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Reshaad Sha: Mobile operators must focus on quality

April 28, 2011 • People

Reshaad Sha, Strategy Director at Cisco Internet Business Solutions Group (Image: file photo)

ITNewsAfrica.com interviewed Reshaad Sha, strategy director at Cisco Internet Business Solutions Group, who provided insights in the mobile connectivity growth in the next five years and the telecoms industry’s focus on the continent.

ITNewsAfrica.com: According to Wireless Intelligence report published earlier this month, Africa has overtaken Western Europe in the number of mobile connections. What were the key factors, in your opinion, that contributed to this?

Reshaad Sha:  In Africa, the limited supply of fixed infrastructure and the roll out of mobile networks meant a massive increase in the number of mobile subscribers over the past years. With more networks rolling out and no sufficient fixed infrastructure to serve most African countries, the only choices were mobile connectivity or no connectivity at all. Europe has developed over 15 years of mobile network, reaching the maximum level of penetration by now. We don’t see a strong growth in Europe in the mobile telecommunication market over the next five years. Also, the demand for fixed line infrastructure overseas is still there, by comparison to Africa.

The biggest growth we have seen in the Middle East and African region refers to data usage and Cisco’s Virtual Networking Index (VNI) has an in-depth analysis on the Internet usage worldwide and across various regions.

ITNewsAfrica.com: Will the ongoing price wars in Kenya, Tanzania and Egypt, also play a role in the mobile growth for Africa, in your opinion?

Reshaad Sha: Price wars are driven by voice tariffs. Most operators are expecting growth from data, not from voice. That explains why data tariffs are not significantly different from each other. There are parts of this service that are not internal to the operators. The price wars are significant from a voice perspective, however when it comes to data, this is a much harder war to start.

ITNewsAfrica.com: What is the estimated increase in the total mobile Internet users and mobile traffic for 2011-2015 on the African continent?

Reshaad Sha: We estimate that the Middle East and Africa region will have a compound annual growth rate (CAGR) of 129% in the next five years, the strongest mobile data growth worldwide. In South Africa, the CAGR stands at 144% over the same period. For most Africans, Internet will be delivered by mobile devices and currently there are more mobile Internet subscribers than fixed. Access to networks will be facilitated by undersea cables in the coastal cities; however we have to count in the ability to reach connectivity versus the costs involved to factor in the people’s decisions to connect. Mobility is the solution.

ITNewsAfrica.com: How much of this growth will be represented by data traffic such as video?

Reshaad Sha: Video plays a big role in the evolution of mobile traffic and we estimate that it will become the dominant component. Currently, video does not represent the majority of traffic in the African region, but it is catching up fast due to the increase of video content availability. We forecast mobile video traffic at 66% of all mobile data traffic by 2015.

ITNewsAfrica.com: Could you give an estimated compound annual growth rate of smartphone penetration in Africa during 2011-2015?

Reshaad Sha: What we can estimate is that smartphones’ contribution to mobile data traffic will increase from 20% in 2011 to 26% in 2015. Portable devices such as smartphones, laptops or tablets will drive the majority of 87% of global traffic in the next five years.

ITNewsAfrica.com: How do you see the evolution of tablet devices in Africa?

Reshaad Sha: Tablet devices will experience an entry barrier for African citizens, due to price and availability. We strongly feel that tablets will not be chosen over netbooks, for example. Most people who own a tablet already have another primary connection device. Tablets are additional devices and not a primary focus for connectivity.

ITNewsAfrica.com:  According to Cisco, which African countries are prone to register the highest growth in mobile traffic over the next five years?

Reshaad Sha: It would be hard to predict. Obviously, there are countries with a higher number of subscribers, which could drive more data traffic, but we should also look at the usage volume and the speed of the networks. In South Africa, for example, an HSDPA+ connection will consume more data. There might be countries with fewer mobile consumers and higher data consumption. Overall, we have to consider population, data usage and the connection speed involved.

ITNewsAfrica.com: According to Cisco, what would be, on average, the preferred mobile connection (EDGE, 3G, HSDPA+, 4G, Wi-Fi) on the continent?

Reshaad Sha: Some countries are just starting to role out 3G networks and those who are not doing it will most probably go directly to HSDPA+. Still, even in most cities, we assume that EDGE and 3G are prevalent.

ITNewsAfrica.com: How do you see the evolution of mobile connectivity prices and average bandwidth usage in African homes?

Reshaad Sha: In countries like South Africa, Ghana or Nigeria, the pricing of data traffic has already reached a fairly low level and what we can say is that it won’t go much lower than this for the next five years at least, perhaps with a slight 1-2% difference, versus the dramatic decreases up to 50% we have experienced in the last two years. While the cost per MB will remain the same, operators will offer more data traffic for the same prices.

ITNewsAfrica.com: What are the network and structure requirements needed to support this growth? Can this growth be sustained with the current level of communication infrastructure?

Reshaad Sha:  Specifically in Africa, the IP connectivity is not widely spread, as there are “small pockets” in different cities. This will change in the next years, as we already see more infrastructure being developed to accommodate the estimated growth we are talking about.

ITNewsAfrica.com:  Your key role as Cisco is closely related to the development of telecom strategies for emerging markets. How does Cisco perceive the mobile operators’ focus and strategy in the emerging markets?

Reshaad Sha: Mobile operators need to focus on increasing the amount of network coverage and the quality of their service. Once the subscriber base reaches a critical growth level the focus will shift towards the quality of the service. In South Africa, we have already reached the quality perspective and this also happens for major cities such as Lagos in Nigeria. Both regulators and consumers have to force operators to improve on the quality of their service.

By Denisa Oosthuizen

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