Telecom should make sub-Saharan African life easier not harder

Submitted by Boko on 29 June, 2006 - 17:49.

Akame is a 30-year-old widow with 4 children. She has a college degree and earns a monthly income of $150 as a high school teacher.

She has a mobile phone, which she primarily uses for text messaging and receiving calls only - making voice calls are reserved for emergencies. Why? It is expensive! She bought the phone 3 years ago for about $100 -- big chunk out of her savings and monthly paycheck. Then she had to wait a couple more months to raise another $100 to cover sign up costs/tariff/line charge with one of the national mobile providers. Like the vast majority of SSA mobile phone subscribers, she subscribes on a pre-paid basis; at 25cents/minute rate on originating local calls, a $5 recharge card would give her 20 minutes, so originating calls up to 200 minutes in a month will wipe out 30% of her monthly income.

I’m mulling these exorbitant costs of mobile phone ownership in SSA, and I know telecom providers can do more! For one, providers need to get more creative with their product offering in these SSA emerging markets – it would make a whopper of a difference introducing any of the popular packages deals suffusing the US mobile phone market now, such as: "free in-network calling" (Cingular, Verizon, etc), or "unlimited push-to-talk" (Nextel). Don’t worry about voicemail—SSA tele-citizens hardly use them – people just look up their missed calls and call back or text back.

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The recent outcry over telecom tariff in Uganda, hardly cuts a wrinkle on, neither the Ugandan nor the greater regional SSA, telecom market.

The case for infrastructure sharing has been made over and over; for instance, sharing mobile towers by providers, instead of having each one build theirs in every geographical area they operate in, can be easily achieved. Thus reducing operating costs for telecom providers and passing the cost-savings down to the woebegone SSA end-users. Infrastructure sharing in the west is a mature technological/business/Service concept. As a mobile (phone) device user travels in and out of different provider geographical cells, his/her calls are handed off seamlessly from one provider’s network to the other (providers sort out customer roaming and network usage behind the scenes). Hence, a provider in Texas in agreement with a provider in Oklahoma, ensures his primary subscribers/customers travelling in Oklahoma have their service handed off to the Oklahoma affiliate network. Leaving the Texas provider to concentrate on managing his towers around Texas instead of trying to build enough towers around the country in a bid to provide service to his customers across the entire United States.

Currently in most parts of SSA, most mobile phones don't communicate across diffrent provider networks at all. Try calling an MTN mobile line with a Vmobile phone within same town, city, state or country in SSA or vice versa! It is a pretty common sight where SSA business men and women haul around 3 or 4 different phones in order to ensure cross-network accessibility.

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Mobile phone ownership costs have actually improved, Akame asserts. In the past couple of years, a new mobile provider joined the market and slashed sign-up/line tariff charges by 20% to about $80, and charged airtime usage on a per second basis, as against the traditional per minute rates where calls were rounded up to the nearest minute. Sign up/line tariff charges across all providers are now down to about $70, airtime rates improved to 20 cents per minute for originating calls. Consumers have seen tangible benefits from (provider) competition.

However, overall usage/ownership cost of mobile telephone in SSA vis a vis average SSA per capita GDP of $600 is still very high! The shortcomings of the per capita calculation is a whole different story – upwards of 70% of wealth in SSA countries are concentrated at the top 10% of individual country population, hence a per capita calculation as a mere average of GDP per population figure is bound to yield dubious results. A more honest approach should incorporate a correction factor to mitigate the unequal distribution. Sad thing here is, these SSA mobile providers are making some obscene profits! (MTN 2005 earnings alone was almost $3bn – poised to go higher this year).

An analogous (price-gouging-suggestive) scenario with the recent petroleum price spike in the US, which sparked massive public appeal for the government to investigate the surge in oil company profits as consumer petroleum product prices rose simultaneously, and possibly mete out some punitive measures. Maybe cream off portions of these "questionable" profits, and flow it back to low-income Americans in the form of tax breaks, oil product subsidies, etc. I don’t see why the SSA governments shouldn’t swing the same cudgel at the telecom providers in view of their wildly ballooning profits being squeezed out of collective SSA end-user penury! These profits represent the larger percentages of their hard-earned $600 per annum income – give them a break for chrissakes! Portions of these profits can be channeled to other sectors of the society; health, roads, education, etc. It is, in essence, the symbiosis the infrastructure-sharing gospel relentlessly advocates. It is the epitome of social responsibility, as well as a direct investment into the closely interwoven skeins of mutual economic interests: if the health, education or power sector grows; the entire economy expands, and telecom grows right along with it.

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A constant mechanical drone blights the peaceful calm in the small rural village Akame lives in. The scourge, a couple of power generators supplying electricity to two mobile phone towers -- each belonging to competing mobile providers. With SSA teledensity rates below 15%, the mobile competition is pretty fierce among providers. Similar towers like these are sprouting like weed across the country.

There is no state provided electricity in Akame’s village. Ironically, a national high-tension power grid runs right through the village, connecting the next big city. She burns 4 liters (1 gallon) of gasoline for about 3 hours every night in her little portable Yamaha generator -- gives her just enough time to prepare and eat supper with her family, and get the kids ready for bed. Gasoline is about $0.4/liter, total monthly gasoline expense runs her about $30, which is 20% of her monthly income. If the infrastructure-sharing initiative actually gains any traction, and providers consolidate usage on one mobile tower versus the two towers in Akame’s village, the extra power generator freed up could actually support Akame’s entire village! Should the providers be inclined to indulge the village in such a generous gesture, and charge the village residents for usage, Akame would be a lot happier paying about $10/month for 12 or more hours of electricity per day versus paying $30/month for a noisy 3-hour Yamaha-thon every night. There are all kinds of mutual benefits to reap from a little bit of corporate responsibility.