With the arrival of the Africa Coast to Europe (ACE) fibre-optic cable and increasing demand for digital services, Gabon’s IT sector is on the cusp of considerable growth. The expansion of national bandwidth through the introduction ACE is likely to boost the number of internet users in the next one to two years, particularly in the fast-growing mobile segment. The entire IT market stands to benefit greatly from the more open environment, which will allow the introduction of new services, such as e-government and e-learning applications, and the expansion of corporate networks. The government aims to make the country a digital economy by 2016, supported by $68m in public investment planned between 2013 and 2014. State support is crucial to the success of these goals, but it is up to the private sector to develop the service offering in this relatively untapped market.

NATIONAL BANDWIDTH: Gabon is one of 19 African countries connected to the ACE submarine fibre-optic cable, which will ultimately stretch 17,000 km from France to South Africa. For Gabon, the connection is expected to significantly change the landscape of the IT sector in the coming years. While the domestic market has shown strong demand for new technologies, particularly mobile internet, insufficient digital infrastructure and high operating costs have been obstacles to sector development.

Since 2002, Gabon has been supplied by a single fibre-optic submarine cable, the South Atlantic 3/West Africa Submarine Cable (SAT3/WASC), with a capacity of 1.2 Gbps. The formerly state-owned telecoms operator, Gabon Telecom, had exclusive access to the SAT3/WASC cable until late 2012, which kept internet prices high for operators and consumers alike. Few operators chose to negotiate cable access through Gabon Telecom, given the high access costs, and as a result, the cable’s capacity has not been fully utilised. The state moved to ensure more transparent access to the SAT3/WASC in 2010 by requiring that Gabon Telecom publish a set tariff list and guarantee access to all interested operators. Gabon Telecom’s monopoly was fully dissolved in late 2012. However, few moves have been made subsequently to increase access to the SAT3/WASC, as operators await the activation of the new fibre-optic cable.

The ACE cable is expected to transform the IT sector, both by increasing capacity and ensuring equal access. The cable will more than triple national bandwidth from 1.2 Gbps to 4.9 Gbps. Perhaps most importantly, the cable will be open to all operators, which should improve internet access while lowering prices. Mobile providers and other internet service providers (ISPs) will be able to purchase blocks of data capacity and set the prices passed on to the client. The government is capitalising on this new opening to launch a slate of projects that aim to transition the country to a digital economy by 2016.

MANAGING INFRASTRUCTURE: A new public agency was created in January 2011 to oversee the country’s digital transition. The National Agency for Digital Infrastructure and Frequencies (Agence Nationale des Infrastructures Numériques et des Fréquences, ANINF) manages planning, installation and application of all digital projects, including telecommunications, audiovisual and IT. ANINF was established by executive decree and placed under the control of the presidency, indicating the importance of digital infrastructure.

The primary ACE landing in Libreville and a submarine extension to the commercial centre of Port-Gentil were completed by December 2012. The initial hook-ups are ready to go, and the next step will be to set the conditions and tariffs for cable access. While ANINF is responsible for the construction of digital and telecoms infrastructure, a separate government agency was established in June 2012 to manage these structures going forward, the Société de Patrimoine des Infrastructures Numériques (SPIN).

SPIN’s responsibilities include regulating the tariffs for ACE bandwidth, although a precise timeline for the cable’s commercialisation has not yet been issued. The agency is still getting off the ground, and its director-general was appointed in the first quarter of 2013. The state may look for a private sector partner to form a joint management company with SPIN to provide technical expertise.

ANINF officials had originally said that 2013 would be the “Year of the Internet” in Gabon. While the commercialisation of the ACE cable and the launch of 3G have now been pushed back to the second half of the year and into 2014, the sector is expected to see a major leap forward in the next 12-18 months.

INTERNET USAGE: Internet usage rates have increased slowly in the past decade, primarily held back by high costs. However, the spread of mobile services sparked record growth in the internet market in 2012. The total number of internet subscribers in 2012 climbed to just over 497,000, a 76% increase year-on-year, according to figures from the Regulatory Agency for Electronic Communications and Postal Services (Autorité de Régulation des Communications Électroniques et des Postes, ARCEP). This is a considerable jump from the 20.6% increase in user numbers in 2011.

Mobile telephony dominates the internet landscape, and this state of affairs is likely to continue due to the high mobile penetration rate. The percentage of the population with access to internet (fixed or mobile) jumped from 19% in 2011 to 33% in 2012. However, compared to the nearly 100% penetration rate of mobile phones, there is considerable room left for growth. The number of mobile internet subscribers rose from 256,729 in 2011 to 461,461 in 2012, an 80% increase year-on-year.

