The combination of increased demand for video, data and Internet services on a large land mass with many rural communities means satellite could be at the forefront of the new digital economies emerging in Africa. However, satellite players have yet to capitalize on the market at the level that has been anticipated, and now other communications technologies are moving into Africa eager to capture a slice of the growing communications market.

Wireless technologies, particularly WiMax, often are touted as the alternative solution for Africa’s communications needs. While the satellite industry fended off a terrestrial effort to gain global access to C-band spectrum, the terrestrial players likely will play a role in the African communications market.

"The potential demand in Africa for communications services, whether television distribution, Internet connectivity or private networks, is so large that no one technology is going to dominate any time soon," says Robert Bednarek, CEO, SES New Skies. "We can all collectively approach the market and provide services. In some places, WiMax or terrestrial will make an impact, but in other places, satellite clearly has a role to play either as a direct distributor or as an inter-connection device for terrestrial activities."

Paul Brown-Kenyon, COO of Measat, also sees a mix of communications solutions serving Africa. "A number of the new technologies will need to work together with satellite. WiMax might provide a good last-mile connection for B2C or even B2B applications, but you still need to connect that back to your local, national or international network. Satellite is often a better technology, particularly in the short term, if you are looking at connecting remote communities."

New Africa, More Players

A number of satellite operators are increasing their investments in the region in order to both prepare for more terrestrial competition and help fill the demand for capacity that only has increased since the failures of a pair of domestically owned satellites, NigComSat-1 and Rascom-QAF 1, in 2008.

Intelsat unveiled in December a joint venture with a South African investor group led by Convergence Partners that will finance a new satellite, Intelsat New Dawn, that will be located at 33 degrees East to serve the African continent. Flavien Bachabi, Intelsat’s regional vice president, Africa, says the satellite "is indicative" of the operator’s commitment to Africa. "None of the other telecoms or satellite operators have engaged in such a project. The satellite will be operational in early 2011. Once in orbit, Intelsat New Dawn will join the other 25 satellites within Intelsat’s global fleet that provide Africa with critical transmission services. Today, we have a number of initiatives underway that will add refreshed capacity to the region," he says.

Convergence Partners will provide 25 percent of the financing for the $250 million project, "and we believe this is certainly going to have a strong impact on the African communications and mobile market," says Andile Ngcaba, chairman of Convergence Partners. "This is a commercial deal and a commercial satellite from which we expect to derive a return on investment."

SES New Skies has filled its existing capacity for Africa but plans to bring more bandwidth to the continent, says Bednarek. "We are going to be able to make some changes and bring some additional space segment into the market place. Recently, we have commercialized the Astra 2B spot beam, which was centered over Nigeria, and indeed, with that capacity, we helped restore some of Nigcomsat’s customers. In the third quarter of this year, we will be launching NSS-12 into 57 degrees East. From that position, we will be bringing quite a bit of incremental capacity to Africa both at C- and Ku- band. Much of that capacity is already sold. We will also have launched NSS-9 soon and that will free up NSS-5 from 183 degrees East. Our intention is to move NSS-5 over to the region and to commercialize part of it in Africa as early as the end of this year."

Regional player Measat of Malaysia moved one of its older spacecraft over Africa, renaming it Africasat-1. "There is insufficient capacity available in the market," says Brown-Kenyon. "We moved Africasat-1 into the 46 degree East slot at the start of 2008 to expand our presence in the market. Within four to five months the satellite was sold out. The gap between demand and supply is expected to be filled over the next few years with a number of operators planning to launch more capacity, but with telecoms services a great enabler of economic growth, we see the market providing a good long-term growth opportunity." Measat also is looking for in-region partners as a way to expand its presence, including other satellite operators, local telecommunications partners and financing houses, Brown-Kenyon says.

The domestic operators also plan to return to the market. NigComSat is planning a pair of replacement satellites, and RascomStar-QAF has placed a launch order to have its Rascom-QAF 1R satellite in orbit in 2010. Faraj Elamari, CEO of RascomStar-QAF, believes the existence of domestically owned satellites boosts the African satellite industry. "RascomStar-QAF is an African company headquartered in Mauritius. It is the first time you can say, ‘This is a truly pan-African operator,’ so African countries will have access to their own pan-African telecommunications solution. I think this pan-African network is of great importance. I think this project will help Africa save a lot of money in telecoms and Internet services. Our policy is different from many other satellite networks."

Seacom

While the satellite players make their plans, other telecommunications providers are moving ahead to help fill the communications gap. WiMax networks are being tested in some countries, with operators touting the systems as alternatives to satellite networks. The WiMax systems pose a dual threat to satellite operators, threatening to capture market share as well as potentially interfere with the satellite operators.

"WiMax is a good solution for Africa as there is minimal infrastructure," says Alan Hird, CEO of GlobeCast Africa. "The problem in Africa with wireless services is that regulatory bodies are not very effective with spectrum management, and there is a lot of interference. Combine that with rogue carriers and rain fade and one can see that satellite has its problems, but it still plays a vital role and is a long way from being marginalized. Still, the interference is a threat."

Christopher Slaney, head of business development, Europe Media Port, sees cooperation between satellite and WiMax operators as the best solution. "If the spectrum conflicts affecting WiMax and C-band can either be resolved or better regulated, then I believe the two technologies can be mutually beneficial. Even in the most densely populated African countries, cities are not always well served by terrestrial links. So while WiMax is a great final mile solution, when you need to create a national or regional network of WiMax centers, satellites have the answer," he says.

Another solution touting itself as an alternative to satellite is undersea cable. One player, Seacom, is spending $600 million to run a fiber-optic cable along the East Coast of Africa linking Southern and East Africa, Europe and South Asia. "Africa remains the most under-connected continent in the world, with little to no access to efficient and reliable communication systems," says Brian Herlihy, Seacom’s president. "International bandwidth is so expensive that the market can only afford to purchase very little capacity at incredibly expensive rates in comparison to global communication costs."

In terms of the market opportunities for Seacom, Herlihy says, "Africa is the last continent to offer very high levels of growth potential attached to large underdeveloped regions. This potential for growth is spread along all three sectors: broadcast, communications and broadband all go hand-in-hand. Growth in broadband has an immediate effect on broadcast and communications as it makes accessibility to these easier and so consumption/demand for them increases. Seacom plans to meet this demand…. Due to the geopolitical attributes of the African continent, fiber and satellite technologies will always be complementary, though the provision of satellite technologies in Africa is very expensive, the more players there are in the communications market the greater benefit of choice the consumer will have and prices will be driven down as a result of the increased competition."

Bottom Line

All players agree there are a number of strong competitors in a region with strong growth opportunities "We see growth in all sectors right now, but clearly, the strongest present growth is in inter-connectivity, which is the requirement for broadband connectivity, Internet backbone services, GSM backhaul and private networks serving various types of enterprises," says Bednarek. "Economic development and connectivity are intrinsically linked so that wherever you see economic development occurring, there must be some kind of strong demand for communications infrastructure and vice versa. Typically, when you have communications infrastructure, you are enabling economic growth."

With local operators emerging and international players increasing their presence, Africa likely will remain a very dynamic region for satellite operators. If satellite operators can work in tandem with other telecoms players, digital economies in the region could take massive strides over the next few years.

Mark Holmes is Via Satellite’s Associate Editor.