazif, Egypt’s Prime Minister and former Minister of Communications and Information Technology – as well as a past Connect-World contributor – pointed to the impact of ICTs upon his country’s economy. “ICT went from competing for government resources to being a net contributor to the economy… In Egypt, we have seen the GDP grow by over seven per cent in recent years with double digit growth in ICT…” He also stated that the ICT sector is capable of delivering a competitive edge, “but it can only be achieved with the right infrastructure and a qualified workforce”.

Dr Nazif was right of course, especially when he said, “but it can only be achieved with the right infrastructure and a qualified workforce”.

The problems in Africa, as many speakers pointed out, call for two things in short supply – infrastructure and a qualified workforce.

Africa’s mobile sector has the world’s highest annual growth rate in mobile subscribers. More than 65 million new subscribers were added to the lists during 2007; there are now over a quarter of a billion mobile subscribers in Africa – about a third of the continent’s population. Mobile subscribers, although more evenly distributed than just a few years ago, are still highly concentrated in North African countries, in South Africa and scattered urban centres. Internet access, on the other hand, has been highly concentrated; more than half of the region’s Internet users are in North African countries and South Africa. Only one person in twenty, five per cent of the population, were online by the end of 2007. In Sub-Saharan Africa, penetration averages just three per cent. The shortage of international bandwidth drives the price for Internet connectivity to an average of US$ 50 per month – unaffordable in regions where per capita income hovers around US$70.

Despite the spotty coverage and limited Internet usage, the economic and practical impact of voice access has been staggering and the impact of such innovative uses for cell phones as mobile fund transfers for micro-payments in a region where credit cards and banking are out of the question for the average citizen, can be truly revolutionary.

Nevertheless, without better infrastructure of all types, the potential for ICTs to transform the economy is limited. A qualified workforce, in regions where even literacy is in short supply, is even harder to create. Assuming we can make the Internet available, just how much can an illiterate worker benefit? Since the vast majority of workers in the micro enterprises that dominate local economies are likely to be at least functionally illiterate, they will be forever cut off from much of the advantages that ICTs can bring. Unfortunately, once again this problem was largely ignored by the ITU (as it was at the WSIS) and the ICT sector. I have long felt that our use of ICTs to help the disadvantaged population of the world needs serious rethinking – systems that rely almost exclusively upon the written word are of little use to the largely illiterate people in developing regions that need all the help they can get. Yes, we need digital inclusion programmes for schools and communities, but why can’t we develop programmes to bring more of the benefits of ICTs to micro enterprises than just plain voice? If we are looking for economic impact, that is a great place to start.

The ITU Telecom Youth Forum is another great place to start. There were some 75 or 80 (much too active for me to count) young men and women from about 40 African countries in this six-day programme of discussions with government, industry and other leaders from around the world. The Youth Forum focuses, broadly speaking, upon the use of ICTs for regional development and provides an opportunity for these future leaders to, “… develop and deliver their… vision and action plan for their region, or the world”. These university students were selected based upon their essays proposing ways, “to facilitate the uptake and use of ICTs by young people for socio-economic development”, and their ideas regarding, “how ICTs can contribute to peace and stability within the African continent”. These very bright, enthusiastic and engaged young people are Africa’s greatest resource, but many with the same potential haven’t had, will never have, the same opportunity for an education or much of a chance to do more than survive.

The ITU Telecom Africa 2008 event brought together 191 Exhibitors from 37 countries, 308 Ministers, Regulators and Director Generals, and Company CEOs from 92 countries, 747 Forum and Youth Forum participants including speakers, within an overall total of 6706 participants.
The event showed a growing awareness of the power of ICTs to drive the continent forward. It was encouraging to see so many dedicated bright people – true leaders, from the continent and around the world – seeking ways to foster Africa’s development , ways to help Africa grow up to take its place in a world increasingly shaped by ICTs. On the other hand, statistics from international institutions and independent research groups point to a serious lack of progress on many fronts and a situation that is worsening for many.

There were many good proposals, by many good and dedicated people, outlining ways ICTs can be used to help the continent. Sadly, most of these ideas are just more of the same solutions we have seen over the years; they are undoubtedly good and useful, but – also undoubtedly – far from enough. The easy answers work, but do relatively little to help the small businesses that are the backbone of local economies in much of the continent. Compared to what ICTs can do, the easy answers do little. Better, admittedly more difficult, answers to the needs of these businesses exist and can be found if the ICT sector, universities, governments and international institutions join forces to discover what these small survival-oriented businesses truly need and then work together to provide it. We need hard answers to hard problems.

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Our next Connect-World North America Issue will be published later this month. This edition of Connect-World will be widely distributed to our reader base and, as well, at shows where we are one of the main media sponsors such as: • ISCe International Satellite & Communications Conference, San Diego, USA, June 10–12, 2008 and • Nxt Com, Las Vegas, USA, June 17-19, 2008

The theme for this issue will be, 3G, 4 G or both? The race is on.