The number of fixed-line internet subscribers continued its slow growth trend in 2012, increasing by 9.8% to about 26,000 users. Fixed internet represented 5% of the total market of internet users in 2012. However, the end of the fibre-optic cable monopoly and the greater broadband capacity offered by the ACE cable should result in expansion in this segment. Gabon Telecom has cut its fixed-line internet prices twice since August 2012. The monthly cost of a 512-Kbps ADSL connection has fallen from CFA29,500 (€44.25) to CFA15,000 (€22.50) as of April 2013.

PRICES: The uptick in internet subscriber numbers in 2012 can largely be attributed to mobile operators’ efforts to cut prices in anticipation of greater bandwidth and more heated competition after the ACE cable launch. Airtel reduced its mobile internet prices by one-third in July 2012; the price of 1 Mb of usage dropped from CFA150 (€0.23) to CFA100 (€0.15), with the possibility to connect continuously for CFA10,000 (€15) per month. Gabon Telecom cut its mobile internet prices for its brand, Libertis; as of mid-2013, Libertis offers 1 Mb of usage for CFA300 (€0.45) and a month-long 500-Mbps connection for CFA10,000 (€15). The introduction of 3G services, which has been in the works since the first public licence tender in 2010, is expected by the end of 2013. This should help to further increase mobile internet’s footprint, as users transition from the slower 2.75G EDGE technology to the 3G network.

INTERNET SERVICE PROVIDERS: The sector contains eight ISPs of varying size, a large number for Gabon’s nascent IT market. ARCEP classes the four mobile operators as the largest ISPs. Mobile providers accounted for 93% of all internet users in 2012, and Airtel remains in the lead with the largest market share in terms of subscriber numbers. Airtel accounted for 80% of internet users in 2011, while Moov, Libertis and Azur contributed another 13%. Despite its position as the historic state-owned operator, Gabon Telecom (Libertis) has steadily lost internet market share to newer operators Moov and Azur.

After Gabon Telecom’s fixed-line service, the remaining 2% of internet users are served by other ISPs. While this is still a small percentage of the market, these ISPs have increased their market share from less than 1% in 2010-11. ARCEP data shows that their clientele quadrupled from 2390 users in 2011 to 9927 in 2012, but ISPs estimate that the number of clients may actually be well above 10,000. There are four main ISPs in this segment: IG Telecom, Solsi, GBM and IPI9. According to ARCEP statistics from 2011, IG Telecom and Solsi led the segment in terms of subscribers, while IPI9 became the newest market entrant in April 2011. Due to the limited cable bandwidth and high access prices in the past, ISPs have largely chosen to develop their networks through WiMAX – and especially very-small-aperture terminal (VSAT) satellite – technology. Reliance on satellite connections allowed ISPs to expand their coverage outside of urban areas and to have more direct control over their pricing.

As access to broadband internet expands in Libreville and Port-Gentil with the activation of the ACE cable, fibre-optic connections may become a more competitive option for internet access in urban centres in the near term. In the past two years, mobile operators have been preparing for the arrival of the ACE cable and the launch of 3G services by expanding their infrastructure networks. Several ISPs are also working to boost their fibre-optic connections in preparation for the market shift. For example, IPI9 began to transition its network in the capital from satellite to fibre-optic access in the last quarter of 2012. In addition, IG Telecom is reportedly also planning to build a 3G fibre-optic network in Libreville, with service slated to launch by mid-2014.

Smaller ISPs may have difficulty generating the investment required to upgrade infrastructure and transition to fibre-optic technologies. This may eat into the market share of ISPs as mobile providers consolidate their position by offering 3G (and eventually, 4G) data services. The complementarity between mobile internet and fixed internet for homes and offices should nonetheless provide an uptick in business for smaller ISPs. However, this could be impacted if mobile providers decide to branch into fixed-line internet now that the ACE cable will be open to all operators.

ALTERNATIVE TECHNOLOGIES: Satellite technology will continue to dominate the IT market outside of urban areas. For the moment, the fibre-optic cable connection is limited to Libreville and Port-Gentil, so both VSAT and WiMAX technologies will remain critical to reaching populations in provincial capitals and beyond. VSAT technology also allows ISPs to offer their clients a guaranteed connection speed, whereas submarine cables can deteriorate or be otherwise interrupted. For example, domestic networks experienced service interruptions in the past year when maintenance was conducted on the SAT3/WASC cable. Furthermore, VSAT networks allow companies with multiple offices to communicate via voice over internet protocol (VoIP) on an internal platform in areas that do not have access to fixed technologies.

However, satellite internet is still an expensive option. Sector operating costs remain high given the small client base, and the operating licences ISPs rely on today are more expensive than in other countries in the sub-region. Sector executives noted that in the most recent tender round, 10-year VSAT licences were offered for CFA250m ($375,000). Satellite services can also require a costly external technical base.

