By Anne Morris
As of February, there were 34 LTE network deployments across Africa, up from 22 in mid-2014, according to research firm Ovum. By now, the number could well be higher as network trials are ongoing. Ovum also predicts that there will be 11 million LTE subscriptions at the end of 2015, up from just 1.6 million in the first quarter of 2014. In 2019, the number of LTE subscriptions across Africa is expected to surpass 100 million.
In other words, LTE deployment and usage is accelerating across a continent that faces considerable challenges in terms of its terrain, economic prosperity, and political and regulatory stability.
While the number and breadth of network rollouts are clearly still far behind those in Europe, North America and Asia, Africa is providing a fertile breeding ground not only for different types of LTE players but also for different LTE service propositions and the role of mobile connectivity as an alternative to fixed-line services.
Click here for a larger version of this chart from Ovum.
Click here for a larger version of this chart from Ovum.
Challenges abound, but LTE deployments are happening anyway
There are many challenges facing LTE rollouts in Africa. For one, the allocation of spectrum suitable for the deployment of LTE over a wide area has been slow. A large number of African countries, including South Africa, are in danger of missing the June 17 deadline set by the International Telecommunication Union (ITU) for the switchover from analogue to digital TV that would free up 800 and 700 MHz spectrum. At the same time, backhaul is not always assured and the price of LTE smartphones and other devices is beyond the capability of many ordinary working people in a number of markets.
"In all cases, coverage is still limited and the strategy is to first target high-end and business segments beyond South Africa," said Ovum analyst Thecla Mbongue. "Handsets subsidy is rare and therefore the price of devices is the main entry barrier."
As Mbongue pointed out, outside of South Africa, around 98 per cent of the customer base is prepaid, meaning that the financing of devices is difficult. Currently, an LTE smartphone costs at least $200, she said, beyond the reach of many consumers.
However, entry-level smartphone prices are starting to fall, and increased efforts to build fibre networks in densely populated areas in certain markets such as South Africa, have encouraged operators to pursue LTE deployments nonetheless.
Mbongue noted that in Africa LTE is more than just a substitute for fixed broadband services. Other factors are driving deployments as well, including the need to serve the small business segment, the desire for education and content, and the connectivity and information requirements of mining and agricultural environments, to mention just some.
Established players enter the fray
Hans Piet, Ericsson's head of sales for mobile broadband in Sub-Saharan Africa, also noted that LTE in Africa is driven by a desire to be first to market, pointing out that there are still many markets with no 3G or very low-quality 3G networks and low average revenue per user.
Daniel Jaeger, vice president for Africa at Alcatel-Lucent, added that in contrast to Europe, mobility is also not always the point of LTE in Africa--at least not until broadband becomes more pervasive. "The priority is having this line of broadband access," he said.
LTE deployments have come not only from established operators like Orange (which has so far launched LTE services in Mauritius and Botswana) as well as Vodacom and MTN in South Africa, but also a new breed of data-only LTE players. Some of them include Surfline in Ghana and Smile Communications, which has launched services in Nigeria, Tanzania and Uganda and plans to start operations in the Democratic Republic of the Congo in July.
What's more, brands including Vodafone are entering the African 4G market through deals with partner operators. In Vodafone's case, it has teamed up with Netherlands-based Afrimax, which has built up a portfolio of TD-LTE spectrum in a number of countries. The first LTE network to be launched under this collaboration, Vodafone Uganda, operates in the 2.6 GHz spectrum band.
Yet as LTE activity levels rise, spectrum, device and service pricing, and infrastructure challenges persist, requiring operators and vendors to remain flexible and responsive to rapid changes in the market. There is also the danger that services could be launched too early. Indeed, a reader's comment from late February on FierceWireless:Europe's article on the launch of 4G services by Vodafone Uganda indicates that some initial services and customer service support leave something to be desired.
Jaeger from Alcatel-Lucent noted that operators have tended to underestimate the challenges they face, such as with backhaul. "They rent capacity, but then find the volumes are quite serious," he said. Operators realise they need fibre in the ground, he added, and noted there is growing evidence of fibre rollouts particularly in South Africa as well as in parts of East and West Africa.
Smile and Surfline offer a new wave of competition
Smile and Surfline are among the new breed of data-only LTE providers that are seeking to service the broadband needs of business and residential users.
For its part, Smile also has ambitions beyond being a mere replacement for DSL services. The company said its proposition is fully mobile, and it also intends to be the first company in Africa to launch Voice-over-LTE (VoLTE) services in Africa in June, when it starts selling the Samsung Galaxy S5 and the iPhone 6.
"The challenge for us is to offer 4G services in the same footprint coverage as the MNOs' 3G," said Smile COO Tom Allen. "It is very hard to build a new national network to compete on voice, and 4G is not suited to high-volume voice services."
According to Allen, spectrum remains the biggest hurdle for the company's LTE rollouts. Smile has so far launched services where it has been able to get hold of 800 MHz spectrum.
"Rolling out 4G LTE in 2.3 GHz or higher takes between six and eight times more base stations as 800 MHz," Allen added. "For highly dense areas such as say, London, the 800 MHz does not have a big advantage as it is more about capacity than coverage. In an African context it is the other way around. We also have 2.5 GHz for capacity and in-fill."
Surfline also has ambitions to expand beyond its current market in Ghana, where it is targeting 150,000 customers before the end of the year. "We plan to expand the Surfline network into other parts of the West Africa sub region within the shortest possible time and explore other opportunities within the continent," the company said in a statement.
Surfline said that backhaul was one of the biggest obstacles it faced when it first set up its network, and noted that the cost of backhaul in Africa is much more expensive when compared to Europe.
"The biggest difference between LTE in Africa and Europe is content. Consumers here are hungry for it and that typically translate to international content, but at Surfline we're committed to bridging the gap for local content providers by providing a platform for them," the company added.
Allen said that while backhaul costs have been high, they are starting to come down. "The cost of backhaul and international links are falling very fast as more capacity comes to market," he said. "One challenge has been getting the level of quality we need; some of the fibre around in Africa is suspect and does not deliver the quality and reliability we need."
Both Surfline and Smile agree that they have been surprised by the high demand for their services."One of the surprises since our launch is the realisation that the people's hunger and appetite for 4G LTE data increases as more and more people identify new and improved ways to use the data for their everyday activities," Surfline said.
Smiles's Allen noted that for Africa, LTE is a quicker way for it to access online services and drive the development of ICT.
"How far and how fast Africa develops on-line services and jumps ahead of Europe is yet to be seen, but the pent-up demand is not just about faster internet; it is the need to conduct business on-line to support the massive growth potential," he added.
Ericsson's Piet believes that in the long term, the Tier 1 providers will drive LTE in Africa, and he also sees further consolidation ahead in many markets. Indeed, some markets such as Uganda have at least seven mobile operators. He further noted that the gap between Africa and Europe in terms of mobile network evolution is shrinking all the time as demand changes: "LTE is only a couple of years behind," he said. "With 5G, it could be fewer than six months."