In a normal world 2.5G follows 2G and is followed by 3 or 3.x G and then 4G, Operators normally would follow a pre-defined evolutionary sequence, but the competition is so rough – and the economics so compelling – that many companies are considering jumping the track and switching technologies and generations. What might the consequences of this be in terms of the networks, equipment, applications, security and especially the market and the consumer?

North America 2008 Media Pack; Click here

May II 2008

Fredric Morris
Editor-In-Chief
Connect-World

4 G and 3 cheers for Intel… WiFiWiMAX! WiFiWiMAX! Go Team Go!

Intel is one of those big companies that some people almost love to hate – but hate to admit it. Some people just love to cheer for the underdog and when they really have little reason – the underdog is a dog or just doesn’t make the grade – they feel uneasy, they secretly begrudge their admiration. I have my root-for-the-underdog days, but all-in-all I think Intel rocks. (Disclosure – they are not Connect-World advertisers, but I do have a cloth bag that has Intel printed on it. They handed them out at a show several years ago and it now follows me to shows around the world; I stuff my laundry in it – it has a drawstring. Draw your own conclusions.)

I won’t speak about all they have done for personal computing; we all know what a big part they are of what made, and makes, personal computing possible. What fewer people realize is their role in making WiFi the success it is and of the importance of Intel’s backing of WiMAX. In my laundrily biased opinion, Intel’s Centrino chip made WiFi happen by building it into everyone’s laptop. This not only raised the bar for all chipmakers, but made anywhere anytime connectivity a must. Remember the first time you connected to a WiFi network at an airport or a coffee shop? How many of you felt the very first time – as I did – that, ‘that’s the way it should be’, I should be able to connect anywhere.

I’m sitting in an airport now, logged into the WiFi network, on my way to the ITU Telecom Africa 2008 event and from there to the WiMAX World event in Munich. I just checked the news and saw that Intel won a 15 year license in Sweden for a national wireless broadband network using WiMAX technology. It bid US$ 26 million for the frequencies, which it reportedly plans to lease to local partners.

This isn’t the first time that Intel pushed its WiMAX vision by buying into the user-side of the equation; earlier this same week Intel put up US $1billion to restart the Sprint / Clearwire marriage dedicated to WiFi access – it went sour last year after only a few months. To re-start the effort and re-focus its energy on WiMAX, Big Daddy Intel, which had already invested a reported US$620 million in Clearwire, put up the extra billion as part of a US$ 3.2 billion consortium with Sprint, Clearwire, Comcast, Google, Time Warner Cable, and Bright House Networks. The result is a merger of the Clearwire and Sprint WiMAX carriers into a single entity worth some US $14.5 billion.

There are many in the industry that feel Sprint has no truly viable 4G strategy at this point other than WiMAX; so without the consortium it would be hard-pressed to rollout a competitive network. It wasn’t Intel’s altruism, though that saved the day for Sprint, Intel was just backing its favourite horse – WiMAX. Nevertheless, it was a marriage made in heaven. Sprint needs a strong response to LTE – the 4G broadband upgrade technology of choice for most GSM mobile carriers – and Intel has long been leading the push for WiMAX. Intel sponsors, indeed leads, the WiMAX forum, the industry association which guides the development and standardisation of this technology.

The Forum, operator and regulators have had their hands full trying to figure out how to regulate this rapidly evolving technology. WiMAX rapidly evolved from a line-of-sight high frequency fixed broadband technology, that at first was to use unlicensed spectrum, to a non-line-of-sight mobile/fixed broadband technology operating in a variety of lower frequencies that work indoors and in heavily built-up urban areas. LTE has its natural constituency, mainly the incumbent GSM operators that have paid fortunes for the rights to the frequencies they use. They, understandably, are not at all pleased that the frequencies that their competitors use are relatively cheap. They are also troubled by the push for technology neutral regulations which would let operators use licensed frequencies originally destined for other uses for WiMAX.

Given this background and Intel’s heavy investment in WiMAX enabled chips, it is clear that Intel needs friendly frontline troops from the industry to push its vision and guarantee a healthy return on investment.

It is going to be a big fight; the GSM Association is supporting LTE and is not particularly pleased by the prospect of competing with much cheaper phone calls and competition with suppliers of a wide range of broadband enabled services and applications.

In addition to its WiMAX chip sales, Intel gets a share of the revenues generated by the new venture. If WiMAX flies, Intel stands to gain fortunes from both sides of the equation. I have no idea of exactly how the showdown will play out, but I am fairly sure both LTE and WiMAX will survive and thrive. Given the need for all networks to interoperate, users of these two technologies will eventually develop mutually supportive mechanisms and settle into a sustainable equilibrium. There might well be operators that deploy both technologies for technological and marketing reasons – LTE in more highly populated regions and WiMAX for backhaul and local service in rural environments. I expect handsets that simultaneously handle both technologies – and WiFi as well – will probably reach the market shortly.