Given the sparse population in rural areas, technical installations are too costly to justify outside of urban areas. In the medium term, VSAT will likely continue to be the primary connection method in rural areas despite its cost. As Mohammed Ahmed, the deputy director-general of Solsi, told OBG, “The issue with fibre optic is that it can hardly be spread out across the entire country. That is why satellite technologies like SAT3 are used in rural and isolated areas, even though they are incredibly expensive.”

WIMAX: WiMAX costs also increase in sparsely populated areas, and this presents its own challenges. The last time they were offered, 10-year WiMAX licences went for CFA500m (€750,000). WiMAX was seen as an immediate solution in the absence of 3G or 4G technology, as it has the ability to transmit broadband wireless internet for up to 45 km. This requires fewer base stations than Wi-Fi technology, which has a broadcast limit of several hundred metres. WiMAX will continue to play an important role in the near term, particularly in ensuring internet access on the outskirts of urban centres. However, it may ultimately be replaced by 4G long-term evolution (LTE) technology once it becomes widely available.

PRINCIPAL IT CLIENTS: Traditionally, the government and large private businesses, including many multinationals, have been the primary clients for internet. Price remains a deterrent for individual and household internet consumers, especially considering the cost of personal computers. IG Telecom, Solsi and GBM have primarily grown their businesses through offering a mix of both fibre-optic and VSAT options for government and corporate clients.

However, the expansion and liberalisation of broadband capacity through the ACE cable should provide the stimulus to expand the market for fixed and wireless access, even among Gabonese households. As Alain Ba Oumar, the president and CEO of IG Telecom, noted, “With the arrival of the ACE cable, ISPs are taking a step into an entirely new market – the public. Internet access will go from being a luxury product to a realisable tool for sector growth and, on a larger scale, economic development.”

The newest entrant, IPI9, offers services that are particularly adapted to smaller clients, which has helped to further increase this segment. IPI9 offers a mix of WiMAX and Wi-Fi technology on a pre-paid basis, which clients can top up using recharge cards. IPI9 formed a partnership with Airtel in July 2012 that allows customers to recharge their pre-paid accounts on its “newG” modems by mobile phone, via the Airtel Money programme. This pay-as-you-go model could lend itself to the current base of mobile internet users given its price and flexibility, and more operators may choose to explore this route in the future.

And yet, while households represent a large number of subscribers for many ISPs, they generate only a fraction of the revenue provided by government agencies and businesses.

Edgar Tougouma, the technical director for Solsi, said, “The household internet market is expanding apace with economic growth. This is a positive sign, but Gabon’s small market of around 1.5m people will put a damper on revenue growth from this segment. Businesses, ranging from small and medium-sized enterprises to multinationals, provide some of the most interesting opportunities for growth for ISPs. Increasing demand for complex solutions and virtual private networks should help to drive revenue growth in the coming years.”

As the service offering develops in Gabon, there are also opportunities to expand into the sub-region. For example, IG Telecom signed a two-year CFA1.5bn (€2.25m) contract in February 2013 to create a private VSAT network for the Congo-Océan Railroad Company. IG Telecom will create an internal telecoms system to link up 29 stations of the railroad in neighbouring Republic of the Congo.

DIGITAL INFRASTRUCTURE: Public investment in ICT has spiked in the past two years. Since the government made a large investment in the development of a satellite network via Gabon Telecom in 1987, the private sector has driven much of the investment in the IT sector. However, according to government estimates, the state invested around $60m in 2011-12 to put in place basic digital infrastructure, boost the adoption of new technologies and recruit qualified personnel. Of this, roughly $51m went to the development and installation of the ACE cable.

Gilbert Nzola Nze, director-general at the Ministry of the Digital Economy, told OBG, “Once Gabon’s digital economy is in place, the private sector will lead innovation and sector development. However, the government has a critical role to play in establishing the infrastructure necessary to support growth in new technologies. The national backbone will provide the framework necessary to speed up communications and to develop applications that encourage socio-economic development.”

The government has planned further investment of $68m in the digital economy between 2013 and 2014. Its top priority will be to extend the land-based fibre-optic network to key urban centres outside of Libreville and Port-Gentil. This sum includes a $58m World Bank loan facility, which will support the cable’s extension eastward to Franceville, Lekoni and Koulamoutou. Work on this segment is expected to begin before end-2013. The cable will then be extended to a landing point on the border with the Republic of the Congo, as part of the Central African Backbone project, which is funded by the World Bank as well as the African Development Bank.

