The public consultation ended in March and the auction rules were made available in April. The market had big expectations that the regulator would amend some previous rules, but Anatel were not very flexible.

700MHz band is better but it is not available

Mobile operators are also pressuring the government to award the 700MHz band because in their view this frequency is more suitable for LTE services. According to the operators, the 700MHz signal offers superior quality for mobile services than the 2.5GHz and would reduce significantly the network investment needed. However, the 700MHz frequency is currently used for analogue TV services and the switch-off is scheduled only for 2016.

The 700MHz network is easier and more cost effective to deploy than the 2.5GHz band, because it requires significantly fewer base stations, which are the most expensive component of the network. In addition, 700MHz is great coverage spectrum in all areas including urban, suburban and rural. However, this band is not available and operators need to bid on LTE spectrum, considering that it is the future technology of the mobile industry. Additionally, they need more spectrum to attend the ever growing demand for data services.

Allocation of 450MHz  band in the 2.5GHz spectrum auction could be an inhibitor for operators

Mobile operators are already arguing that the 700MHz is more suitable for LTE services but Anatel has not made it available yet. The allocation of 450MHz spectrum is making the LTE spectrum less attractive and main market players may eventually not participate in the LTE auction. The investment required to take telecom services into rural areas through 450MHz is not justified by the potential market. Also, mobile operators still have to deploy 3G networks in non-profitable regions.

In small cities, 3G will attend data demand

LTE coverage targets imposed by Anatel are very aggressive.  For the 3G spectrum auction, Anatel already imposed several 3G network coverage targets in order to ensure that small cities would have access to mobile broadband services. The 3G network will be sufficient to attend the demand in most of the country, thus making unnecessary heavy LTE investments in the short term in many areas.

It is important to provide mobile broadband services across the country, especially when there are no fixed-broadband offers. However, there is no need to have both 3G and LTE where the costs to implement LTE networks are not justified by local demand.

In small cities, HSPA or HSPA+ should provide high speeds for mobile broadband, up to 6Mbps, because data traffic is expected to be significantly lower there than in larger urban areas. Because of the low population density and users’ low income, a sharp increase in data traffic is not expected in the medium term in small cities.

TIM needs more spectrum to continue growing

Although TIM Brasil has announced that it has not decided yet whether it will bid for LTE spectrum, it is likely to be a negotiation tactic to pressure Anatel to change some auction rules. TIM Brasil believes that it could avoid the high cost of investments in LTE licenses and infrastructure by using the fibre network of AES Atimus. However, considering the limited amount of spectrum available for 3G networks, TIM is unlikely to be able to provide speeds comparable to LTE, even using HSPA+.

LTE spectrum auction may be open to new players

A key question on the forthcoming LTE auction is whether a new player would bid for the LTE spectrum. Obtaining LTE spectrum represents a unique opportunity for GVT to enter the mobile market, becoming a strong competitor in the country with quad-plays offers. With no mobile legacy, by acquiring LTE spectrum GVT would be able to enter the market directly with the most advanced technology, avoiding costs and spending time managing different technology networks and then migrating to LTE in the future.

Cable and satellite TV operator Sky is another potential new entrant in the profitable mobile market. In December 2011, Sky launched TDD-LTE services in 2.5GHz, in the country’s capital Brasilia. Currently, Sky offers only fixed wireless broadband services as it does not have a license to operate in the mobile market. However, it could acquire more spectrum in the tender, therefore making its entrance to the mobile market. In addition, Sky expressed interest in the LTE auction in Colombia and Chile.

LTE take-up might be weak in Brazil

LTE has been deployed only in a handful of countries and has yet to generate the economies of scale required to bring prices down. Services and handsets remain expensive worldwide. In the countries where LTE has already been implemented, LTE data plans are US$50-80, significantly higher than the US$14 Brazilian ARPU. Handsets are also a problem for an emerging market such as Brazil. In the short term, the country is likely to import LTE devices, and prices could double because of the high local import taxes.