The new consortium has a tough battle ahead, but given the billions Intel is pouring into the segment – Intel has put money into at least 16 other WiMAX-related companies – WiMAX should be able to soldier on until what is an essentially unwinnable battle peters out. Intel has put its chips on the table, but by no means its entire hoard, and seems likely to win its gamble. LTE will do well given the vested interests of GSM operators, but so should WiMAX. It will be a win for WiMAX, a very big win, not only for Intel, but for many in the developing regions of the world where WiMAX brings the promise of truly inexpensive broadband and voice. WiMAX is potentially more exciting than WiFi; if it grows to realise its full potential, it will be because Intel pushed it. So let’s hear it for Intel – WiFiWiMAX! WiFiWiMAX! Go Team Go!

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Our next Connect-World North America Issue will be published later this month. This edition of Connect-World will be widely distributed to our reader base and, as well, at shows where we are one of the main media sponsors such as: • ISCe International Satellite & Communications Conference, San Diego, USA, June 10–12, 2008 and • Nxt Com, Las Vegas, USA, June 17-19, 2008

The theme for this issue will be, 3G, 4 G or both? The race is on.

In a normal world 2.5G follows 2G and is followed by 3 or 3.x G and then 4G, Operators normally would follow a pre-defined evolutionary sequence, but the competition is so rough – and the economics so compelling – that many companies are considering jumping the track and switching technologies and generations. What might the consequences of this be in terms of the networks, equipment, applications, security and especially the market and the consumer?

North America 2008 Media Pack; Click here

May I 2008

Fredric Morris
Editor-In-Chief
Connect-World

Good business in a digital world

Recently, I have read and thought quite a bit about how companies will have to rethink their business to survive in the age of ICTs and the global economy. I have also been closely following the dilemma of telecom service providers whose traditional voice-driven business models seem doomed to follow prehistoric creatures into the tar pits.

Telecos, the world over are looking for a magic business model they can mount and ride into a perpetually sunny, high ARPU, future. I’ve never heard of a telecom service provider – let’s just call them all telcos here, it’s simpler – that only wants to drift along providing commodity services. To provide more advanced, non-commodity, services and wrest business from an ever-wider range of competitors they have to invest in IP-based next generation networks (NGN).

There is a good business case made for NGNs. NGNs are high-tech competitive weapons. NGNs cost less to build, operate and maintain than traditional networks. NGNs can more easily meet demands for greater, far greater, bandwidth. Given their IP base, NGNs provide a far more flexible platform for innovation and make it much easier to implement and bring advanced new services to market. All of these claims are eminently correct. Nevertheless, I wonder if the advanced applications telcos speak of will prove to be more than short-term stopgaps.

When pushed, telcos speak confidently of the service/content/application future – and they do their best to believe it; when squeezed there is very little juice in their replies. Traditional revenues are slipping and many telcos will have a problem finding new revenue sources. Data is picking up some of the slack, but there are many reasons to believe that most data and content based services will eventually slide down the slope to commodity land. Telcos, both fixed and mobile, rarely, very rarely, control content or even applications. Most telcos provide little more than a transmission pipe and a billing structure for content and applications providers. In truth, most telcos, even the newest, still think like utility providers; few have a notion of what an audience is or what drives a business to consume.

Wireline has seen better days; it is stagnating or declining in some parts of the world. Broadband is holding back the losses and dreams of triple or even quad-play to stave off depression. But I cannot see content, even IPTV, in the role of saviour, there is too much content and too much competition. Too much of anything in a market can transmute golden products into low cost commodities.

Mobile is still growing. Everyone talks about mobile data’s rise; revenues are growing steadily, at least for now, but commodity drift with flat-rate deals is setting in. Sure, we are seeing more cable and Internet-type content and services, but few new or exciting made-for-mobile services – with the important exceptions of location-based services and mobile money.

Telcos, both wired and wireless, are fighting to hold and gain customers and build revenues. Most new services simply deliver someone else’s content; with few exceptions, there is little if any value added.

Telcos still make good money doing what they have always done best, fetching and carrying the words, content, whatever, of others – but they have few truly unique services, and few winning propositions of their own except transport. Mobile operators in much of the world are riding the wave; there are still large pools of potential subscribers to conquer so they are often blind to the danger of becoming tomorrow’s thin-margin commodity providers. They are in a bind, the technology that makes them, breaks them.

