Among Barriers to 4G in Africa, 3G Looms Large

It typically goes unsaid that a vibrant mobile Internet ecosystem allowing nearly anybody who wants to use the services to do so requires ecosystem alignment. In other words, every part of the value chain has to align to produce outcomes that allow virtually all citizens and residents to use mobile Internet.

And that emphasis on ecosystem alignment has to be foremost, if Africa is to experience widespread Long Term Evolution service, according to Ovum analyst Thecla Mbongue.

In early June 2015  there were 42 live LTE networks across Africa, spread across 21 countries, serving three million accounts, said Mbongue. That represents about one percent adoption.

The high cost of terminals and a fragmented, regional approach to spectrum allocation are the main factors impeding faster LTE growth, Mbongue notes.

So African stakeholders--ranging from governments, regulators, service providers, app providers and infrastructure and device suppliers--will be needed.

Device taxation and spectrum harmonization are two notable areas where work is required.

Import duties on handsets--which raise the cost for potential users, vary across the continent.

Exemption policies help, and are more frequent in East and Southern Africa, but most West and Central African countries are yet to follow suit, Mbongue said.

The government of Ghana recently announced a smartphone import tax reduction to 20 percent.
Until now, taxes could account for up to 35 percent of the cost of a smartphone.

Import duty for handsets are set at 20 percent in Senegal as well. In 2013, Nigeria moved to eliminate  import duties on devices by the end of 2014. Rates now are at about five percent.

Aligning regional spectrum allocations also would lead to handset economies of scale, and help reduce device prices.

The 1800MHz band is the most common because operators often re-farm spectrum initially allocated for GSM.

But slow adoption of 3G, which means service providers have not yet recovered their investments, also likely is a factor retarding investment by mobile operators.

In West Africa, where LTE is available in only four countries out of 15, there are seven networks, of which four are based in Nigeria.

Only one of those networks was activated by a traditional mobile network operator). The other six were started by ISPs. That suggests some of the sluggish LTE adoption on the part of mobile service providers is voluntary: they might be hoping to profit from their 3G investments before moving rapidly to 4G. .

That, in fact, is what Mbongue suggests. “3G is yet to be fully monetized,” she said.

So when will 4G become a higher priority? About 2019, Ovum’s surveys suggest. By 2019 LTE subscriptions should grow by two orders of magnitude to 318 million accounts.

“Operators must work with regulators to discuss and formulate a coordinated approach to tackling the barriers that prevent 4G uptake,” she argues. “Lower handset taxes, harmonized spectrum allocation, and a framework for network-sharing” can help.
Post a Comment

Popular posts from this blog

Voice Usage and Texting Trends Headed in Opposite Directions

What to Do About Industry Challenges? "Take the Package," One Exec Quips

Verizon has a Brand Promise Problem