Afcom ’98 review: partnering to build the african information infrastructure

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  The year 2000 computer problem (The Millennium Bug).
  
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  The changing international accounting rate regime.
  
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  The emerging global mobile personal communication system (GMPCS) technologies and related policies.
  
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  The future of the Internet, including electronic commerce, Internet telephony and Internet radio.
  
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  The appropriate use of multimedia for African development, including distance learning and healthcare delivery (telemedicine).
  

Following Dr. Akwule’s welcome and introductions, FCC Chairman William E. Kennard delivered his opening address. During the course of his remarks, Kennard reminded the audience of U.S. Vice President Al Gore’s 1994 speech in Buenos Aires (Argentina) challenging all nations of the world to create a Global Information Infrastructure (GII). According to Chairman Kennard the GII would evolve around four fundamental principles:

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  Encouraging private investment;
  
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  Promoting competition;
  
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  Creating a flexible regulatory framework to keep pace with change and
  
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  Providing open access to the network.
  

However, the message many of the African representatives were pleased to hear from Kennard was the

pledge of U.S. support to telecommunications initiatives in Africa. “We at the FCC are committed to working in partnership with you. And beyond the FCC, I know that my other colleagues in the U.S. government are committed to working with you to advance the AII,” announced Kennard. Emphasizing the depth of U.S. commitment to AII initiatives, the chairman reminded the audience of President Clinton’s statement in March prior to his trip to Africa that “the United States stands ready to be a partner in Africa’s prosperity.”

The theme of partnership between government and the private sector was addressed further on the international level by Dr. Henry Chasia, Deputy Secretary General of the International Telecommunications Union (ITU) and various panelists from the sessions that followed. Dr. Chasia opened his remarks by promoting the positive aspects of Africa’s economic and telecommunications base. “It would probably come as a shock to many to learn that according to the IMF, African nations are expected to have a record GDP growth average of 4.7% in 1998… Africa might actually become the fastest growing region in the world. Many people probably also don’t know that growth in main telephone lines across the entire continent is stable at a very healthy 10% per annum… If we continue to expand our networks at the present rate, we will have doubled the number of main lines on the African continent by the year 2003” Chasia exclaimed. He also noted that Africa’s rapidly growing cellular networks serve over 2 million subscribers and Internet services are “proving enormously popular, providing new opportunities for local investors and opening up vast possibilities for the delivery of vital services such as education and health care.”

Dr. Chasia predicted African entrepreneurs will play a key role in the expansion of markets and discussed private investment issues related to Africa’s participation in the global marketplace of telecommunications. “The world’s relentless move towards open global markets received a great boost not long ago with the signing of the WTO agreement on Trade in Basic Telecommunications,” stated Chasia. “At signing, seven African nations put their names to this agreement, but I hope that, in the future, many more will take the plunge and commit to the liberalization of their national markets… I believe that private investment offers the best hope for rapidly expanding and upgrading Africa’s telecommunications networks. I further believe that an extensive and reliable communications capability will be so important to each country’s national economy in just a few years from now that we cannot and must not tarry.”

The ITU’s Deputy Secretary General reminded the delegates representing African governments of the importance of “good governance and political stability.” In addition, he suggested effective regulatory reform is a key ingredient necessary to attract willing investors. “I cannot stress too strongly the importance of firm and independent regulation in a liberalized environment. The establishment of an impartial regulatory agency is an essential step towards encouraging new players to participate in the national telecommunications sector… An effective regulatory framework is equally essential to each and every government which opens its telecommunications sector to foreign participation.”

Before concluding his remarks, Dr. Chasia shared his vision for empowering African people with the technical, financial, and educational skills to participate in an “information economy.” He stated:

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  We must encourage our people to invest their savings in this industry and we must equally encourage foreign investment, particularly if it comes with new technology and management skills that can be passed on to our people.
  
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  By building and upgrading our telecommunications networks, I believe we will offer the vast majority of people in Africa the best chance they have ever had of joining the ranks of the prosperous.
  
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  By making the education of our children and the development of an African Information Infrastructure their two greatest priorities, Africa’s governments may be able to foster a boom in their nations’ economies like none we have yet witnessed.
  

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  Improvement of penetration in rural areas from 0.16 lines per 100 people to 1 line per 100 people.
  
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  Improvement of penetration in urban areas from 4 lines per 100 people to 20 lines per 100 people.
  

