The COVID-19 pandemic has highlighted the importance of resilient, high-speed internet infrastructure. According to a recent International Telecommunication Union (ITU) report, the world after COVID has witnessed a staggering 80% increase of PC uploads to cloud computing platforms since the start of the pandemic. Videoconferencing applications in particular are booming.
We witness this every day. Every day, hundreds of millions of professionals log in to similar enterprise desktop applications. At the same time, millions of children around the world engage in virtual learning using the same technology.
S&P Global Market Intelligence estimates that Zoom’s use increased by over 300% since the start of the pandemic, and its unabated growth has continued. Oppenheimer’s research expects that the cloud-related capital investments by Apple, Amazon, Alphabet, Facebook, and Microsoft will increase from $40B in 2017 to $100B annually in 2023. Cloud-based applications are growing at a staggering rate, with segments such as Communications Platforms as a Service (CPaaS) rising at more than 40% per year. CPaaS redefines the relationship between consumers and enterprises by allowing companies to programmatically engage customers via any channel in the form of messaging, voice or e-mail from a unified platform.
The world has turned a page.
However, in countries where the digital infrastructure needed to support a cloud-based platform economy does not exist, a broadband data package can cost as much as 30% of disposable income.
IFC has begun the challenging task of estimating the quantity of fiber deployed in selected African countries. We started in Africa and discovered that some governments funded public backbone networks and linked public institutions. These governments received funding from multilateral development banks, donors and eager vendors. They charged the private sector fees on their net revenues, set up universal service funds, which were only partially used.
How much fiber optic cable has been installed in Africa? IFC estimates a total of 1.1 million kilometers. About 50% of this fiber is deployed by private Mobile Network Operators (MNOs). These are private sector operators which were granted licenses to offer mobile communications services and have the right to deploy fiber to connect their towers and base stations for their backbone and backhaul needs.
About 40% of all fiber optic cable in Africa, a staggering 450,000 kilometers, is publicly-owned. This includes government networks, state-owned enterprises (SOEs), and utilities.
This publicly-owned fiber cable is only partially used to deliver services to citizens. In Algeria, the share of fiber cable owned by government is 68%, and this portion is divided between incumbent SOE Algerie Telecom and the fiber assets of Sonatrach, Sonelgaz, and the other utilities. The government of Algeria owns 110,000 km of fiber, which amounts to10% of all fiber in Africa.
The West Africa Power Pool (WAPP) brings together many of the electric utilities of West Africa. WAPP has underused fiber optic. All the fiber in the Central African Republic belongs to the government; 73% of the fiber in Chad and about 58% in Cameroon and the Democratic Republic of Congo are government-owned. Some governments, including those Benin and Senegal, are considering establishing public private partnerships (PPPs) to tap into the existing underused assets. Wholesale broadband access prices are excessively high in Angola and Madagascar.
What does it take, then, to bring this 1.1 million kilometers of fiber cable to aid African development?
First, most African countries need more competition. In many markets, broadband is a monopoly and only the government can deploy fiber cable. In Libya, all telecom assets are under a holding controlled by the state. Djibouti has a state-owned monopoly incumbent operator. It is imperative to open the African market to competition at all levels, wholesale and retail, domestic and international. Monopolies are associated with low internet speed and high costs.
Second, government assets should be leveraged, through proactive infrastructure sharing regulation and commercial agreements with the utilities. Infrastructure sharing rules need to be established and enforced. The conditions for MNOs and data operators to access existing fiber capacity need to be non-discriminatory and cost oriented. Both wholesale and retail markets need to be open.
Good examples already exist in selected African nations. The World Bank assisted Tunisia with a framework for the utilities to lease excess capacity. More than 600 km of fiber owned by railways operator SNCFT were leased and used by telecom operators to serve the population. Gabon has a national backbone network, but private operator Axione was selected as an operating manager of the network. In Jordan, the government built a National Broadband Network (NBN), with public and donor funding. Jordan has contracted IFC to be the Advisor to structure a PPP for the development of the network.
Finally, countries like South Africa have established a fully competitive market. As a result, the data center capacity in South Africa is now three times higher than the next three highest-ranked countries in Africa (Ghana, Nigeria and Kenya). Each of these three latter countries has also a good track record of telecom liberalization, with some gaps with respect to South Africa. Their data center capacity is higher than the rest of the continent combined.
The COVID-19 pandemic has changed the world. The potential economic and social benefits of leveraging the million kilometers of fiber in Africa could not be higher. Implementing a shift in fiber access will require a discontinuity from the policies of the past. It will also require aligning donors, private sector and governments around the principles of the Cascade approach, a framework for prioritizing the use of private sector solutions to development challenges wherever possible and optimizing the use of public sector resources. The framework requires World Bank Group teams to first try and address policy and regulatory hurdles to private sector investments before using public sector resources to finance investments.
Carlo Maria Rossotto is Principal Investment Officer, Global Head, Upstream Telecom Media and Technology, Infrastructure at the International Finance Corporation, IFC
Register for our digital event to learn more about new business models for affordable access to broadband, which will take place on March 17, 2021 | 8:00AM — 9:00 AM ET. Follow the IFC Infrastructure LinkedIn page to keep up to date with latest trends and news in the digital connectivity space and bookmark our page: www.ifc.org/tmt.
