[kictanet] Cell operators key for African Internet penetration

[alice]

Cell operators key for African Internet penetration
Tuesday, 25 September 2007, 11:49

In a continent where restrictive regulations, high operating costs
and widespread poverty makes Internet services unaffordable, low
literacy among its population limits demand, and poor telecoms
infrastructure hinders penetration, Africa's cellular operators have
a key role to play in boosting Internet usage.

Frost & Sullivan research analyst, Spiwe Chireka, says that while
Africa is experiencing double-digit growth of Internet usage, ISPs
can significantly enhance this by aligning themselves with cellular
operators.

"Moving forward, ISPs will need to consolidate their efforts and
create strategic relationships with cellular operators," says
Chireka. "The further development and increasing penetration of
cellular networks would allow ISPs to offer mobile internet access
and boost penetration of their services, thus reducing the high
initial investment costs involved."

At the same time, mobile handset operators need to partner with ISPs
to provide affordable tools for mobile internet access. To develop a
sound market share in the limited market base characteristic of
Africa, there is a need for product differentiation to increase
consumer's switching costs.

"In addition, ISPs need to target markets outside the major urban
areas, since these areas are currently saturated in terms of
operators," says Chireka. "Accordingly, partnerships with cellular
operators would go a long way to address this challenge. Besides, low
cost and high speed access will also be crucial to ensuring market
growth."

Chireka says that the current double-digit growth is predicted on a
narrow base, with the overall number of Internet users remaining
limited.

In some cases, ISPs, with the help of governments, are gradually
designing coping strategies around restrictive licensing regimes,
poor telecoms infrastructure and low affordability of services.
Promisingly, both governments and private telecoms operators are
making significant investments in infrastructure. Such initiatives
are setting the stage to leverage the exciting growth potential of
the African Internet market.

"Most governments have embarked on ICT-led development strategies,
aimed at developing e-governance and subsequently internet
penetration," Chireka says.

Markets such as Kenya, Tanzania, Uganda, Senegal, Angola and
Mozambique are set to enjoy high growth levels, given their
technology neutral licensing regimes, independent regulators, high
levels of FDI and highly liberalised markets. Ghana and Nigeria have
high growth potential, but this is hindered by poor economic
performance and poor licensing regimes, which have limited foreign
investment into these markets.

By partnering with highly successful cellular operators in regions
such as these, ISPs could quickly negate some of these barriers.

OEM Division - Novell
Garry Hodgson (IP:62.200.56.xxx) 2007-09-25 05:32:38



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