Going online: New technologies and infrastructure will boost connectivity

While the current level of internet provision is surprisingly modest, the scope for growth in terms of getting Côte d’Ivoire’s population online is immense. According to World Bank’s calculations, the country’s internet penetration rate reached 2.5% in 2012, significantly lower than those in neighbouring countries such as Nigeria (32%), Senegal (19%), Ghana (16%) and Liberia (4%). The difference is particularly notable in the fixed-line internet segment, where the total subscriber base reached 133,556 individuals in 2013, representing a marginal penetration rate of 0.6%, according to figures from the Telecommunications/ICT Regulation Authority of Côte d’Ivoire, which regulates the sector.

The primary reasons for this are two-fold. First, investors’ confidence was affected by the unrest caused by the 2010-11 post electoral crisis and subsequent infrastructure damage. Aside from physical degradation to network infrastructure, which took time to repair, consumer demand did not begin to significantly increase until 2012, while the delayed issuance of 3G licences left Côte d’Ivoire playing catch-up for much of the past 24 months.

Cables

Another constraint that previously limited penetration was stubbornly high cost of access to international bandwidth, caused by a lack of competition between wholesalers serving the country. While four international connections dock in the Gulf of Guinea – WACS, ACE, GLO1 and MAIN-ONE – Côte d’Ivoire is thus far only served by the two former. “Studies on the extension of GLO1 and MAINONE are ongoing, but the terrestrial links from [Ghana’s capital] Accra, which have proven more cost efficient than submarine branches, bring about a range of bureaucratic issues that affect the speed of roll-out,” Alpin Verlet, CEO of Alcatel-Lucent’s West and Central Africa operations, told OBG.

Mobile operators MTN and Orange are shareholders in the WCS and ACE cables, respectively. Both firms follow an integrated business model serving wholesale and retail markets at the same time. In recent years, both firms have acquired controlling stakes in the country’s largest internet service providers (ISPs); Aviso, controlled by Orange, and Afnet, held by MTN, represent market shares of 58% and 40%, respectively. Therefore, the incentive to lower access fees for ISPs and, consequently, open the door to incoming competitors is largely absent.

Broadband

Nevertheless, a slate of private and public initiatives are likely to increase the level of dynamism among operators, lower access fees and, consequently, deepen penetration. One such example is the National Broadband Project, under way since 2008, with finalisation expected for the end of 2015. In total, close to 7000 km of fibre-optic cables are being installed along the country’s south, east and western axes. At the time of writing, Chinese telecoms engineering companies Huawei and CITCC were nearing completion of a 1200-km axis from the south-western port city of San Pédro to Ferkessédougou in the central north and a 600-km leg connecting Abidjan to Grand-Bassam, on the eastern coast, and Bouna in the country’s north-east.

Connecting The Dots

The remaining 5000 km, which will link the central regions, has been carved up into three equally sized sections and was due to be contracted out by public tender. By early May 2014, a total of seven proposals from companies of varying countries had been received. The National Agency of the Universal Service of Telecommunications (Agence Nationale du Service Universel des Télécommunications, ANSUT), the state agency in charge of the project, will also oversee handover of the network’s management to private operators. As of early 2015, bids were still being solicited for construction of the remaining cables, which are set to link some 1000 localities by the end of 2015.

As the remaining sections come on-line, ANSUT will decide if they will be awarded to the same operator, or if they will be managed separately. “One of the primary objectives of the national fibre backbone is to lower the price of accessing the internet; ensuring adequate competition of the network’s management may fall within that line of thinking,” André Apete, cabinet director of the Ministry of Post and Information Communication Technology, told OBG.

Financial requirements of the project, estimated at some CFA117bn (€175.5m), are partly met through the National Telecommunications Fund, also managed by ANSUT, and generated through a 2.5% tax on annual turnover figures of the nation’s telecoms and IT operators. Based on current turnover figures, this will raise an estimated total between CFA17bn (€25.6m) and CFA20bn (€30m), far off the required amount, but enough to provide the government with a means to cover the cost of external financing.

“We are calling on foreign development agencies and private sector firms to help finance our ambitious plans,” Apete told OBG.

A Step Further

As for private sector initiatives, inroads into 4G technologies have recently been made. In June 2014 Switzerland-based provider YooMee entered the market with the region’s first time-division long-term evolution (TD-LTE) service. High access fees have limited roll-out of the service to Abidjan’s government, corporate and high-end residential segments, but growth is expected. “SMEs and households very much remain on our radar, and will be implemented as soon as wholesale connection fees permit it,” Yann Le Guen, YooMee’s managing director, told OBG. In May 2014 VIPN et, already active in the market, announced that it was preparing the introduction of a TD-LTE service of its own, scheduled for the end of the year.

This is a significant step to get Côte d’Ivoire in line with other parts of the continent. For example, Ethio Telecom — Ethiopia’s state-run mobile operator — recently partnered with China-based Huawei at the end of 2013 to roll out 4G services in the country. Meanwhile, Sweden-based Ericsson partnered with Nigeria’s incoming fixed-line 4G provider Smile Communications. Similarly, Rwanda recently signed a deal with Korea Telecom to embark on a nationwide roll-out of the technology over the next three years.

Inclusive Coverage

Higher competition and faster technology will also support efforts to expand internet penetration rates, bringing them closer to the regional norm. The national backbone, for one, will constitute a significant support to bridging the rural divide and increase penetration rates nationwide. In particular, the project will contribute to the government’s ongoing efforts to digitalise public administration at the national, regional and local levels. The often modest IT infrastructure of public offices across the country is currently being integrated through a combination of satellite and wireless technologies, which are either costly or facing capacity constraints. Connecting through the fibre network will help to secure ample capacity for years to come and will set the foundation for more localised virtual solutions such as cloud-based applications.

Outside of the public offices, deployment of code division multiple access (CDMA) technology at a number of landing points across the network, a key component of the project, will help secure mobile broadband to more than 1000 communities that currently fall outside of the scope of the commercial offering. “The initiative will connect parts of the country where commercial operators do not find justifiable returns,” Apete said. In addition, the ongoing roll-out of the e-government strategy (see IT chapter), particularly in key focus sectors such as agriculture, health and education, will see a rise in access among farmers, schools and hospitals.

Intrenet On The Go

Low penetration levels are expected to be given an additional boost by ongoing developments in the mobile internet space, following the launch of 3G services two years ago. Orange, MTN and Moov, the three primary mobile operators that own the only issued licences, have widespread national coverage, exceeding 90% in most cases. This allows for rapid deployment to users in a wide range of cities, including Abidjan, Yamoussoukro, San Pédro, Bouaké and Bassam.

While low data usage has kept average revenue per user down, the 4G announcements of ISPs YooMee and VIPN et have raised the question on when mobile telecoms operators will follow suit. With the current 3G licences up for renewal in 2016, press reports indicate that the introduction of 4G mobile permits are likely to come out around that time. “I am expecting an early push for 4G to stay ahead of the game,” Verlet told OBG.

Despite its lag compared to regional counterparts, a variety of privately and publicly initiated projects will help Côte d’Ivoire to catch up on both recent technology standards and internet penetration rates. According to the government, the latter will increase 10-fold within the coming five years. While this is certainly ambitious, if the current pace of project execution is maintained, it may just become a reality.

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The Report: Côte d'Ivoire 2015

Telecoms & IT chapter from The Report: Côte d'Ivoire 2015

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