October II 2008

30 October 2008

Fredric Morris, Editor-In-Chief, Connect-World
Fredric Morris
Editor-In-Chief
Connect-World

Good hope and the Cape

Years ago, during a university summer vacation, I went with a number of friends to Birdland – a New York jazz club named after Charlie ‘Bird’ Parker. Sitting next to me at the next tiny table – shoulder to shoulder in the crowded space – was a young, mid-thirties, South African. We were soon talking about the music and a host of other subjects. He was a professor of anthropology, a medical doctor and a PhD; he was a fascinating conversationalist with informed opinions about everything. We all left together after the show and walked downtown towards the ‘Village’ for a few beers, talking as we walked. When the bars closed we exchanged addresses.

We wrote back and forth a few times, but I let the correspondence slide, increasingly aware of my inability to keep up my end of the exchange. Although overwhelmed by Dr Phillip Tobias’s brilliance (I recently looked him up in the Wikipedia, he has since been nominated three times for the Nobel Prize), he fired my longtime interest in South Africa.

In the years since, I have avidly read every bit of news about the country that came my way – relatively little, as with most countries, except in times of trouble. What little I knew about the state of technology in South Africa came mostly from articles published in Connect-World by government officials and local ICT sector leaders.

Savant – South African Vanguard of Technology – is a public-private partnership between the government and a number of important South African information and communication technology sector players. Savant’s main concern is that, outside of the country most people in the ICT sector, like me, know little of what South Africa’s ICT sector is capable of producing.

Savant’s mission is to raise global and local awareness of South Africa’s ICT (or, as they often put it, electrotechnical – ICT, electronics and electrical engineering) sector skills by showcasing the capabilities, successes and competitive advantages of SA companies. Their job is to promote the sector, build its exports and attract foreign investment and joint ventures.

When they invited me to visit South Africa, to take part in a dti – road tour of their country in the company of other ICT editors from around the world, I couldn’t say no. The ‘dti’ is the South African Government’s Department of Trade and Industry.

Savant, a coalition of industry leaders supported by the Department of Trade & Industry and the ICT Development Council, is South Africa’s first marketing and branding campaign for its hi-tech sectors. The aim of the tour was to showcase the best that South Africa’s ICT sector has to offer.

All in all, it was an intriguing, highly interesting, experience. Although the tour only scratched the surface, it soothed a long-term itch.

The road show – from Cape Town to Durban to Johannesburg, took a week. Savant, dti, ICASA (the Independent Communications Authority of South Africa) and USAASA (Universal Service and Access Agency of South Africa) briefings provided the social, political, regulatory, government policy and government programme background information needed to put the daily visits with ICT sector players into context. A number of detailed briefings from Frost and Sullivan, Africa Analysis, the South African Electrotechnical export council and Dimension Data concentrated more on sectorial and economic analysis.

As expected SA is a leading user of ICTs in Africa, but overall, the usage is low. Universalization of services and bridging the digital divide are top-level government priorities, but are not easy goals to achieve, especially given the country’s skills deficit. Surprising were the charts showing SA as the world’s fourth fastest growing mobile market at 50 per cent per annum, and that HSDPA mobile networks provide 34 per cent of the country’s broadband access.

South African Governments at all levels are rightly proud of a number of initiatives aimed at promoting, rather incubating new ICT companies. Although there are many differences between the way the programmes are structured and their specific goals, they follow a common pattern.

The Bandwidth Barn – a subsidiary of the Cape IT Initiative (CITI), is a Business accelerator, an incubator, for information and communications technology start-ups in the Western Cape. The Bandwidth Barn cuts the costs most start-ups face by sharing common office spaces and services; it also promotes networking between the start-ups and established businesses. The Barn’s business development programmes teach the business skills required to develop into profitable companies.

Like the Barn, Durban’s SmartXchange, a public/private partnership, seeks to incubate start-up businesses. It provides start-ups with rental space where common areas and services are shared to reduce costs. SmartXchange’s most significant contribution is the intensive mentoring that it, and its partners offer the participating start-ups. Deloitte, Dimension Data, Axiz, IBM, Microsoft, bizWorks, Business Connexion, Waltons, CityWorks, Lexmark, the City of Durban, Ramco, AdaptIT and Thusa, a mixture of local, multinational and government entities, are the partners behind this effort.

