Early 4G launches in Africa more about marketing than technology

Two countries from the developing world’s backwaters, Angola and Namibia, have just beaten most of Europe in the race to 4G mobile, but the initiatives are tailored to help operators’ marketing, not to create genuine technology leadership.

Movicel of Angola and MTC of Namibia have launched commercial LTE (Long Term Evolution) services in the past two months, becoming the first in Africa to go 4G. LTE is the technology behind fourth-generation mobile services, offering vastly faster Internet connections. Like many African operators, Movicel and MTC have been testing LTE for a while, planning their commercial launches. Commercial launches in Africa usually don’t pan out strictly according to plan, especially with brand new technologies. But Movicel pulled a surprise when it announced its commercial LTE launch a month ahead of schedule.

Operators responding to demand for data

Innovation in data applications in Africa in the past ten years has been impressive. In many instances, instead of copying technologies from developed countries, local markets have pioneered technologies tailored to the region. The local innovation attending to local needs generated hugely popular data applications in areas as varied as social media and banking. All of this activity around mobile applications has been driving data usage phenomenally, while voice traffic is growing strongly because of network expansions in rural areas.

By 2016, cellular-network traffic in Africa is expected to be at least nine times that of 2011 levels, from a little over 173 billion megabytes to over 1.5 trillion, according to Informa Telecoms & Media research. With multi-SIM penetration in Africa at less than 60 per cent, voice is still likely to be a large component of this bulging traffic, but data is becoming more important, because of strong demand for Internet access and data applications.

This has been the trend for the past few years, and several African operators have responded quickly by deploying 3G and 3.5G networks, based on WCDMA and HSDPA technologies. At end-2011, operators in more than 50 African countries were already offering 3G services.

The rapid rollout of 3G networks has helped operators cope with growing demands on network capacity, but the scale of the problem is such that the operators need to find more efficiency in spectrum usage. LTE, the technology behind 4G, brings such efficiency by conserving radio spectrum while vastly improving the user experience.

Booming economies and engaged regulators help

Proactive regulators, engaged governments and booming economies have helped operators in Angola and Namibia fast-track 4G launches, with competitive pressure adding to the dynamics in Angola. For this year, the IMF forecasts nine per cent GDP growth in Angola and four per cent in Namibia. And the strong economic growth has created boom towns in Luanda and Windhoek. The initial 4G services are targeting these two cities.

With spectrum scarcity rarely an issue in Africa, it’s the regulatory clarity and the engagement of government that makes or breaks the pace of growth in Africa’s telecoms markets. In Namibia’s case, the prime minister’s office was actively pushing for the modernization of the country’s telecoms network. The regulator’s swift spectrum-usage approvals and Windhoek’s prompt clearance for laying high-capacity fibers to link LTE cells have helped expedite the commercial rollout of LTE.

Vendor support was as important

A well-developed ecosystem around LTE, including a radio network and low-cost devices, is important for mass-market adoption in Africa. In particular, handset availability is a major problem hindering the widespread deployment of LTE networks. Informa data shows that LTE handsets account for just 18 per cent of LTE devices available in the market. There are about 15 LTE devices available around the world, compared with more than 2,000 WCDMA-based 3G devices.

Fortunately for the operators, Chinese vendors ZTE and Huawei offer end-to-end support for Movicel’s and MTC’s 4G ambitions, including a limited range of low-cost LTE devices.

Others in Africa might not join the party so soon

However, if all the hype around early 4G launches in Angola and Namibia is stripped down, the initiatives seem to be designed more to aid Movicel’s and MTC’s marketing than to genuinely forge technology leadership.

The 4G coverage in Angola and Namibia is limited to three cities – oil-rich Cabinda and Luanda in Angola and the capital, Windhoek, in Namibia – leaving large swaths of these countries still on 3G or in some cases 2G.

Discounting plans for 2013 in Kenya and Rwanda, there aren’t any concrete LTE-rollout commitments in sub-Saharan Africa. There is talk that Smile Telecom in Tanzania is planning a launch for 2012, but that remains speculation. The scheduled auction of 800MHz and 2600MHz spectrum in South Africa has been postponed. South African operators that have been testing LTE are talking to fixed-wireless operator iBurst to gain access to its 2600MHz spectrum. In North Africa, Egypt is the only market expected to see 4G by end-2012, but only if the required spectrum is issued by the regulator. In an election year in postrevolution Egypt, it is questionable whether regulators will be able to put things in order for a 4G launch.

Angolan surprise – or rather, an exception

A happy combination of motivated operators, benign economic conditions, engaged regulators and, most important, enthusiastic operators has created exceptions in Angola and Namibia. It’s unlikely to mean widespread 4G access in Angola and Namibia, never mind broader Africa. It was a poster event for these operators, which is perhaps all they wanted out of the exercise.

With over 65 per cent of operational 3G networks in Africa being rolled out in the past two years, operators across Africa are going to be busy optimizing their WCDMA networks, upgrading them to HSPA+, and fine-tuning their data product lines. Besides, building the metro and national terrestrial high-capacity backhauls that are a prerequisite for the smooth functioning of the LTE networks is no easy task.

The African operators won’t be worried about LTE, certainly not this year. So the hyperbole around Africa’s winning the 4G race should be taken with a grain of salt.