Disruptive technologies: Impacting African telecoms

The impact of disruptive technologies is perhaps nowhere more profound than the telecommunications field. Around the world, the development and implementation of communications technology continues to provide opportunities for faster, more effective and better methods of staying connected. And while the invention of the telephone harks back nearly two centuries, it is the stunning advances being made in the field of wireless communications - and the increasingly relaxed regulatory environment - which has the market abuzz.

According to Keith Bothma of GijimaAst - which provides wireless communications technologies to corporate South Africa - the telecommunications market is in a state of flux. "Notably, the impact of disruptive technologies in this market is profound; there are numerous established players looking after their interests while a host of new and innovative operators are looking for their part of the lucrative communications market," he says.

`Disruptive technology` refers to a new innovation, product or service which has the power to overturn the established dominant technology presently in the market.

"Disruptive technologies give participants in a market the ability to supersede incumbent players by enabling them to be more cost-effective, more convenient, or provide enhanced of better services," explains Bothma.

In the field of telecommunications, these technologies are legion; GSM (Global System for Mobile Communications) rapidly superseded fixed-line telecommunications in South Africa and has enjoyed particular success across Africa, enabling telecommunications operators to extend their services to previously inaccessible areas. In Africa, some 83 million people use GSM, while just 30 million have fixed lines - despite the fact that the fixed line telephone was invented in 1876.

There is also the wave of deregulation sweeping through the telecommunications industry across Africa. Bothma says this is an enormous disruptive force. "With deregulation and the availability of additional licences, new threats and opportunities are presented. The threats predominantly affect incumbent operators, which are under pressure to adapt or die in the face of new, agile and ambitious competitors which are able to take advantage of the disruptive technologies to potentially rapidly usurp market share," he explains.

While GSM has been a poster child for disruptive technologies in the telecommunications field, a host of newer technologies and techniques continue to enter the market rapidly, further pushing the boundaries of what can be achieved with mobile networks.

Notes Bothma: "Voice over IP [VOIP], WiMax and IPTV are among the more notable disruptive technologies. There is also the trend towards fixed-mobile convergence, which holds the promise of delivering services to more people than ever before."

By now a common topic, VOIP targets one of the most important aspects of communications for the user - that of cost. Offering the ability to carry voice at a fraction of the cost of a traditional circuit-switched network, VOIP has enjoyed sustained hype - and it is delivering on the promise. However, Bothma notes that the implications of the technology are far reaching. He explains: "VOIP is forcing a fundamental change in the business models of the old guard. With VOIP, the fixed line infrastructures of the incumbent operators, which cost millions or even billions to establish, are under serious threat of obsolescence."

The VOIP threat affects the enormously successful mobile operators too. Voice remains the `killer application` and price remains the most important consideration for the bulk of users. "Telecoms operators still derive the bulk of their revenues from voice communication. While mobile operators are introducing data services to their product mix with technologies like 3G and HSDPA, these are marginal in terms of revenue generation and are unlikely to be profitable in the near future. VOIP presents a real threat to mobile operators, especially with the increased introduction of handsets featuring a WiFi chip," says Bothma.

The WiFi chip enables a mobile handset to connect directly to a corporate LAN; with a VOIP client installed, it is a relatively simple step to using the mobile GSM handset as a VOIP communications tool, bypassing the GSP network.

WiMax, on the other hand, is a technology which enables high speed signal distribution, and can be used as a `last mile` solution to deliver Internet connectivity to homes or businesses. "WiMax is often considered to be an enabling technology for fixed-mobile convergence; a signal carried by a fixed line can terminate at a WiMax station for easy distribution into a metropolitan area, delivering high speed bandwidth across a large area very easily," Bothma explains.

While these disruptive technologies are already having an impact on the market, Bothma stresses that success will be driven by the ability for service providers and network operators to deliver convenience, compelling content and an enjoyable user experience.

"Price remains the single biggest factor, but ease of use and simplicity are critical for mass user adoption. These - and other - disruptive technologies will have a profound influence on the telecommunications market; the operators that can harness the technologies to deliver convenient and compelling services will prosper, while customers of every sort can look forward to competition, less costly and more useful services than ever before."