In a digitalised world, anyone can offer the same service. Anyone can mount a virtual network. Anyone can buy content. Anyone can compete on the playing field of their choice; pygmies can battle giants and Davids can slay Goliaths. In fact, any service can be commoditised. As independent filmmakers used to say, ‘all you need is an idea in your head and a camera in your hand’. Today, all you need is an idea in your head and a good broadband connection to the Net’.

Many years ago, I read – I have forgotten who said it – that there is nothing that someone cannot make more cheaply and worse and sell for less. The words are not exact, but the meaning is. At the time, it was true. Today, outsourcing – perhaps just ‘sourcing’ would be more accurate – has turned this proposition on its head. There is little that cannot be bought for less, but with better quality, somewhere in the world. This is less of an exaggeration than many might think.

The jam the telcos are in is not unique. Almost everyone, almost every company, can easily find itself in the same position. Digitalisation is the great commodity-maker; the Internet has levelled the market. No matter what the line of business, anyone, anywhere in the world can play the game – and one needn’t be big to do it. Anyone with an idea can outsource production and services – their entire supply chain, marketing, distribution and more, if need be – and go head-to-head with the giants in any niche they choose.

The telcos are invading everyone’s turf, and having their own invaded in turn. They have some natural advantages, certain core strengths, but they have never learned how to apply them imaginatively with constant creativity and updating of their offerings. It isn’t an easy task.

For individual clients, until someone comes up with a truly new idea, except for targeted advertising, telcos seem fated to be little more than commodity-pushers – the pipes and billers for services others own. Telcos will be perpetual percentage-taking middlemen, until someone discovers how to cut them out of the chain.

The telcos have done better with larger companies, providing them with sophisticated services that the companies find themselves too hard-pressed to handle themselves. Every telco is competing for the big clients; this lets clients drive hard bargains, so margin will tend to be low. By providing highly personalised increasingly complex services, by becoming so vital to and interwoven with their client’s daily routine, telcos can build margins and do well. Even so, they must watch the competition and constantly upgrade their services.

If I were a telco looking for a new market where I could really add value, build loyal customers and build revenues, I would go after the micro to mid-sized enterprise segment.

Smaller companies have fewer internal resources so, in addition to specialised communications services, they also need a wide variety of reasonably priced business services. Telcos, especially the larger ones, have the size and scale – not to mention the experience of running their own highly complex operations – to offer a wide portfolio of mix and match services to smaller companies, some telco cost-centres might well serve as the models for service providing profit-centres.

Anyone who has ever worked with both large and small companies knows that small companies have to deal with most of the same basic functions as large ones, but they have far fewer resources and far fewer specialists to handle each function; the smaller the company, the greater the number of functions each employee must assume. There is so much information and so many services on the Internet that smaller companies often finding it difficult to find, contract, monitor and administer the services they need. Telcos could offer smaller companies a portfolio of online ‘meta-management’ services – services that provide higher-level integration of other service providers’ offerings. If they charged on an affordable per transaction basis, they should be able to capture, keep and grow a great number of clients.

I don’t know if any such a service yet exists, but if I had a small company, I would be overjoyed to have meta-management systems of the sort big companies use to tie everything together into a coherent understandable whole. I would like a telco that tied all my internal information together with the information from all the external services I used and, perhaps, provided a few others I needed. An affordable system that synthesised the data received from all sources from accounting to supply chain to sales, and combined it with local market and economic data and offered alerts and practical guidance based on industry best practices might not be easy or cheap to develop, but it would offer long-term growth and revenues for users and telcos alike.

It sounds complicated and it is, but no more complicated than what many larger companies already have internally – and small companies could really use it.

Telcos have the scale to develop and operate meta-managers on a transaction basis. It is a good business opportunity. Unlike the individual consumer whose budget is relatively fixed, these systems can help companies grow; as they grow, their transactions, loyalty and revenue generating potential will grow apace. That’s good business!

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Our next Connect-World Europe Issue will be published later this month. This edition of Connect-World will be widely distributed to our reader base and, as well, at shows where we are one of the main media sponsors such as: Sviaz / Expo Comm (14-18 May, Moscow), FT Mobile Media Conference (15-16 May, London), Wimax World Europe (29-31 May, Vienna), and Von Europe (11-14 June, Stockholm).

The theme for this issue will be, The evolving ‘Net’ – Rising to the challenge of rising use.

When speaking of networks, conventional wisdom and traditional business models no longer work as they did. The lines are blurring in the fixed, mobile and even broadcasting markets. Wired networks now handle traffic once thought suitable only for wireless and wireless is substituting wired in a broad range of applications. Seamless handoffs between wired and wireless networks –and,  indeed, mergers, partnerships and consolidations bringing together networks and players of all sorts – further confuse the once prettily organised networking landscape.

This issue will examine what these changes in technologies and the market mean for the sector. How can the residential and business consumer best be served? What does the future hold for network operators of all types?