The greatest constraint to satellite deployment in Africa is cost, said speakers and delegates at Satcom Africa 2006 in Sandton this week.
The theme running through the presentations and panel discussions was why the price of satellite deployment in Africa is too high, what manufacturers of satellite solutions are doing to assist and what financing models would work effectively.
Lieb Vermeulen, group CIO of the African Banking Corporation in Zimbabwe, said even though Africa has a teledensity of 6.2% and there are ample opportunities for satellite deployment as a telecommunications platform, Africa is still on the margins of the global satellite market.
Vermeulen noted that despite the acute need for telecoms infrastructure in Africa, the continent accounts for only 10% of VSAT deployment globally. He said African projects are on such a small scale that 50 installations that are routine in other parts of the world, are regarded as major contracts in African countries.
"We cannot contribute enough to make us viable to suppliers," he noted.
Economies of scale
Guillaume Aris, ND Satcom's representative in Africa, agreed that lack of volume and economies of scale in the African market impacts the cost of satellite deployment on the continent.
He noted that while manufacturers wish to offer competitive prices, they cannot sponsor deployment. "One way or another we have to get our money back."
Michael Antonovich, executive VP of global sales and marketing for PanAmSat, insisted prices have come down and will continue to do so due to a competitive landscape.
He admitted there are areas where PanAmSat can extract premium price and said he "won't apologise for it". Antonovich noted that when the company has a better competitor in another region, it is penalised and forced to charge less. That is the nature of market forces, he said.
Unique challenges
A delegate pointed out that Africa pays at least 20% more than the rest of the world for its satellite service.
However, Aris argued that Africa is not being overcharged. He said the additional costs arise due to challenges that are unique to Africa. For example, there may be additional costs when delivery is delayed. Also, regulatory measures in African countries result in additional costs, including certain taxes. These are costs that Western counterparts do not have to contend with, he noted.
Leke Betechouh Casimir, VP of international relations for the Regional African Satellite Communications Organisation (Rascom), expressed frustration at financial institutions that have no concept of what Africa needs and how to effectively meet these requirements. He insisted the continent would be profitable for manufacturers if they could see the continent's potential.
The proceedings continue today, with Martin Jarrold, chief of international programme development for the Global VSAT Forum, presenting a report on initiatives the organisation is involved with to provide satellite access across Africa.
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Satcom Africa 2006 begins
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