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The Economics of Change in African Infrastructure Development

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Mobile network infrastructure rollout in Africa is at an economic crossroads where energy efficiency is concerned. Compared to 2G networks, 3G and 4G basestations require considerably more power and access to high-speed broadband fiber.

Indeed, from a power consumption point of view, 3G and 4G rollouts require not only bigger standalone generators than 2G, they also need more of them, because of the different radio propagation qualities of the spectrum. Simply put, with the same investment, you can build more 2G sites and cover a much wider area.

But it's not that simple. Operators know that 2G networks can't handle the types of services they want to launch or deliver the level of digital transformation required to meet the ambitions of the users. Our recent survey regarding "Capex Priorities" provides clear confirmation of the requirement. (See Africa's Mobile Operators Should Focus Investments on 4G and Mobile Finance: Poll.

In the survey, Connecting Africa readers placed 4G/LTE radio access comfortably at the top of the list of technologies in which Africa's mobile phone operators should prioritize their capex investments during the next five years. The desire for the type of advanced services that 4G can deliver -- mobile finance came second in our readers' list -- are not going to be met satisfactorily by 2G networks.

"More than two-thirds of Africa's mobile connections are 2G and those desired 4G connections currently only represent 2% of the market"

The size of the resulting economic challenge facing Africa becomes apparent when you consider that, right now, more than two thirds of Africa's mobile connections are 2G and those desired 4G connections currently only represent 2% of the market.

By 2020, 3G connections will at least overtake 2G, but the figure for 4G is only expected to creep up to 12% in that time -- and that is not fast enough to satisfy the needs of consumers and businesses. Our survey also identified one critical reason for that slow progress towards faster, more advanced mobile networks -- the need for investment in high-speed backhaul and packet transport infrastructure.

Next-generation radio access networks use a distributed architecture which sees one baseband unit (BBU) coupled with multiple antennae located at the remote radio head (RRH). To deliver the best signal quality, each of the towers hosting the RRHs will need to be linked by fiber back to the BBU.

"Nigeria's outsourced infrastructure model sees some 15,600 towers shared by all the country's major mobile operators"

In some areas, relatively low-cost links using millimetre wave radio could relay line-of-sight fiber quality backhaul to the central BBU, but operators recognize that excess humidity and heavy rain can severely affect propagation.

Perhaps the economic challenge needs an economic solution rather than a technology one. Stephane Teral, who studies mobile infrastructure and carrier economics at research house IHS Markit, believes that network sharing is the way forward and says that Nigeria is Africa's most successful and innovative telecom infrastructure country. (See Nigeria Is 'Most Successful Network Sharing Country' in Africa: Report.

According to Teral, Nigeria's outsourced infrastructure model sees some 15,600 towers shared by all the country's major mobile operators. He believes more operators will sell their towers to management companies who can sell space on the towers to multiple operators.

"Africa's climate might provide the solar power answer to help fuel the networks, but it might not be the friend of lower-cost backhaul solutions"

To provide the advanced services that African consumers and businesses will increasingly demand, operators will need to find a way to power the network and deliver the backhaul links. Africa's climate might provide the solar power answer to help fuel the networks, but it might not be the friend of the lower-cost backhaul solutions. Working together to share the costs seems to offer the best overall solution.

Infrastructure development and powering African telecommunications will be brought into focus at the biggest event in African tech and telecoms -- AfricaCom (November 7-9, 2017, Cape Town). Check out the Connecting Africa and Connectivity Stage agendas to find out more about these topics at the 20th anniversary event.

Join the biggest gathering of telecoms and technology enthusiasts on the continent and gain access to key insights and cutting edge technologies by signing up for your free visitor pass here.

Don't miss out on a thing and gain an unrivalled all-access pass to the most extensive event on the African tech and telecoms calendar by booking your Silver, Gold or Platinum pass to AfricaCom 2017 here.

— The staff, Connecting Africa

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