The projected $5.4 billion dollar initiative will create 300,000 lines for rural areas as well as an additional 2.4 million lines for urban areas. The Kenyan minister noted however, that the enormous cost of the investment “will no doubt require partnering with the private sector in order to transform the info-communications sector for the benefit of all stakeholders.” With private sector investment playing such a vital role in the success of these ventures, the Kenyan government has moved swiftly to put forth legislature that will attract potential investors. The 1998 Kenyan Communications Bill and Postal Corporation of Kenya Bill are two such measures. “As part of my Government’s initiative towards creating a conducive environment for private sector participation, we have made good progress towards implementing key activities in the reform process,” said Ntimama. Other key items announced by Minister Ntimama include:

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  26% of Telkom Limited (Kenya) will be sold to a strategic investor by the government in January 1999; 20% will be sold to local and foreign investors through the Nairobi Stock Exchange.
  
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  A second GSM license to be granted based on a joint venture with Telkom (70%) and an international partner (30%).
  
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  Issuances of licenses to local access network (LAN) operators in all provinces except Nairobi where Telkom will have a 5-year exclusivity license. Additionally, Telkom will be granted licenses in all provinces that it currently operates.
  

Minister Ntimama, summarizing Kenya’s telecommunications position said, “we in Kenya aim to encourage partnership between Kenya and foreign investors. We recognize that in the context of a global economy, we need to look outward to the world both to seek opportunities for our enterprises and to invite others to participate in building our economy. This is particularly crucial in the telecommunications sector, which is highly capital intensive and where the pace of technological change and the rate which new services are emerging is extremely rapid. The function of the Government, in this case, will be to support and facilitate through the Investment Promotion Centre, the establishment of joint venture partnerships in all areas of the liberalized telecommunications sector.”

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  Agriculture information systems and networks to promote food security.
  
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  Basic education and health care information systems, to manage and promote basic education.
  
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  Statistical information systems and geographic information systems for planning natural resources management.
  
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  Property, land and business registry systems and networks, to improve financial market [s] and the development of private sector.
  
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  Trade information systems, business promotion information systems and networks to improve trade and global competitiveness.
  
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  Transport, communication, utilities management information systems and networks to improve the delivery of infrastructure and social services.
  
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  Budgeting, monitoring tax administration, expenditure management system [s] both at national and local government level to support the management of macroeconomics planning and project implementation at [the] national level.
  

To accomplish the many tasks at hand, Minister Bitewelign cited three priorities that required immediate attention. “Firstly, we would like to provide communications to rural areas with particular reference to previously neglected regions” stated Bitewelign. “Second, we would like to make wide range of modern high bandwidth services available to urban areas to support a growing demand for multimedia communications. Thirdly, we intend to provide access to local and global information resources by improving connectivity. The three areas of focus are interdependent.” Minister Bitewelign further detailed Ethiopia’s planned initiatives for their telecommunications infrastructure. “The Government of Ethiopia is determined to bring about a sustained improvement in the availability, reliability and quality of services sufficient to ensure that basic services for rural communications is met. We are planning to introduce more than 760,000 lines in the coming two years of which 50% is earmarked for rural areas. This will improve the density of lines rising to between 1 and 1.5 lines per 100 people,” said Bitewelign. Improving public access in rural and urban areas through the use of pay telephone facilities, cellular telephone service and satellite communications were given high priority on Ethiopia’s list as well.

Minister Bitewelign stated, “in urban areas, the number of payphones will be determined by commercial demand, whereas in the rural areas our long-term objective shall be to have at least one payphone in every village of more than 1000 people… The Ethiopian Telecommunications Corporation (ETC) is expected to introduce cellular network with 36,000 subscribes in the next three months. In the next two years, cellular connections are planned to meet access requirement to most urban or semi-urban areas with low density. Satellite-related communications technologies also are emerging as a contributor to solving our rural telecommunications problems. We are deploying very small Aperture Terminal (VSAT) satellite systems in rural areas specially for reducing the communications gap between regions in the country. So far we have bought 470 VSAT terminals and have started installing them. Through the VSAT systems we will provide Internet and digital TV services as well as interactive distance learning. In addition to these, about 200 Digital Radio Multi Access subscribers systems (DRMAS) are being installed in regional villages.”

According to Minister Bitewelign, Ethiopia is fully connected to the Internet and currently boasts 2500 users. Also, the need for greater individual access to the Internet has led to the rise of Cyber Cafes throughout Addis Ababa. However, the Minister warned, “access and connectivity is meaningless unless it is accompanied by measures to ensure affordability, ease of use and content that is directed by the community.”

Concluding his remarks, Minister Bitewelign reminded the audience that “the information revolution is a powerful too which we can not ignore in our everyday life. It affects our schools, hospitals, institutions and management… We should therefore work out an African plan of action for telecommunications development based on a common and integrated vision.”
Lesotho
The nation of Lesotho is in the midst of telecommunications reform that began in earnest last year. Its Minister for Communications, the Honorable ‘Nyane Mphafi, commented on the purpose for reform and the status of radio, TV, and Internet connectivity within the country. “The reforms” Mphafi said, “are aimed at eliminating obstacles to development of telecommunications in Lesotho, namely:”

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  Lack of investment funds for network expansion and upgrading.
  