Unfortunately, I was only there for a week; it was impossible to cover everything I would have like to have seen. I missed seeing some of the many ICT-driven economic and social inclusion projects – the hard-core digital inclusion efforts. The inclusion programmes I did get to see were essentially platforms to include technically savvy graduates, they accelerated the inclusion of the already included to build the momentum of South Africa’s high-tech sector.

I also missed seeing and learning more about SA’s networks and countrywide communications – again, not surprising given the time available. The statistics confirmed that South Africa’s networks – as far as they currently reach – are as well managed as any and from the balcony above Vodacom’s network control centre there was as impressive a display of computer screens and blinking lights as any such room I have ever seen.

I expected to see a number of good digital inclusion projects in SA and I was not disappointed, but I had not expected a number of the globally active South African-based technology companies and I certainly had not expected some working, bleeding edge, quantum technology.

Fundamo, based in Durban, is a world leader in mobile funds transfer. Most of Africa’s people, indeed the majority in most developing regions, are ‘unbanked’. They have no bank accounts and live on the edge of the money-based economy. Many of these people do have pre-paid mobile phones, and the systems designed to store credits in these devices to pay for calls are, in a sense, equivalent to money left in a bank. Phone companies with mobile banking applications, such as those developed by Fundamo, let users transfer funds to other users in distant villages or even serve as a sort of debit card to make purchases. As a broader range of applications become available including, especially, mobile micro-credit, mobile money will drive an economic revolution in developing regions. Mobile money, perhaps more than any other mechanism, will soon make the ‘long tail’ economy at the bottom of the pyramid relevant. Fundamo is working with Accenture in GSMA project to build a hosted mobile-wallet platform that will let operators quickly rollout mobile money financial services for the millions who have no bank accounts.

DigiCore, traded on the Johannesburg Exchange, is another South African global company. Its GPS tracking technology is used throughout the world for end-to-end trucking and fleet management and to locate and recover stolen vehicles. DigiCore currently manages more than 340 thousand vehicles in 32 countries on five continents.

The Quantum Secure Network programme at the University of Kwazulu in Durban was wholly unexpected. They are building the world’s first network secured by quantum cryptography. Currently, the best cryptography for secure messaging utilises complex mathematical algorithms to encode the content. Although exceedingly difficult to break, they can be overcome by using massive computing power. Some years from now, when quantum computers are available, most such cryptography will be easy to break. Quantum cryptography, though, is inherently impossible to break. Any attempt to measure a quantum encoded transmission will, following the laws of physics, change the state of the transmission and make it impossible to read.

Durban’s Smart City Initiative will use this technology over The eThekwini Municipality optical fibre network and make it the world’s first quantum encryption network. Links between Durban and several suburbs are now being tested.

I visited a number of other very impressive companies as well; I can’t cover them all now, but I promise invite a number of them to write in future Connect-World EMEA and Africa and the Middle East editions and let them each speak of the part they are playing in the transformation of South Africa.

The Cape of Good Hope was once the turning point in a long voyage, the mark that the worst was over and there were good prospects ahead. Today, technology marks the turning point in South Africa’s quest for inclusion, progress and good hopes.

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The next issue of Connect-World Global will be published early next month. This edition of Connect-World will be widely distributed to our reader base and, as well, at shows such as: Mobile World Congress (16-19 February 2009, Barcelona)and CTIA Wireless (April 1-3, 2009 Las Vegas)

The theme for this issue will be The information society 2015 – corporate responsibility and digital access for sustainable development..

The World Summit on the Information Society, WSIS, established a number of goals for the year 2015. Providing the world’s peoples with access – to connect the world’s people in even the remotest regions, its schools, governments, research centres, libraries hospitals and health centres, cultural centres, museums, post offices and archives – was the primary goal. One of the most important goals set by the WSIS calls for a world where, “more than half the world’s inhabitants have access to ICTs within their reach,” by 2015. The WSIS also called for, “ensuring that all of the world’s population have access to television and radio services”.

Providing digital access, as a way to achieve sustainable development, to half the world’s population within a decade is a grand ambition. It will take a mighty effort. Governments, international organizations and non-governmental organisations – NGOs, can do part of the job, but far from all of it. Much of this mighty effort will depend upon the world’s business enterprises. To complete this mission, new technologies, new hardware and software, new applications and content, manufacturing genius, financial resources and logistics that only private enterprise can efficiently provide, develop, deploy and manage will be needed.

