There is still plenty of opportunity for the private sector to roll out telecommunications infrastructure, with demand increasing exponentially as international connections improve, say market participants.
Dark Fibre Africa CEO Gustav Smit says the demand is so extensive that, for the near future, at least, there is no real reason for participants to duplicate their efforts as so much of the country still needs to be connected.
Furthermore, the improvement in international connectivity, such as the upgrade of the SAT-3 West Coast undersea cable, the planning of a new cable on that side of the continent and the Seacom cable on the East Coast, along with the construction of the East African Submarine System, mean national networks have to be built.
“Without a national fibre-optic network, one cannot realise the benefits of this improved international connectivity,” he notes.
Smit says the market for connectivity is still open, which means players don't have to compete with each other just yet.
Spiwe Chireka, an analyst at international consulting firm Frost & Sullivan, agrees with Smit. “You need very extensive fibre-optic networks to leverage the benefits of increased connectivity,” she explains.
Chireka says the main reason for high connectivity costs across the African continent is that of connecting end-users to the international cables.
“Many landlocked countries have to rely on satellite connectivity to the cables and that is why nearly true broadband speeds are only found close to the coast. This is all a big opportunity as one can never have enough fibre-optic cable,” she comments.
Smit says Dark Fibre Africa's relationship with state-owned Broadband Infraco is one of co-operation, rather than competition.
“We make a point of not duplicating what they are doing. We are also open to suggestions of co-operating with them on certain routes if necessary.”
However, Smit adds that many private companies, such as Internet service providers, prefer to work with another private sector company, as state-owned enterprises are unable to offer the necessary service level agreements.
“There is also concern about some of Broadband Infraco's network as it consists of aging fibre-optic cables, which could also be a factor,” he states.
Chireka says there is no reason why a government-owned company could not offer service level agreements on par with those offered by private companies. However, she acknowledges that public sector enterprises have a bad record in this area.
“State-owned companies tend to over-promise and then under-deliver. Broadband Infraco could easily take a leaf out of the private companies' book, and with its government subsidies, easily become a major force in the market,” she concludes.
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