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  High cost per line for provision of telecommunications services.
  
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  Lack of infrastructure for provision of a wide variety [of] telecommunications services.
  
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  Poor availability of telecommunications services to rural communities.
  

According to Minister Mphafi, “the process of reform is focused primarily on the incumbent national

operator, the Lesotho Telecommunications Corporation (LTC) and on creating an overall enabling environment.” The reform process, scheduled for completion by June of 1999, include the adoption of a new Telecommunications Act, establishment of an independent organization to regulate telecommunications, market liberalization for services such as cellular telephony, and securing a “strategic equity partner” for LTC by offering a 5-year market exclusivity period as an incentive to invest. Plans to convert Lesotho National Broadcasting Service (LNBS) into a public broadcasting corporation are under development. LNBS, the lone broadcast operation in Lesotho, operates a single radio station covering 80% of the country.

The station operates on three bands – short wave, medium wave, and FM. Through improvements such as installation of new FM transmitters, LNBS has grown significantly since 1993. Minister Mphafi also touted other major activities underway in Lesotho. “Currently, four new projects, namely the establishment of the FM/TV main station which is expected to be completed by October 1998, the refurbishment of radio studios, establishment of regional studios in the districts, one in the north and one in the south of Lesotho and the procurement of [a] radio outside broadcast vehicle are on course,” Mphafi said. Completion of these projects is slated for March 1999. The Minister also noted that all analogue radio and television equipment had been replaced with “the latest digital systems.” In the area Internet connectivity, Minister Mphafi reported “the wiring and installation of local area network (LAN) have been completed and all offices make use of this facility for effective and prompt communication among staff members. Several offices are already on E-mail.”

According to Minister Kaba, “ICOM has already installed its equipment based on the AMPS standard and is serving the public in an isolated mode. In the near future, the ICOM system will be interconnected with the PSTN (public switch telephone network). Omega is expected to install a system based on the GSM standard shortly. In addition to the cellular systems, Monrovia is supplied with Internet service by two other local firms – Data Technology Solutions and LibNet. The Liberian Minister outlined the country’s plans to upgrade PSTN systems in Monrovia and rural areas. The initiatives discussed included:

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  Installation of a 5,000-line digital exchange to replace the analog L.M. Ericsson switch at the Central Terminal Office in Monrovia.
  
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  Installation of a 2,000-line digital exchange in Sinkor.
  
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  Installation of four 1,000-line exchanges in the areas of Paynesville.
  
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  Reconstruction of the external plant network in Monrovia and its environs.
  
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  Establishment of telecommunications bureau in 18 rural cities through the installation of UHF radio links, mini PABX’s, diesel power systems and external plant networks.
  
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  Reconstruction of the Rural Telecommunications Network of Liberia.
  

Concluding his remarks, Minister Kaba stated “the People of Liberia are in the better position to improve and develop the communications network of the country. However, this cannot be possible in the absent of the following:

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  An improved communication policy that will give more emphasis on privatization.
  
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  Telecommunications infrastructure must be regionalized as a matter of policy to avoid external control.
  
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  There must be an increased pressure on industrialized countries to increase investment in Africa Telecommunication.
  

According to Odunsanya, Nigeria operates 267 telephone exchange locations with a capacity of 700,000 lines. An additional 15,000 cellular telephone lines are available as well. “Nigeria’s immediate requirements based on established and suppressed demands exceed 3 million telephone and 200,000 cellular lines in excess of the existing 500,000 telephone and 15,000 cellular lines. The country’s target is to meet these demands by the year 2001,” said Odunsanya. The deputy director also announced the planned privatization of the country’s existing national carrier NITEL. Scheduled for completion in 1999, NITEL will divest into three portions. The Nigerian government will maintain 40% of NITEL. A “strategic investor,” through an international bidding process, will retain 40% of the organization as well. “The remaining 20% will be made available to the Nigerian public,” Odunsanya stated.

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  Complete the establishment and strengthening of the Integrated Billing system (DATOS).
  
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  Install the Linear UT 100 Exchange and the Digital Tone multi-frequency equipment.
  
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  A rate revision for local calls.
  
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  Improved customer care.
  
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  Spread of the Internet and E-mail services.
  
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  Domestic telephone expansion – especially penetration into the rural areas.
  
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  Major focus on international telephone and facsimile services.
  
