Broadband across the East Africa region is booming, possibly even leapfrogging technology available in SA. But industry experts say SA's telecoms industry needs only focus inwards to succeed.
Last week, Wananchi Group, an African triple play (broadband, multi-channel cable television and voice telephony) and VSAT provider, signed an agreement with networking giant Cisco for the purchase of Cisco network technology solutions and services across Africa.
With financial backing of $200 million, the agreement will result in the rollout of high-speed fibre to the home, the development of VSAT and WiMax services, and the deployment of pay-TV programming across the region.
The services will be rolled out to nine countries, including Kenya, Uganda, Tanzania, Rwanda, Burundi, Malawi, Ethiopia, Sudan and Zambia. SA is not and will not be one of those countries.
Richard Bell, CEO of East African Partners and founder of Kenya Data Networks, says the group is interested in developing a network in SA, but says the country's market has a closed regulatory environment, preventing Wananchi from getting a licence to operate.
“East Africa has leapfrogged ahead of SA. If we could get a licence to build a cable network in SA, we'd be there in a second,” says Bell.
Analysts have hit back, saying SA's regulatory environment is not a closed one and if the company wanted to invest in SA, it would have to commit to navigating a more mature, albeit complex, environment to those found in East Africa.
Tied up
The South African regulatory environment is not a closed one; the real issue in SA is the amount and complexity of red tape involved in any business venture, explains WWW Strategy MD Steven Ambrose.
“SA also has long established companies, such as Telkom, operating in this space, and a fairly developed infrastructure in urban areas. East Africa is essentially a 'greenfields' operation with little or no infrastructure in place,” he states.
Ambrose argues that when combining this with a simpler and less complicated regulatory and operating environment, it makes implementation far easier and faster.
“The development of broadband in SA is essentially one of investment and opportunity, no longer is it regulatory. There are more than sufficient licences available to make the market competitive,” he continues.
Spiwe Chireka, industry analyst at Frost & Sullivan, agrees that as it stands, SA has in excess of 700+ ECN licence-holders and the market is reaching saturation point. She argues that developing the broadband market is not a case of relying on foreign entities but focusing inwards on a more balanced South African market.
“For once, the fact that SA is far more developed than other countries in Africa has actually worked against us,” argues Ambrose. The incumbent monopolies, which include Telkom, Vodacom, Neotel and MTN, have resulted in a highly complex, and by the very nature slow moving arena.
The challenge is logistical, as the infrastructure environment is highly capital-intensive, and major infrastructure projects of this nature can take years to come to fruition, he explains. Due to the late start SA had in clearing up the regulatory environment, it will now take at least five to 10 years to create sufficient infrastructure to get broadband to where it should be.
“There is an almost toxic environment of vested interest, government involvement, regulatory interference and ineptitude, all of which militates against nimble and entrepreneurial development, which is taking place in East Africa,” concludes Ambrose.
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