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3G the African way

By Lars Stuber

Shortly before the telecommunications market in Europe and the US descended into recession, many multinational telcos spent billions of dollars to secure licenses for third-generation (3G) cellular networks.

The thinking was that higher bandwidth availability – up to 2 Mbps – would provide opportunities for the always-connected generation and stimulate innovation and the growth in mobility applications. Unfortunately the economic downturn delayed the 3G rollouts and put the telcos under immense financial strain.

3G operators definitely face a challenge. Luckily the market for 3G is steadily improving and networks have been, or are being launched in Europe and Asia at the moment, albeit at a slower rate and with a slower up-take than initially hoped for.

In Africa however, rolling out new technology to enable 3G mobility is currently not a financially viable option. Broadband cellular communications is still fairly new on the continent and telcos and users could not afford 3G if they were forced to upgrade their current GSM/GPRS hardware to WCDMA, the preferred standard in Europe and Asia.

Fortunately, there are other options to take African communications into the 21st century and deliver the benefits of 3G without a completely new hardware infrastructure.

Enhanced Data GSM Environment (EDGE) is a faster version of GSM/GPRS able to transfer data at rates of up to 384 Kbps. The benefit for African telcos is that minimal investment is needed to implement EDGE as an upgrade of the current GSM systems.

3G functionality can be provided by changing only one transceiver in each GSM base station. This allows cellular service providers to continue offering GSM services to the majority of customers, with EDGE functionality available to users requiring
increased bandwidth.

South Africa, Nigeria, Mauritius or Reunion will probably be the first African countries to commence a commercial EDGE launch. I suspect this may only be in the second half of 2004, as mass demand for wireless broadband data services in Africa still has to develop. Telcos are aware of the future importance of 3G functionality and there are indications that they are starting to prepare their network infrastructure for EDGE.

In the EU, for example, data services were first introduced to people in the workplace. From there the demand for home access soon developed, followed by a growing request for data services “on the move” via customers’ cellular phones and PDAs.
We expect a similar trend in Africa, although currently at home use is minimal. As more people are educated and learn new skills, the demand for new communications options will increase and in about four to six years there will be a groundswell of demand for mobile solutions.

The shift from the traditional 2G-business model (consumer to network operator to supplier) to the 3G-business model opens up many opportunities. With various new entrants such as application service providers, information brokers and content providers, these opportunities extend to innovative people and companies, which then show growth in the local economies. Being able to access information anywhere anytime will have a profound impact on business.

Given the tight budgets African companies and consumers must work with, I believe EDGE is the best and most cost-effective solution that will deliver 3G functionality without the difficulties experienced in Europe.

Lars Stuber is Manager: Network Consulting, Ericsson Market Unit Southern Africa. The unit can be contacted on +27 11 844 2306. Vusit the Ericsson web site at http://www.ericsson.com or visit Ericsson at stand # 49 at the GSM Africa Exhibition in Cape Town from 25 to 26 November.

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The Big Change is a business strategy blog and newsletter published by Arthur Goldstuck, managing director of World Wide Worx, a leading technology research organisation based in Johannesburg, South Africa.

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