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  Introduction of a new telex exchange (the Transit Telex Exchange). Although new types of telecommunications services have been replacing telex services, major institutions such as banks, embassies, insurance companies, and customs still prefer telex services.
  
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  Preparation for the Millennium (year 2000 computer bug) problems in telecommunications. A budget allocation has been made for this.
  

“In all of this, however, the rehabilitation of damaged infrastructure is the crucial first step without which the company (SIERRATEL) will be incapable of providing quality telecommunications services nationwide,” Minister Spencer stated. He reminded the audience that “an efficient Telecommunications network is a necessary requirement for sustained growth and development of a modern society.” Although radio and television broadcasting is currently “underdeveloped,” according to Minister Spencer it has “potential for immense growth.” He stressed the point that Sierra Leone currently has “a very liberal policy as far as radio broadcasting is concerned, and we are in the process of liberalizing television. In addition, Minister Spencer announced the government anticipates “considering applications for private television broadcasting in the near future.” However, Sierra Leone’s representative noted that advances in the broadcasting sector were “contingent on our putting in place a comprehensive information and telecommunication policy which we are currently working on. We are also hoping to have independent monitoring bodies n place for both telecommunications and broadcasting in the near future,” said Minister Spencer.

Concluding his remarks on the future of telecommunications in Sierra Leone and SIERRATEL, the Minister of Information stated “the national Telecommunications Company, is now being challenged to become a truly profitable business enterprise. Government is in the process of finalizing a performance contract with the management of the company. This is the first stage in what will hopefully be a divestiture by government of the majority of its financial interest in the company.”
PRIVATE SECTOR DEVELOPMENTS
The Technology Showcase and Policy & Business forums afforded representatives from various private sector organizations opportunities to discuss major technological and investment developments in Africa.
John L. Mack, Managing Director of WorldSpace Africa described the intricate use of satellite technology on the continent and its implications for Africa’s telecommunications development. “In October of this year, WorldSpace will be launching its first of three satellites,” Mack announced. “What is unique about this satellite is that it is being launched to cover the African region and for the first time in history a new satellite technology will be launched in Africa before it has been launched anywhere else in the world” stated Mack. The satellite, dubbed AfriStar will serve as a digital audio and multimedia platform delivering hundreds of channels of diversified program content to the African/Middle East region with the use of a digital receiver.
“Perhaps more than any other region, Africa is poised to achieve decades of telecommunications development in a few short years because the technology that Africa’s structure and geography demands is now available” said Iridium LCC’s Vice President of Global Gateway Management, Lauri J. Fitz-Pegado. Iridium will launch the world’s first global mobile personal communications service by satellite (GMPCS) in November. Ms. Fitz-Pegado speculated that private investment and partnerships would play a key role in Africa’s telecommunications growth, particularly in the area of cellular systems. “In recent years, Africa has begun to reap the rewards of innovations in telecommunications and the benefits of the private sector and public sector coming together to form strategic alliances, offer new and exciting services, fund needed infrastructure and work in parallel to create regulatory structures. The incredible recent growth in cellular systems serves as a perfect example” Fitz-Pegado said.

Iridium’s Vice President continued her assessment of the industry noting that “fifteen new private mobile cellular companies have been launched in Africa since 1995, and the number of subscribers is expected to surpass 2 million during 1998.” “Moreover,” continued Fitz-Pegado, “we have seen national fixed line operators in Cote D’Ivoire, Guinea, Ghana, Senegal and South Africa move toward privatization with investments from foreign strategic investors. These new strategic partnerships will prepare these countries for the next millennium, and enable their citizens to be well equipped to compete in this new global environment.”

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  Most of the projects, although badly needed, never get implemented because of unrealistic demands by either the project sponsors or governments.
  
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  Many projects have not been financed because of the vested interests of equipment manufacturers and operators who do not want competition from indigenous companies.
  
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  Equipment suppliers pursue predatory pricing practices especially when they have local political clout.
  
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  Many inexperienced companies are attempting to become operators for the first time in Africa, spurred on by the notion that there is such a need for service – that Africans will take whatever they can get. The results are often disastrous and expensive.
  
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  There is a continual trend, especially in satellite networks, where every attempt is made to locate the physical operating assets offshore even when business logic dictates otherwise.
  
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  The legal architecture of many licenses and contracts are often times incredibly slanted towards the foreign investor even when the underlying business opportunity is fundamentally sound and profitable.
  
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  In many projects, the associated political, technical, commercial and financial risks are significantly exaggerated so as to justify pricing and profitability that are both predatory and criminal.
  

Despite these concerns however, Phillips emphasized the point that “there have also been situations in which creative approaches to financing, a true spirit of partnership and compromise, have resulted in successful undertaking.”