What is corporate responsibility in this context? What can, and should, corporations do, then, to help achieve the ambitious WSIS goals? What are they already doing? How can businesses participate? Why should they participate? What will be the rewards and the costs? Is corporate responsibility – corporate participation in the building of the Information Society – good business? These are the questions Connect-World will ask global leaders.

Global 2008 Media Pack; Click here


October I 2008

16 October 2008

Fredric Morris, Editor-In-Chief, Connect-World
Fredric Morris
Editor-In-Chief
Connect-World

Broadband World Forum, in denial, the meltdown and developing regions

The IEC’s Broadband World Forum, held this year in Brussels, is a major event for equipment manufacturers and operators – fixed and wireless alike. Year after year, this IEC (International Engineering Consortium) event brings together the latest and best developments in the broadband universe – technology, applications, services and a bit of content.

The importance of the event to the sector can be gauged by its keynote speakers: Scott Alcott, the Forum Chair and the Executive VP of Belgacom- the show’s official host company; Didier Bellens, President and CEO of Belgacom; Ben Verwaayen giving his first public address as Alcatel-Lucent’s new CEO; John McMahon, President and Managing Director, Europe, of Sony Pictures Television International; Ericsson’s President and CEO Carl-Henric Svanberg; and Julio Linares, Telefónica’s COO.

Operators from the world over were there, of course, looking for whatever competitive advantages broadband services could bring them. Broadband drives a range of video-based services – IPTV was everywhere – that operators hope will raise their ARPUs. Equipment suppliers are counting upon this to drive their business – they pray that video will drive growth for years to come.

Still, the spectre of a teetering economy hung over the show. There were many smart people there, operators and suppliers alike, and many had to know in their hearts that the financial meltdown would hurt everyone. But everyone soldiered on, seemingly untroubled by the gathering forces of darkness. I expect the markets’ quickening slide in the two weeks since the show have changed the, ‘it won’t hurt us’, attitude of so many of those at the show.

Since then, the meltdown has accelerated and brought to the surface the waste products of a system long polluted by unintelligible securities derivatives, largely uncontrolled short selling, unprincipled distortion of the ‘everyone has a right to a home’ principle and the economically incomprehensible posturing of ideology-driven politicians.

I spoke at the show with many heads of companies, CTOs, heads of marketing and other pivotal figures of the sector. Save for a few, all spoke in glowing terms of their companies’ visions of the future – all were ‘in denial’. I wonder how many secretly feared for their jobs.

Abdelkrim Benamar is Alcatel-Lucent’s Vice-President Business Strategy & Market Planning Solutions for Europe, Africa and Asia and one of the few who seemed to really grasp today’s realities. Benamar knows the world’s developing regions well.

During our meeting he described a particularly compelling vision of some of the opportunities and challenges that the sector faces. He spoke of emerging markets and, odd as it might seem to those who know little about emerging markets, it is one of the scenarios that I expect will hold up best in the post-meltdown world.

Mr Benamar cited OECD statistics that showed strong growth in ‘south to south’ investment and the belief of some analysts that this will soon overtake traditional ‘north to south’ capital flows. Mr Benamar’s subsequent analysis was based in good part upon this assumption. This means that cash-rich investors from regions south of Europe and the United States – many of them recent success stories in the south’s emerging economies looking to put their capital to work – will soon be the biggest sources of FDI (foreign direct investment).

There are many reasons to believe that during the overall economic slowdown we are likely to see Mr Benamar’s scenario hold, especially in the near future, and an increasingly larger portion of the funds available for FDI spent in emerging economies. If for no other reason, more of the FDI will come from emerging economies; it will come from investors whose cash was earned in these economies and know their potential. These investors live in emerging markets themselves, know that money can be made there, have faith in long-tail consumers and know the time is ripe to take advantage of the inevitable explosion of demand in these markets.

It will take a while before prices in the developed economies adjust to the new realities, so low-cost emerging markets – if they can quickly upgrade their infrastructures and provide a trained workforce (the biggest ‘if’) – will be able to capture a growing portion of the world’s markets.

Although economic problems in other parts of the world tend to drag developing economies along, the growing use of ICTs in these regions might well tip the table, slide some of the bigger economic crumbs into their hungry mouths, and permanently fatten their economies. In more stable, proactive, developing economies the meltdown might well have a number of long-term – even short and medium term – positive effects.