It must also not be forgotten that the countries that have deployed LTE also have high levels of 3G penetration and show an increasing demand for data services. In contrast, in Brazil 3G has not taken off yet and still represents only 20% of the market.

A more detailed version of this analysis is available on Informa Telecom & Media’s Americas and Mobile Operator Intelligence Centre.

Richard Vester

Richard Vester is the Executive Head of Vodacom Business Services and will be a speaker on Day 1 at the Cloud Africa Com at the Sandton Sun Hotel in Johannesburg on 23-24 May. In this interview he shares his views on the future of cloud services in Africa.

How would you describe existing ‘’cloud services’’ in Africa?

Cloud Services in Africa can be broken down into a few different areas. Firstly let’s look at private cloud which is fairly mature in South Africa but a lot less developed in the rest of Africa. We are seeing a lot more focus from global software vendors in extending their virtualization technologies into African markets. Several corporate companies have adopted at least virtualization in their own data centres. Most of the virtualization services are aimed at the infrastructure consolidation layer and not in the software space.

Public cloud is fairly immature in Africa. There are one or two players which have been able to build a true elastic cloud service, but this has traditionally been focused on the South Africa market with future African expansion the next logical step.

What would you say is the level of awareness about cloud in your region’s ICT market?

There is a lot of awareness and talk in the market about cloud services. The challenge is not so much in awareness but more in the adoption. Many companies love the idea of cloud and they can confidently say that they need to adopt it in some form or fashion; however the starting point for moving to the cloud is the biggest challenge. Change seems to be the biggest stumbling block.

Which ‘type’ of cloud would be your choice – public or private?

My first choice would actually be a hybrid approach specifically in the corporate / enterprise segment. The reason for this is that there are many companies that have adopted virtualization in their own data centres and are content not to move their information into the public cloud, yet the biggest challenge they have would be the need for rapid scale of infrastructure for growth. This could have a large capex burden on the company. The converse of that is many companies don’t wish to move all their confidential data into the public cloud, but wish to enjoy an opex based service with less capacity issues. The hybrid approach allows for companies to manage their own infrastructure and the public cloud infrastructure through a single pane of glass. When they need to scale quickly then leverage off the public cloud for rapid deployment and when you have greater timelines for internal projects, plan and implement your own private cloud.

Smaller companies without their own data centres should look to move to public cloud as the benefits are exponential.

How rapidly do you think the adoption of cloud will reduce capital and operational expenditure for enterprises in Africa?

Adoption of cloud would see the immediate reduction in capital costs with a slightly smaller operational expenditure. There is a perception that cloud will replace the requirement for IT staff. Operational work will still be required, however the time to deploy and the tools available to make the IT department more efficient would result in more time to focus on other parts of the business.

What do you think is needed to drive improved and cheaper bandwidth in Africa for cloud?

Bandwidth costs and availability will improve over the next few years. A lot of large telco’s are on a drive to deliver fibre to the door. This will increase the capacity and force the market to drop its pricing for service. Other important factors are things such as the additional cable systems from Europe and Asia. The more capacity we can land in the country the more affordable it becomes. Satellite is also an important factor as infrastructure can be a problem throughout Africa.

Have you seen an increase in IT spend (in your business/country/region), and if yes, has it included investment in cloud?

I have seen an increase in company’s spending money on cloud based services however, this has actually decreased the total revenue spend. Cloud services are proving to be a great vehicle for companies to increase service levels, increase productivity and decrease costs to service providers. All though service providers make less revenue on the service its self, they also save in space and utilities and therefore improve on their profit.

What do you think is preventing enterprises in Africa from implementing cloud?

Knowledge, the ability to experience it and the correct exposure to case studies. So often companies want to get to know more about how cloud can benefit their business but unfortunately a lot of providers talk about cloud and don’t deliver on its promise. More providers need to invest in infrastructure through Africa to help companies on their journey to the cloud.

Which key message do you want to highlight during your participation at Cloud Africa in Johannesburg later this year?