STREAMLINING THE PUBLIC SECTOR: Under the Digital Gabon Plan, the government is working with private partners to develop a number of projects that should help to establish a digital economy by 2016. In particular, several public initiatives are under way in an effort to streamline government operations. Under its wireless broadband project, the government is working to install an internal communications platform connecting all ministries and agencies. For the moment, the platform relies on a dedicated WiMAX network; 500 WiMAX keys have already been distributed in Libreville alone. However, the government plans to transition this network to more efficient 4G LTE technology in the future.

Another state-led IT scheme, the Gabon Administrative Network (Réseau de l’Administration Gabonaise, RAG) project, was more than halfway completed as of early 2013. RAG will create a common digital collaborative platform for all administrative bodies nationwide. Government offices in Libreville are beginning to be linked up to the network via a fibre-optic connection, utilising the ACE cable. In the next phase, the network will be extended into provincial capitals, and then eventually smaller towns, as part of an effort to improve information sharing within the government.

The state is aiming to improve its online interface through a variety of projects. The Gabon Online project is in the process of establishing websites for each ministry. The national domain name, “.ga,” is also being revamped under ANINF’s direction, in an effort to improve Gabon’s online presence. Finally, a number of application programmes are being developed within key ministries, such as those for justice, health and education, that are meant to stimulate economic and social development. Education and health are key sectors in this effort, as the absence of up-to-date statistical information has been a particular issue in these areas (see analysis).

DIGITAL TELEVISION: The government is working to promote universal use of digital television signals by 2015, the date set by the International Telecommunications Union for the end of analogue transmissions. The country still has a considerable way to go to meet this goal, but private companies have begun to launch innovative products in anticipation of the change. Satellite television already has a stronghold in Gabon. Two foreign satellite operators, CanalSat and SatCon, are present in the market and provide access to a broad spectrum of international content, as well as national public stations.

To facilitate the transition to digital broadcasting, local firm TNT Africa, a sister company of Solsi, is promoting the use of digital terrestrial television (DTTV). DTTV is capable of transmitting 8-10 channels on a single frequency, which reduces operating costs and maximises the available data capacity compared to analogue. Basic DTTV is also more affordable than competing satellite television, largely thanks to lower equipment costs involved.

By working with a corporate partner, the state has encouraged the private sector to lead the switch to DTTV. TNT Africa established three major technology installations in the high-population areas of Libreville, Port-Gentil and Oyem, and an estimated 300,000 subscribers had made the switch to DTTV by mid-2012. However, this still leaves a segment of the population outside of the digital system, and the state may need to cover the remaining materials cost in order to close the divide. This could involve distributing decoders to low-income families and investing in broadcast equipment in more sparsely populated areas, where there is little return on investment.

IG Telecom recently signed a partnership with Canal+ to offer a “triple play” product, the first bundled satellite television, wireless internet and radio service package available on the local market. To support the expansion of its triple play offering both in Gabon and the wider Central African region, IG Telecom inked a deal worth $15m with satellite operators Hughes Network Systems and SES. A network operations centre and up to 2000 HN9260 routers will transmit broadband satellite internet and VoIP service to homes and small businesses throughout Central Africa. A customised Hughes dish antenna allows IG Telecom to bundle these services with Canal+ television using decoders that are already in subscribers’ homes.

The service will require a $1000 installation investment, and will cost roughly $100 per month after that. IG Telecom plans to first migrate 350 existing satellite internet clients to the new system, before beginning commercialisation in the third quarter of 2013. Partners hope to reach 3000-4000 clients in Gabon in the next three years, and estimate that there could be over 20,000 triple play customers in Francophone Central Africa in the long term.

HUMAN RESOURCES: One of the most pressing needs for both IT and telecoms is improving human resources. A handful of schools offer engineering and advanced technical degrees, but class sizes are small and range from roughly 20-40 students per year, while the needs of the job market are increasing rapidly.

For the IT sector, the Institut Africain d’ Informatique (IAI) is one of the primary professional schools in Gabon. The IAI offers training programmes for computer analysts and programmers, IT business management and engineering. Additional IAI campuses exist in the sub-region, including in Cameroon. Given the lack of opportunities for quality education in-country, the majority of sector employees were either educated abroad or come from other countries in the sub-region or elsewhere in Africa.

OUTLOOK: The rapid uptick in mobile internet usage in 2012, pushing overall internet penetration from 19% to 33%, shows that the market is quick to respond as soon as new technologies become affordable. With the arrival of the ACE cable and increased competition, the number of internet users should grow exponentially in the next few years.

The low level of internet and IT penetration creates considerable opportunities for growth, and a number of companies are moving to meet the demands of this burgeoning market. The realisation of a digital economy by 2016 is an ambitious goal, and the move is likely to favour public-private partnerships for the numerous projects on the horizon, which will help to distribute the cost and bring in technical expertise.