Off the beaten track

20 June 2018 | Guy Matthews

What are carriers doing to address the less developed parts of the global digital ecosystem? Guy Matthews looks at what is being planned to connect the remaining pockets of underdevelopment

As the world’s wealthier economies gear up for new connectivity frontiers like autonomous vehicles, 5G and the embedding of artificial intelligence into software-driven networks, it is easy to forget that many countries remain in the telecoms slow lane, under-invested and under-developed. 

Ever alert to an untapped revenue source, the international carrier community continues to look for ways to bridge this digital divide, sometimes battling protectionist governments and at other times partnering with local service providers to get past barriers like antiquated national infrastructure, civil unrest and highly distributed rural populations.

Africa probably has the largest concentration of countries that can be considered under-developed in telecoms terms. Over half of all Africans live in rural areas, and despite much terrestrial and subsea development, many are still facing a limited choice of services, if they can get services at all. The continent remains the target for investment, both from international development agencies and from the carrier community. Capacity Africa 2018 will be taking place in Kigali, Rwanda, on 5 & 6 September for those of you wanting to attend.

"BICS is present, or selling, across the continent, with business relations in 53 African countries, making it a really important market for us," says Clémentine Fournier, regional vice president, Africa with the Belgian wholesaler.

"Africa is a varied region, and because of this we have found we need a medium-to-long-term approach when it comes to planning and investment," she says. "Not all players are able to operate at the same pace, and constraints – whether regulatory, political, or geographic – differ from country to country."

She says BICS has chosen three relatively developed African locations as bases from which it can address the surrounding countries, depending on their levels of regulatory and political stability. From Kenya it serves the Africa’s east coast, from Nigeria its west coast, with South Africa as its hub for the southern end of the continent.

"In regions that lack access to reliable or affordable broadband connectivity, it’s mobile connectivity that many people depend on to access internet-based services," Fournier adds. "As with most of the rest of the world, Africa is also going through an IoT boom, with use cases and IoT-driven start-ups increasing in number – so strong, reliable connectivity is key to success in this area."

Fournier points out that while deregulation always puts welcome downward pressure on the pricing of services, it can have the knock-on effect of making it hard for local operators to profit, despite help from BICS in setting up new cellular revenue possibilities appropriate to local conditions and budgets, like A2P services: "In smaller countries in West Africa, such as Togo, Gabon, Congo and Benin, the mobile marketplace is competitive, with many operators struggling to break even."

Angola is not usually top of the list when world-class connectivity hubs are mentioned. But António Nunes, CEO of Angola Cables, has plans to change that. The company is poised to launch the South Atlantic Cable system (SACS), which will link the west African country to Forteleza in Brazil where it will interconnect with the already in-service Monet cable running from Boca Raton in Florida to South America. Nunes believes the two cables between them will help to bring numerous poorly connected places onto the grid, both in Africa and Latin America.

"When SACS is ready we’ll be able to serve Africa and Latin America at the same time," he explains. "We will be able to connect our Africa customers directly to the US, and US and South American customers to Africa. It will be the lowest latency connection between Africa and the US. Brazil too will be able to link to Europe without going through the US."

He admits that a route of such ground-breaking diversity will take time to achieve acceptance, but that it will eventually put Angola on the map as a major hub for multi-continental cross connections. 

"We are equidistant between Nigeria and South Africa, making us a very strategic point, and very efficient for distribution of traffic to those two markets," he says. "There will be a knock-on effect in other less developed placed that Angola borders, like DR Congo, Namibia and Zambia – already big customers of ours. We are also building terrestrial links to the border of Zambia and later will provide services to Mozambique and from there have connectivity into Asia." 

He anticipates being able to bring welcome prosperity to Brazil’s northern region: "Brazil is a continent in its own right, with the south quite developed but the north east still poor," he observes. "There is big demand in the north, but not many operators there offering services. I’d expect other South American countries to benefit too, but some of them are quite small markets in terms of demand."

Ari Lopes, principal analyst with Ovum, says all the bigger Latin American countries – Brazil, Argentina, Mexico, Colombia –have whole regions that are pretty much untroubled by modern connectivity services. 

"Brazil, for example, has 5,600 or so towns and cities, and fixed broadband penetration in 40% of those is at less than 5%," he points out. "Most of the 40% is in the north and north east." 

He points out that Brazil has no national broadband strategy or universal broadband fund, unlike Argentina and Columbia. "What’s going on instead is a lot of smaller service providers, around 4,000, who offer broadband in often quite small areas where the incumbent and big operators are not interested in going," he explains. "Compare that to Central America and the Caribbean where large companies like Digicel and Cable & Wireless are doing a lot of investment everywhere." 

Colombia, says Lopes, is a notable broadband success story: "In 2010 they had around 100 cities connected to the national fibre network, and 1,000 still unconnected," he claims. "Now all 1,100 cities are connected. Venezuela by contrast is a disaster, with the government making it almost impossible for companies to invest." 

Many governments make it a priority to stimulate investment, not only in their jurisdiction but in other places where they deem it in their interests to do so. Alan Mauldin, research director at analyst firm TeleGeography, pinpoints China’s One Belt, One Road policy for much current investment in under-developed places. "There’s the SAIL subsea cable being built between Brazil and Cameroon by Huawei Marine Networks and backed by China Unicom, and there’s another plan for a project between Chile and China," he says. "There’s also the PEACE cable from Pakistan to East Africa another Huawei Marine project – all part of One Belt, One Road." 

Mauldin points also to a plethora of domestic cables being built to empower the many small nations of Oceania: "There’s one that’s just been completed in Tonga, and another planned for Polynesia," he says. "There’s also a cable in prospect for East Timor – its first. These projects are often backed by a regional development bank because they are not always very good commercial propositions." 

Asia is mostly well served with connectivity, but does still have pockets of relative underdevelopment. The mobile market in Myanmar, for example, has been experiencing a rush of new competition, although a slowdown in fresh subscriptions is forecast for the next five years by analyst firm Buddecomm. The country’s fixed-line sector is still highly underdeveloped and may remain so. Find out more at Myanmar Connect 2019, taking place on 18 & 19 September in Yangon. It’s a similar story in Mongolia where wide open spaces and a distributed population make mobile broadband a first choice and the basis for the country’s fast expanding digital economy, supported by satellite initiatives.

Across the vast centre of Russia, there are several carriers building infrastructure to fill gaps and attract traffic looking for low latency between the Far East and Europe. In Eastern Europe meanwhile there remains a clear developmental distinction between EU and non-EU countries.

"In the Balkan region, for example, you’ve got countries in various stages of development," points out Vlad Ihora, director of wholesale at Colt. "The geopolitical situation is quite stable now, and the strategic location of these places is good for global carriers looking for alternative routes into Europe from the Middle East and Asia. Diversity is important and there’s an attraction to building in these under-utilised places, as an alternative to submarine options." 

Ihora says the game changes as one looks further east into former Soviet countries, where it’s still common at best to find a duopoly and sometimes still a monopoly of operators. Prices, he says, are high in places like Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan where for a number of reasons international carriers have been kept out. That may soon change, he believes, as market pressures start to gather strength. 

"Ukraine is doing well as a regional hub, with a lot of eastern and western carriers now meeting in its Internet exchanges and swapping really large volumes of traffic," he claims. "The same goes for Bulgaria which is important partly because it borders Turkey which has for years been an important route for trade east to west."

The connectivity-lite part of the world map is shrinking fast, a fraction of what it was 10 years ago. But there are still pickings for those prepared to combine patience and boldness. 

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