The message that I would like to deliver is that cloud services are really there to benefit companies, whether in a private, public or hybrid state. It doesn’t matter what size your business is, there is always an advantage to you as an organisation to adopt cloud infrastructure, software or security. Although the service delivery may be lacking across Africa for true cloud services, the capability is available and companies don’t have to always leverage off cloud in their own country it could be at the end of a rainbow.

Tom Juma, Head of ICT and Service Delivery for Old Mutual Kenya

Tom Juma is the Head of ICT and Service Delivery for savings and investments firm Old Mutual Kenya and will be a speaker on Day 1 of the Cloud Africa Com at the Sandton Sun Hotel in Johannesburg on 23-24 May. We caught up with him ahead of the show to get his views on the future of cloud services in Africa.

How would you describe existing ‘’cloud services’’ in Africa?
For Africa, I see cloud computing as the convergence of three worlds: consumers, business and technology. The rise of mobility, social networking and mobile devices has created a new norm for interaction with customers and employees. At the same time, businesses are experiencing speed-to-market and cost containment pressures as never before. Technologies for virtualization, open-source software, automation, bandwidth availability and more continue to evolve. However apart from South Africa, cloud computing is relatively new in other parts of Africa. In Kenya though, Safaricom recently launched a cloud computing service that it says will be the largest on the continent, reflecting the cloud’s emerging importance to economic growth in Kenya and other parts of Africa.

What would you say is the level of awareness about cloud in your country/region’s ICT market?

For Kenya, the awareness of cloud while still very low is rapidly growing as more and more companies are now beginning to utilize cloud services and recently one of the largest telecommunications company in Kenya launched its cloud computing services for both local and international companies. The overall demand is really huge. This is so because Kenya is geared towards establishing itself as the ICT hub of Africa.

How rapidly do you think the adoption of cloud will reducing capital and operational expenditure for enterprises in Africa?

Many businesses are experiencing speed-to-market and cost containment pressures as never before. Technologies for virtualization, open-source software, automation, bandwidth availability and more continue to evolve. Lowered costs, enhanced flexibility and the ability to create new revenue streams are making cloud a technology of choice for high performance. But, cloud can do more. Cloud can:

•    Connect customers and citizens anytime, anywhere.
•    Enhance insight through advanced analytics.
•    Eliminate organizational boundaries.
•    Spur new products and services.
•    Broaden global footprint at lowered cost.

Cloud benefits in many industries include:

•    Software as a service resulting in low capital expenditure on software including maintenance and support costs.
•    On Demand services, meaning you only take what you require at the moment and grow as your needs arises.
•    Worldwide information availability i.e. Diseases records can be available to any Doctor in the world hence rapid development and access to healthcare. But this must be securely stored.
•    Applications such as product barcode scanners have brought instantaneous, online comparison shopping to the retail industry
•    Global peer-to-peer lending services allow consumers to sidestep banks with hundreds of millions of dollars in transactions.
•    Applications such as Pandora and Genius for iTunes aggregate and analyze user feedback in real time.

What do you think is needed to drive improved and cheaper bandwidth in Africa for cloud?

Use of appropriate technologies like Fibre optic like Eassy, Teams, SAT-3/WASC/SAFE to connect the global PPP between investors, and governments and availability of cloud based solutions in Africa which will spar more usage hence reduction to unit costs.

What do you think is preventing enterprises in Africa from implementing cloud?

Fear of the unknown – a misnomer about security issues in the cloud; inadequate IT skills and knowledge in reference to cloud computing; the fact that most companies already have traditional IT solutions and are not willing to change; a lack of cloud-based computing companies marketing their solutions and services to companies; the cost of bandwidth and lack of reliable and secure internet connections is some parts of Africa; and low IT usage in some part of Africa.

What do you think are the 3 key advantages gained by companies using cloud as part of their IT services?

There are lots of advantages to using cloud computing for international companies as follows:

One of the major ones is the flexibility that it offers. Cloud computing means that staff can access the files and data that they need even when they’re working remotely and/or outside office hours. As long as they can get on the internet, staff can access information from home, on the road, from clients’ offices or even from a smartphone such as a BlackBerry or iPhone. Staff can also work collaboratively on files and documents, even when they’re not physically together. Documents can simultaneously be viewed and edited from multiple locations.

