Satellite-based services support everything from pay TV and cellular phone services to robust broadband and niche VSAT markets throughout Africa. While the market is growing, Africa remains a continent where even more satellite connectivity is needed urgently.

The most important goals for the Regional African Satellite Communications Organization (RASCOM) include obtaining “coverage of the entire African continent, including its islands, with one satellite; creating connectivity among African countries; rural integration and price competitiveness; and addressing the issue of affordability,” says Jones Killimbe, director general of the organization.
But while demand for satellite services continues to grow throughout Africa, many obstacles remain for those who wish to bring additional services to Africa. Satellite networking suffers from both a shortage of capacity and the absence of a single satellite that can cover the entire continent. Many African satellite service providers describe prices as too high in an increasingly competitive environment, and while the regulatory approval process is improving, it remains too slow in many countries.
African entrepreneurs who want to start new satellite-related businesses also face difficulty in gaining access to optimistic international financing institutions, Killimbe says. “While we are witnessing an exponential growth in terms of customer numbers, international financial institutions are still pessimistic about the African market,” he says.
Satellite bandwidth also remains far too expensive for the average African business or private sector to afford, says Abdul Bakhrani, London-based technical director at Intersat Africa Ltd., which offers trunking services to various Internet service providers and voice over Internet protocol (VoIP) service providers throughout Africa and the Middle East. Bakhrani wonders how service with speeds of just 512 kilobits per second can cost $10 per month in the West, while the same bandwidth will easily cost 50 times more in Africa. “If you want the market to explode, then bandwidth costs need to be addressed. If they were reduced, then there is a colossal market in Africa that is waiting to embrace satellite bandwidth,” he says
Intersat, which is headquartered in Nairobi, is among the companies trying to alleviate this problem, participating in the e-school program developed by New Partnership for Africa’s Development Africa along with Cisco, Microsoft and AMD. The program, launched in 2003, aims to provide computers and Internet access to schools throughout Africa and provides C- and Ku-band services that include SkyDSL and SkyNet provided via an iDirect VSAT platform using a hub in Washington.
But the private sector can do only so much to cut prices, which also are driven up by import duties can easily add 35 percent to the price of satellite equipment. “These absurd taxes discourage the growth of African businesses who find it difficult to justify the exorbitant costs of implementing satellite bandwidth.”
While cost must be reduced, Bakhrani also describes regulations for VSAT licenses in African countries as still quite rigid and difficult to acquire. “In those countries where you can get VSAT licenses, the process can be extremely tedious and lengthy; a lot of influence coupled with various informal methods are still required to get the licenses approved,” he says. “Licensing which is restrictive is not helping to overcome the digital divide. Licenses which do not permit VoIP telephone calls from Internet cafes limit the viability of those businesses because they cannot survive when the only business they can do is Web browsing at $1 an hour. Disruptive technologies like Skype are literally re-writing the rules for telephony — not just in Africa, but across the world.”