This does not mean countries such as India – just one example – will not suffer; everyone will, but the newly created and empowered middle class, the highly competitive new companies and the world-class entrepreneurs in the emerging economies will not just sit back this time. They are hungry and accustomed to succeeding in difficult conditions. Instead of just handling the outsourced needs of the developed economies, the energy that made them succeed will go into growing their own markets and those of other developing economies. South to south investment, and marketing, will drive a new sort of expansion. The expansion will be uneven, often painful. This time, the economic development of these countries will not be driven predominantly by raw goods and manufacturing, but by ICTs and intellectual capital.

There will be lasting differences in the world’s markets when all is once again stabilised and the competitive playing field will be more level than ever before.

The recently created pool of middle class jobs – the muscle of the newly emerging economies was built upon the credit-fuelled expansion of western service economies. The new middle class cannot be sent back down. Desperation, preparation and imagination have long driven new companies to success and none of these ingredients will be lacking. Expect surprises.

Mr Benamar sees a fundamental shift in investment within the telecom sector; the increasing dependence of major suppliers upon capital expenditure in emerging markets to drive their businesses and maintain profitability. This is likely to continue in the AM (after-meltdown) world, since little of economic consequence can be done without information and telecommunications technology. Even though budgets will be cut, this is not the dot.com bust. Industries will be investing a greater part of their remaining budgets in ICTs to cut operating expenses in other areas and sharpen their competitive edge.

Long-term presence – real local history and experience – in emerging markets, Mr Benamar predicts, will be decisive for both large suppliers of services and equipment and their clients. Local technical competence will be at a premium; the current pool of well-trained technical personnel is just too shallow for sustained expansion. Programmes such as Alcatel University and a number of other company sponsored high-level training programmes can provide a decisive edge for sponsoring company and local economies alike.

The new technological ecosystem that Mr Benamar foresees in emerging markets – ecosystems that extend upward from the end-user through the service provider to the manufacturer or original service developer – will depend heavily upon services that enable the end user. The availability of content and applications that meet local needs, the availability of a first-class access infrastructure, economies of scale and affordable end-user equipment, all stressed by Mr Benamar, will be increasingly important in the after-meltdown world.

Stephen Scholz, Nokia Siemens Network’s CTO, spoke to me of the challenges facing the industry. He expects traffic to grow one-hundred fold in the next seven to ten years. The good news is tempered by the fact that revenues will stay flat and operators, manufacturers and service providers alike will face huge difficulties reducing costs to maintain profitability. Operators will have to build capacity to handle the enormous volumes expected and at the same time drop costs by going to flat architectures, full optical fibre access and either LTE or WiMAX wireless depending on the market.

He agrees that many operators might well become gigantic bit-pipes operating on razor-thin margins.

Considering the relentless acceleration of the meltdown since the event, I – and the entire sector – would like to know what sort of world we really will be living in. Try as we may, it is hard to deny the world has changed in the last few weeks and harder still to predict where it all will lead.

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The next issue of Connect-World Global will be published early next month. This edition of Connect-World will be widely distributed to our reader base and, as well, at shows such as: Mobile World Congress (16-19 February 2009, Barcelona)and CTIA Wireless (April 1-3, 2009 Las Vegas)

The theme for this issue will be The information society 2015 – corporate responsibility and digital access for sustainable development..

The World Summit on the Information Society, WSIS, established a number of goals for the year 2015. Providing the world’s peoples with access – to connect the world’s people in even the remotest regions, its schools, governments, research centres, libraries hospitals and health centres, cultural centres, museums, post offices and archives – was the primary goal. One of the most important goals set by the WSIS calls for a world where, “more than half the world’s inhabitants have access to ICTs within their reach,” by 2015. The WSIS also called for, “ensuring that all of the world’s population have access to television and radio services”.

Providing digital access, as a way to achieve sustainable development, to half the world’s population within a decade is a grand ambition. It will take a mighty effort. Governments, international organizations and non-governmental organisations – NGOs, can do part of the job, but far from all of it. Much of this mighty effort will depend upon the world’s business enterprises. To complete this mission, new technologies, new hardware and software, new applications and content, manufacturing genius, financial resources and logistics that only private enterprise can efficiently provide, develop, deploy and manage will be needed.

What is corporate responsibility in this context? What can, and should, corporations do, then, to help achieve the ambitious WSIS goals? What are they already doing? How can businesses participate? Why should they participate? What will be the rewards and the costs? Is corporate responsibility – corporate participation in the building of the Information Society – good business? These are the questions Connect-World will ask global leaders.

Global 2008 Media Pack; Click here