Cloud computing can be very quick and easy to get up and running. Consider, for example, how quickly you can set up a Gmail or Hotmail account and start emailing – it takes minutes and all you need is a computer and the internet. Downloading and installing software, on the other hand, takes much longer.

Cloud computing is often cheaper and less labour-intensive for companies too. There is no need to buy and install expensive software because it’s already installed online remotely and you run it from there, not to mention the fact that many cloud computing applications are offered free of charge. The need to pay for extensive disk space is also removed. With cloud computing, you subscribe to the software, rather than buying it outright. This means that you only need to pay for it when you need it, and it also offers flexibility, in that it can be quickly and easily scaled up and down according to demand. This can be particularly advantageous when there are temporary peaks in demand, such as at Christmas or in summer, for example.

A major advantage of using cloud computing for many companies is that because it’s online, it offers virtually unlimited storage compared to server and hard drive limits. Needing more storage space does not cause issues with server upgrades and equipment – usually all you need to do is increase your monthly fee slightly for more data storage.

Josh Parolin

Josh Parolin is the Manager & Developer at awareness organisation Invisible Children, which made headlines recently with the Kony 2012 campaign that focused on the plight of Ugandan children. He will be a speaker on Day 1 at the Cloud Africa Com at the Sandton Sun Hotel in Johannesburg on 23-24 May. In this interview he shares his views on the future of cloud services in Africa.

1)     How would you describe existing ‘’cloud services’’ in Africa?

Existing cloud services in Africa continue to drive adoption within companies and homes across the continent. These services have attracted larger companies, such as RIM and Symantec, to the market and have persuaded them to begin paying more attention to what’s happening with the cloud in Africa.

2)     How would you say cloud has impacted your company?

The cloud has allowed our offices across two different continents to connect and leverage data like never before. Tasks such as reporting and data mining which were once limited by bloated software and spreadsheets are now liberated by cloud based CRM and web tools. Communication which was once limited by lofty international fees is now possible with the click of a button. At Invisible Children we’re constantly looking to adopt the next great cloud based solution in order to maximize our efficiency.

4)     Which ‘type’ of cloud would be your choice – public or private?

In our world, the private cloud allows us to share sensitive information and construct valuable reports which without, we would have little need for the public cloud. The private cloud drives our operations.

5)      How rapidly do you think the adoption of cloud will reducing capital and operational expenditure for enterprises in Africa?

I think what we currently see in the cloud market in Africa is only a fraction of the growth that we will see over the next ten years. With that, we will continue to see a rapid decline in operational expenditure across the continent. The cloud will continue to find its place in many African companies, big and small.

7)     What do you think are the three key advantages gained by companies using cloud as part of their IT services?

The three key advantages of using cloud as part of a company’s IT services are increased efficiency, increased ability to scale, and increased innovation. Efficiency is in an instant reward when adopting cloud services because it removes the static and stagnant variables that once weighed a company down, such as servers. The ability to scale allows a company to go from catering to 100 users one day to 100,000 the next day. Finally, increased innovation is a result of the increase in collaboration and learning that becomes possible throughout a company after having adopted the cloud.

8)     Which key message do you want to highlight during your participation at Cloud Africa in Johannesburg later this year?

The cloud is what you make of it. You can use it to fuel one per cent of your company or you can use it to power 100 per cent of your company. Either way, always look for ways to be innovative with your approach to meshing together different aspects of the cloud and celebrating the outcome.

Mobile World Congress

Ahead of Mobile World Congress in Barcelona next week, here are the top ten hot topics to look out for according to analysts at Informa Telecoms & Media.

1. European operators will launch new IP voice and messaging services based on the RCSe standard and which, they hope, will combat the threat to their business posed by services such as What’sApp, iMessage and Viber. The extent to which these launches are supported by a wide range of devices is absolutely crucial to the success of RCS.

2. M2M technology will go mainstream at this year’s Mobile World Congress with the leading global infrastructure vendors parading their newly-found expertise in service management platforms.

