Converging communications Aggregating the African Market
Written by Leonard Cremer and Norman Parkin
THOUGHT LEADERSHIP
With its large and virtually untapped market, Africa is considered the ‘in’ market by most organisations right now. Cellphones are the most prevalent technology across the continent, and as this market matures, so too will the demand for value added services begin to grow.
Not only is this demand expected to continue to grow, but satisfying its needs is going to take aggregators with knowledge and experience to operate in a unique greater African market which differs widely from the more mature markets of Europe and North America. The first tentative steps into Africa have already been taken, with Kenya seen as a viable opening gambit for the mobile aggregator, with its high levels of both cellphone usage and education with regard to value-added solutions. In addition, countries including Ghana, Tanzania, Nigeria and the Democratic Republic of the Congo (DRC) hold enormous future potential.
Whereas the majority of international aggregators tend to focus on the world’s developed markets, an African-based aggregator is able to bring a much more complete understanding of the vagaries and peculiarities of the African market to the table. That is not saying that moving into Africa does not present challenges, of course. There is a lot of red tape and local legislation that needs to be understood and overcome – an example of this would be the fact that although it is possible – at a technical level – to manage such transactions from existing infrastructure in another country (such as South Africa), local laws do not allow this. It is for this reason that aggregators intent on tackling African markets need to understand that they will have to physically duplicate the infrastructure on the ground in the nations they choose to move into.
Despite such difficulties, the African market holds enormous promise, with value-added services such as mobile entertainment proving to be extremely popular across the continent. While mobile entertainment has a specific lifespan, and is not as sustainable as other mobile services, it remains a key driver for the African markets at the outset. Certainly, the landing of the Seacom cable is going to make a significant difference in terms of general connectivity speeds.
Although businesses are all about revenue, it is of course equally critical to build a sustainable business model. For example, by taking the experiences gained in compliance and putting these into practice in the newer African markets where there is a general lack of compliance at the moment.
A sensible goal would be to help develop a similar industry body to South Africa’s Wireless Application Service Providers Association (WASPA) – in other words, one that can self-regulate. Without investors who have integrity putting the effort into developing some kind of guiding association or rules of compliance, these new markets will be exposed to any fly-by-night operators out to make a quick buck.
A regulatory body that focuses on the issues of compliance is the only certain way of preventing indiscriminate business practices. The self-regulation model has worked well in South Africa, and it makes sense to try and drive a similar model in other African nations. Without proper regulation, it is a matter of time before the market fails.