Steady Growth

Russell Southwood, CEO of U.K.-based Balancing Act recently published a report called African Satellite Markets that looks in detail at the state of the market on the continent. “Satellite bandwidth has been growing very rapidly across all regions,” he says. “Growth has tended to come from specific market sectors. In particular, there has been considerable growth from both the banking sector — connecting ATMs — and the cellular sector.” Southwood also sees the recent mergers between operators as giving the merged entities some greater degree of flexibility about meeting demand.
“But whatever the underlying position with operators, the larger resellers have often bought considerable amounts of bandwidth,” says Southwood, adding that price stability in the region is influenced by some trends towards greater liberalization on the regulatory side, and in East Africa by the arrival of international fiber in 2008 which will result in bandwidth prices of between $1,000 to $2,000 per megabit per second per month.
“Satellite operators will be unable to match the lower end of this range and will therefore lose business in the fiber- connected urban capitals of East and Central Africa,” says Southwood. “This lowering of prices on the eastern side of the continent will knock-on to the western side of the continent, starting in South Africa. The latter will have a choice between two fiber cables and will almost certainly choose the cheapest capacity.”
Despite these concerns and the fact that competition from pay TV, IPTV and DSL broadband is increasing, satellite is benefiting from this overall increase in telecom and entertainment-driven activity. When it comes to the integration of last-mile connectivity for wireless networks, Gilat Satellite Networks expects significant growth in East Africa and West Africa in particular, says Janna Koretskaya, Gilat’s regional vice president of Africa,
“Over the years, VSAT technology has become increasingly affordable to a wider range of end users in Africa,” says Koretskaya. “As this trend continues, we believe we will see operators using VSATs as part of hybrid networks, where VSAT is integrated into a broad networking solution that includes DSL, Wireless Local Loop, Wi-Fi and even WiMAX.” Koretskaya credits the high demand for satellite services to the fact that the continent is so far behind in terrestrial telecommunications infrastructure. “New investment in antennas and the deregulation of some markets has allowed the continent to jump ahead of the old types of fixed-line infrastructure. IPTV via satellite is also driving demand, and we expect that demand to continue to grow in the coming years,” she says.
Intelsat, which works with leading African direct-to-home (DTH) providers such as MultiChoice and Sentech, considers itself the leading service provider for broadcasters. Intelsat offers its African customers more choices as far as video compression is concerned, along with access to more advanced high-definition TV programming coming from Europe, says Flavien Bachabi, Intelsat’s regional vice president, Africa. Regional content delivery growth also is helping satellite service providers maintain their competitive edge. “We are seeing significant growth in satellite-enabled broadcasting, Internet trunking and cellular backhaul initiatives throughout the continent, especially in the countries experiencing political stability and progressive regulatory reforms,” he says. “Countries with significant regulatory reform include Nigeria, Morocco, Ghana, Uganda and South Africa, to name a few.”
SES New Skies has planned to  replace its NSS-703 satellite at 57° East with the NSS-8 spacecraft to increase C-and Ku-band coverage of East Africa, says Michael Schwartz, senior vice president, marketing and corporate development. But after the loss of NSS-8 in a January launch failure, NSS-703 will continue to serve customers in the region until 2009.  “We have not observed major rollout of cable television networks. Distribution of satellite television is mainly a DTH market. Some terrestrial networks redistribute satellite programming,” says Schwartz. “Our customers are looking for satellite services mainly because of lack of reliable terrestrial alternatives, fast deployment of satellite-based services and reduced opportunity cost.” Schwartz offers examples such as cellular operators who use satellite to connect their different switching centers in order to offer instant access to their mobile subscribers and national and private TV broadcasters who are using satellite to maximize their reach as well as their advertising revenue.

Hot Markets

According to Bachabi, terrestrial wireless broadband and even cell phone service providers are gaining some momentum within Africa, and these applications are using satellites for backhauling. “Intelsat serves more than 60 mobile operators, most of them from Africa. For Africa, based on penetration rates, the deployment of cellular seems to be faster than the deployment of broadband,” he says. “IP technology allows users to suppress packets of data that are useless, such as packets that are transporting silence, and therefore improve link efficiency significantly, up to 50 percent. We observe that African operators are increasingly taking advantage of this new technology to reach out to more remote areas.”
The introduction of IPTV and additional gateways are helping to grow the market, too,” says Southwood. “The number of countries with only one international gateway is considerably reduced. One major market – South Africa – is about to liberalize its international gateway regime shortly,” he says. “Those without a liberalized international gateway regime pay higher prices because the monopoly incumbent has no competition.” South Africa also has opened the gates to 18 new pay-TV operators, he says. “That process will slowly happen across the continent in the coming period. This will inevitably lead to greater broadcast use of satellite, but it will also be in competition with IPTV operators distributing signal using DSL broadband.”
Bachabi sees steady progress throughout the continent, with more than two-thirds of the countries having more than one mobile operator and approximately one-third of all state telcos in Africa having privatized. “More telecommunication sectors are opening up. This trend is continuing, and the regulatory landscape will be improving in many countries in the coming years,” he says.
Most African countries have liberalized their telecommunication sector and have allowed use of satellite for public and private VSAT networks, IP trunking, educational services and voice trunking services, says Schwartz. “Access to satellite is limited in most cases to few players except in Ethiopia, where satellite access remains under the monopoly of the national telecom carrier, the Ethiopian Telecommunication Corporation,” he says. “In countries such as South Africa, where a limited number of players are allowed to offer satellite services, growth of satellite access has been limited due to the lack of competition and the incumbent operator’s preference for use of terrestrial alternatives.”
Continued growth in the VSAT market depends on deregulation efforts in the various countries, says Koretskaya. “In general, governments are realizing that opening up the regulatory environment allows entrepreneurs to provide more communications which helps the economy and growth of the country. Africa is getting into more competitive markets as opposed to the monopolies that dominated 10 years ago. African governments are slowly recognizing that information tools such as high-speed Internet connectivity are critical to economic success and personal advancement. As information technology plays an increasingly important role in Africans’ economic and social lives, the prospect that some will be left behind in the information age can have serious repercussions,” says Koretskaya.