3. Spanning both smartphones and tablets, the OS ecosystem and verticalization are becoming ever-more important, so expect more from Microsoft at MWC12 following last year’s marketing invasion by Android’s “little green men”. We also expect to hear an update on operators’ own platform strategies and whether there is any progress to report on the WAC initiative initially launched two years ago.

4. Momentum is gathering in the connected health market with an ever-growing range of new medical applications and devices both from established and new players.

5. The connected car is coming of age and the Mobile World Congress could see contract announcements between car OEMs, operators and providers of in-car communications and entertainment systems.

6. Small cells rather than just LTE will emerge as the key battleground for network infrastructure vendor solutions. The adoption of Carrier Wi-Fi will feature heavily.

7.The use of smartphones and tablets to connect to television sets will play a central role in the connected home of the future which will be a feature of handset vendors exhibition areas.

8. There will be no shortage of options for mobile operators shopping for solutions to manage the growth of data carried over their networks. Solutions will either: a) enable operators (or users) to better understand what traffic they are carrying; b) provide tools and techniques for managing the traffic; or c) support operators’ efforts to introduce new price plans for different services and applications.

9. Cloud technologies and services will dominate at this year’s event with the unveiling of new services for business and consumer markets.

10. Customer experience management will be everywhere at Barcelona this year as BSS/OSS generally emerges as a key theme in next-generation network, multiple-service environments.

M-health is gaining momentum

Among the massive displays of TVs, gaming consoles, mobile devices and other gadgets at last week’s International Consumer Electronics Show, mobile health and fitness solutions were among the most dynamic new areas of focus at the conference.

Industry heavyweights Qualcomm and Verizon Wireless were among the most prominent firms to dedicate substantial booth space to display their growing set of partners and wireless health solutions. Verizon’s health section focused on several clinical health devices including LTE enabled devices for use in ambulances, remote patient diagnostics and home health monitoring.

This year’s conference also included an expanded section that included dozens of companies such as Body Media offering its FIT arm bands with sensors that monitor body vitals and Telcare with its innovative blood glucose monitor that includes built-in cellular connectivity to send a patient’s daily glucose readings to his/her physician.

In addition to these health-focused products, health and fitness related games were also prominently featured in Microsoft’s XBox 360 area. While the sales volumes of this growing array of products continues to be modest in comparison to the broader mobile phone space, BestBuy CEO Brian Dunn stated that the growth trend for the category has prompted the giant retailer to create a health focused product team for wireless health solutions and carve out dedicated floor space for the new products throughout its chain of stores.

Within the US market, the complexities of device certification, health insurance and payment mechanisms continue to present a challenge to new wireless clinical solutions. but the expanded offering of wireless consumer fitness and wellness products is proving to be one of the most compelling new product categories for 2012.

Operators must evolve to meet new demands

In the Middle East, as elsewhere, the convergence of media and telecoms is creating fresh opportunities as well as new difficulties and operators in the market need to develop new business models if they are to succeed. The warning comes from a report published by Informa Telecoms & Media this week, identifying the strategies for success in the rapidly-growing market for online and mobile content in the Middle East and North Africa.

Key enabling factors include the strong growth in both fixed and mobile broadband in the MENA region. The number of fixed broadband subscriptions in the region grew by about 160 per cent in the three-year period to end-June 2011. While the number of mobile broadband subscriptions in the region increased from 919,000 in 1Q08 to 6.9 million in 1Q11. The use of smartphones is also growing strongly, with smartphone penetration in Saudi Arabia forecast to rise from 25 per cent at end-2011 to 48.63 per cent at end-2016.

Additionally, strong growth in the use of social-media services, which was accelerated by the events of the Arab Awakening, demonstrates the interest in the region in new digital media content and formats. The region’s nascent e-commerce sector is also seeing a rise in activity.

However, there are constraints on digital media in the region, including the limited availability and affordability of data services in the less-developed markets; a lack of attractive local content; high levels of content piracy; and an unpreparedness to pay for goods, services or content online.

