Telecom: Fast & Furious ICT Sector

Submitted by Boko on 16 June, 2006 - 20:23.

TelecomIn my mind, two words sum up the popular perception of the telecom sector; 'frenetic' and 'turbulent'. I agree, some people thrive in such environments, while for some others, it’s a career debilitating disease. The industry is unique for a number of reasons but for the purposes of this illustration, we stick to the Technological elements of it.
The telecommunication industry is pretty much the primary vehicle that ushered in the current digital era, hence the moniker; 'information technology age', and it somehow remains the bleeding edge of current technological innovations, evidenced by its characteristically high disruptive technology propensity. Following from this, I find it interesting, but perfectly logical that telecom is also leading the charge in the ‘digitalization’ of SSA (sub-Saharan Africa) -- ahead of all other needs in SSA: water, power, healthcare, etc. Of all possible hues,  the SSA digital lightening flashes in telecom silhouettes! This sentiment is aptly captured in a popular South African joke; "It’s easier to talk on the phone these days than get a bucket of water from Cape town water faucets."

Wireless Telecom Unlimited

A lot of explanations can be made for telecom leading the digital incursion into SSA; besides a fairly short ROI cycle, entry barriers are relatively low as far as widely-deployed public utility set up costs go. It is relatively inexpensive to piggyback extensions on pre-existing infrastructure or install wireless connectivity hardware from scratch, rather than installing in-ground wire/fiber cables, hence the characteristic dearth of ‘wire’ connectivity in SSA.
Wireless is king in SSA; Cable TV, ‘fixed wireless' home &  office telephones, mobile phones, ISP services, etc., are all offered via wireless framework. Current profitability figures for the telecom industry in SSA are legendary and future profit/usage projections are even more mind-boggling; Cable TV, ISPs, telephones and mobile phone markets lumped together, make up a multi-billion dollar industry. Given an average SSA teledensity at less than 10%, the market is at a high-growth phase -- very far from mature, and much further from saturated.

Voice vs. Data Traffic in Telecom Networks 

There’s always the alarmists to contend with; this article seems to suggest the SSA telecom market is nearing maturity -- weighing in from the network voice traffic versus data traffic comparison. My days at Nortel coincided with the emergence of the ‘succession’ initiative. Succession, in a nutshell, was a fallout from industry study reports that showed data traffic volumes were overtaking voice traffic on the legacy telecom network. Hence, the industry needed to rework entire network configurations to make them more data-friendly; switches, routers, bridges, protocols, etc., all had to become packet-data compatible (IP and ATM protocols initially but ATM didn’t quite take off). A lot of industry-defining changes have occurred following this 'packetized' (read: Internet Protocol - IP) network revolution, giving rise to a pervasive slew of Voice over Internet Protocol (VoIP) applications at greatly reduced costs – evident in recent telephone and broadband internet access cost reductions (No impacts on cable TV 'yet').
The whole succession stimulus was a mere resurgence of the primal industry albatross (read: “Disruptive technologies” and “bleeding edge innovation”). SSA telecom should however enjoy a less turbulent time because they can learn from mistakes already made in western telecom industries where typically, the emerging technologies had been earlier deployed. SSA is somewhat shielded; at worst, they get swished around by 'cutting edge' technologies but never fully exposed to the gale force of 'bleeding edge' technologies.

EASSy problems are Telecom problems

Typically, telecom companies operate and grow, just like any other industry, via conventional business strategies; enhancing quality of service (making best use of whatever tools available, wireless or not), manpower quality, skills and organization, marketing strategies, product structuring, advertising, Mergers and acquisitions, forging synergies within and across industry platforms, Innovation, etc. But they remain most vulnerable to the break-neck speed of technology transformations -– giving rise to a whole range of industry inebriating paradigm shifts. This unique techno-slippery trait of the telecom terrain would appear to feed the anti-open standards sentiment among SSA telecom providers as seen in the on-going EASSy squabble. Playing devil’s advocate for a second, here's a teaser to bring the anti-open standards argument into sharper focus on the EASSy problem; how would a telecom company recoup sunk costs invested in laying fiber and copper cables, installing copper/fiber-centric switching and routing equipment, if ISDN transmission over power line (IOPL) protocol suddenly gains traction on a commercial scale, and wipes out existing copper and fiber competitive advantages?
Thus, I submit that the Péché of the whole EASSy befuddlement for the pantheon of anti-open access SSA telecom companies, are merely different permutations of the self same overarching industry uncertainty phenomenon.


 

...Part II coming