Broadband Footprint Increasing

As far as broadband over satellite services are concerned, Africa is witnessing a steady increase in activity. “In the last years, we have seen a significant increase in demand for broadband connectivity,” says Schwartz. “In particular, broadband over satellite has become more affordable as a result of the introduction of hub-based VSAT services. The costs of terminals has decreased and more efficient modulation and coding has increased bandwidth efficiency.”
Hub-based services allow local service providers to remotely manage their own customer base on shared facilities, lowering startup and operational costs. This has resulted in a meaningful increase of local service providers. “As satellite broadband has become more affordable, we have seen an increase in demand from smaller companies and internet cafes,” says Schwartz. “Churn is not a major concern because we expect that terrestrial technologies, such as wireless broadband, will serve as a last mile solution in combination with satellite connectivity.”
Broadband services are growing throughout Africa, and satellite-enabled services are in the forefront, says Bachabi. Intelsat capacity, which delivers more than 2 gigabits per second of traffic to Africa, supports IP distance learning and e-health initiatives and facilitates access to Internet connectivity for many urban and rural centers.
But pricing continues to be an issue for many businesses and consumers alike, says Southwood. “More than half the countries of Africa now have some form of broadband offer. The majority of these offers have been using DSL over the telco incumbent’s network,” he says. “This growth has spurred a number of satellite broadband offers including things like [Inmarsat’s Broadband Global Area Network] and iWay. These services are now providing higher levels of connectivity for remote areas but connectivity prices remain, in relative terms, high.”

Domestic Satellite Taking Shape

As the African satellite market prepares to enter another stage, Nigeria is among the first countries working to increase options across the continent by developing its own satellite. In 2006, the Export and Import Bank of China agreed to provide $200 million to fund Nigeria’s first communications satellite project. The deal involves the construction and launch of Nigcomsat-1, which is based on China’s new DFH-4 platform. In 2005, when this joint project started to take shape, Ernest Ndukwe, executive vice chairman of the Nigerian Communications Commission told the Chinese media that Nigerian investments in RASCOM were substantial and that this new satellite would not only boost satellite bandwidth in Nigeria but throughout all of Africa. This satellite will carry four C-band, 18 Ku-band, four Ka-band and two L-band transponders.
Nigcomsat-1  had been scheduled to be launched in early 2007 by a Chinese Long March 3 B rocket. However, the October launch failure that destroyed the Sinosat-2 satellite raises questions about the timetable. Killimbe indicates that Nigeria is proceeding with the launch as planned. “To me, Nigeria’s participation is a testimony of the existence of a huge unsatisfied market demand in Africa as a continent at the regional level as well as at country level,” he says. “RASCOM considers all existing and future infrastructure solutions as playing a complementary role in creating a total solution for African needs. Africa, just like Europe, Asia and China, needs huge capacities in order to stimulate traffic volumes and create affordability level as well as to become active participants in the information society.”
Africa is eager to see more satellite dishes, and the best is yet to come for the satellite sector as a whole.