These are barriers that must be overcome, because the telecoms industry’s best prospects for growth now lie in data services rather than voice – while the media industry must adapt to viewers’ increasing preference for digital media and new content formats.

Google and Facebook have gone to considerable lengths to localize and Arabicize their services and that is an important factor in their success in the regional market, according to Reda Haidar, Dubai-based consultant for Informa. “Localization and Arabicization are essential if international players are to reach a mass market in the Middle East,” said Haidar.

Investments in the region by Yahoo and LivingSocial demonstrate the interest that international players have in the regional digital-media market. But players from within the region have the advantage of local knowledge, which is a strength that international entrants find hard to replicate.

“In the Middle East, as elsewhere, the convergence of media and telecoms is creating fresh opportunities as well as new difficulties,” said Matthew Reed, Informa’s head of mobile research for the Middle East and Africa. “In many cases, operators, media companies and others with a stake in the sector need to develop new business models if they are to succeed. Few, if any, have the option to stand still.”

Despite South Africa’s appearance at the top of the index, joint authors Nick Jotischky and Sheridan Nye note that until now mobile government implementations have been far slower to take off there than in Kenya, Rwanda, Uganda and Tanzania. These East African countries have been quicker to realise the benefits to citizens and small businesses (agricultural advice, payment of utility bills, commodity pricing information) of delivering public services using cellular technologies.

E-government is being seen increasingly by African governments as a source of economic, social and political development that encourages greater citizen engagement and improves access to services. And yet two-thirds of respondents to a C-level industry survey, whcih Informa recently commissioned, believe e-government services are still under-developed in Africa.

Jotischky notes “It is striking when looking at e-government strategies in Africa that there is no clear articulation of the role mobile devices can play in the spread of e-government services. Given the importance of mobile in Africa’s economy and culture over the last decade, this appears strange. After all, not only does the continuing growth in wireless access ensure a wide audience reach, but messaging and data usage trends suggest many consumers in Africa are already using mobile for a variety of purposes. Furthermore, the mobile device market continues to mature and smartphone penetration is accelerating.” Informa projects that by 2016 over a third of mobile connections in South Africa will be via smartphones.

The report notes that many of the mobile government services already implemented are in East and North Africa. Most of these services are directed at citizens and businesses but as yet, governments have not used mobile technology as a way of overhauling internal processes and providing more flexibility to their workforces.

Nye suggests: “Technology providers in Africa have an opportunity to enable mobile government by encouraging the migration of public sector services to the cloud. Virtualisation of infrastructure and flexible, usage-based pricing would allow government agencies to pay for what they need and flex costs accordingly to match demand. Mobility services should form an integrated part of the public sector’s cloud migration.”

Informa’s mobile government readiness index is based on the following indicators: mobile penetration; 3G penetration; mobile broadband penetration forecasts; proportion of population living in rural areas; the size of public sector as a % of GDP; UN’s e-Government Readiness Index; fixed broadband penetration and literacy rates. The index excluded countries with a population less than 5 million.

Informa’s Analysts will be discussing this and other hot topics at the AfricCom event in Cape Town. For more information please visit: http://africa.comworldseries.com/

About AfricaCom
AfricaCom is Africa’s largest communications conference & exhibition. Now in its 14th year, this trailblazing event gathers together 5,000 senior decision-makers from the telecoms, media and ICT industries. This year a record 150+ speakers will share their vision of Africa’s future communications landscape and the agenda has expanded t incorporate 2 brand new events – AfricaCast and Enterprise ICT Africa – which will attract new audiences from the broadcast and business sectors respectively.

About Informa Telecoms & Media
Informa Telecoms & Media is the leading provider of business intelligence and strategic services to the global telecoms and media markets. Our aim is to provide actionable, strategic advice and forecasting on all aspects of the music, mobile and fixed, entertainment markets.

© Informa UK Ltd 2011. All rights reserved.

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Under a three year frame agreement, Alcatel-Lucent will deploy GPON technology to help support the Finnish government’s national broadband initiative of 100Mbps broadband for everyone by 2015.

The Finnet Group comprises 28 small and mid-sized telecom service providers all across Finland.

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