Huawei outlines plan for emerging markets

Connecting the unconnected is a topic which has been quite common over the last week, and it returned at the Global Mobile Broadband Forum during a session with Huawei’s Ming Cao.

Cao, President of the GUC product line, and lead for the Huawei wireless business in the emerging markets, outlined the company plan to stimulate growth; the sharing economy. Here, Huawei will aim to stimulate co-operation between various commercial entities, as well as the local government, to develop an asset sharing model, to reduce costs and accelerate the rollout.

It certainly sounds like a sensible idea, after all, with the price per MB in the emerging markets considerably lower than in the more mature areas, new products and new ideas have to be thought of to make economic sense.

The conversation also turned towards government influence. Cao believes more can be done to create a regulatory and legislative framework to encourage investment, but how much intervention should the government be granted in this space?

This was certainly a topic of conversation at AfricaCom last week. And while commercial entities and government bodies in Europe might play nice with each other, hiding behind co-operative and false smiles, Africa’s counterparts were anything but friendly. Operators, including Liquid and Safaricom, accused the government of trying to influence the market too much and create communications monopolies, while governments blasted the operators for not doing their jobs in connecting the rural communities.

In fairness, Cao did well to keep at arms’ length from a potentially sticky debate; Huawei doesn’t comment on such bureaucratic or political interests, though he was able to point out a couple of factors which might not help the connectivity question in Africa.

Firstly, site acquisition. When looking to develop any form of asset in any country, there usually has to be acquisition of real estate. In Africa, this process can take around 12 months, which some might say is a long period of time, after which only 50% are successful. These are not attractive numbers to consider when you are trying to rollout connectivity across an underserved continent.

Secondly, when looking specifically at the mobile broadband side of things, there simply aren’t enough smartphones on the continent. Part of this might be down to the taxation of the devices.

Around the world there are numerous smartphone manufacturers who have taken it upon themselves to design a device which is suitable for the African market. Some have been successful, offering devices for as little as $20-30, but in Africa these same devices can be as much as $60-70 due to taxation. This might not sound like a huge hike or amount to us in Europe, but this is a gamechanger on a continent with very little disposable income.

Without the appropriate devices in the hands of the consumer, the telcos will struggle to monetize the their networks, but this might be a moot point, as the processes are not in place to allow for an expansion of the infrastructure. These are two points which should be addressed relatively soon.

Huawei of course noted it had no official stance on the matter, but it did assure us that during a meeting at AfricaCom last week which included several Ministers from prominent African countries, it is a problem which has been recognised by the governments, and will be addressed in due course.

It must be frustrating to come across government regulations and policies that do not encourage the development of infrastructure in a region, but Cao did very well to contain any frustration, should it have been there! From our perspective, having attended AfricaCom and witnessed the spat between governments and operators, it seems like bureaucratic chaos which won’t get cleaned up very soon. But perhaps we are wrong, and taking the word of the politicians that they are sorted out the mess is a sensible idea…