Over the last several years Africa has been, and continues to be, touted as having multiple opportunities for the expansion of broadband and digital services. This, and the nature of the region geographically, has presented many opportunities for novel technologies to be used for the rollout of broadband to support digital services such as fixed wireless and satellite.
Despite the optimism this creates, the nuances of the regulatory regime in some African jurisdictions can present a barrier to market entry.
In this article, we set out some examples of challenges for satellite broadband service providers expanding into Africa, by reference to specific African jurisdictions and identify potential workarounds, where available. We will focus only on the regulatory regimes applicable to the provision of telecommunications services and operation of terrestrial ground stations.
Broadband services in Africa
Only 27% of the population in Africa has internet access.1 While there is no shortage of fiber optic cable around coastal areas of Africa to support fiber networks for the provision of broadband services, there is not much fiber inland, and terrestrial broadband networks are typically limited to urban areas. This is because the vast size of the African land mass and the defined distinction between urban and rural areas can make broadband network rollouts outside of saturated urban areas logistically difficult and uneconomical.
However, difficulties that apply to traditional terrestrial broadband networks are not applicable to telecommunications satellite systems, where uniform coverage over a given area is guaranteed from a single point in space.2
As such, satellite has become a key solution to the low availability of internet access in Africa, and there are numerous satellite broadband providers globally looking to take up opportunities for expansion into Africa.
While there may be opportunities for expansion of satellite broadband services into Africa, there are a number of regulatory challenges that should be considered before any expansion decision is made. These include:
1. License unavailability
Before liberalization of its telecommunications markets in 2019, Ethiopia was a closed market with a single state monopoly telecoms provider, Ethio Telecom. A new telecommunications regulatory and licensing regime has now been established; however, the nature of the liberalization process means there are still barriers to entry into Ethiopia for providers of satellite broadband services.
- Despite the creation of a new regulatory regime, the market is being opened gradually and the new regulator (the Ethiopian Communications Authority) currently only has plans to permit entry into the market of two additional players, with the award of two Telecommunications Service Licenses by way of public tender. In our view, it is very likely that these two licenses will be won by mobile network operators.
- While the new regulatory regime does contemplate other licenses being available, there is currently no clarity around when such licenses will be offered.
On the basis of the above, direct entry into the Ethiopian market as a license holder and service provider is currently unlikely to be a realistic opportunity for satellite broadband providers.
Despite this, satellite broadband providers wishing to enter into the Ethiopian market may wish to explore indirect entry into the market, such as through a partnership arrangement with a local operator. For example, rather than being the direct provider of services, operators could instead structure their business to be a “subcontractor” to a licensed operator, providing and operating infrastructure on behalf of the licensed operator.
Under the local regulatory regime in Morocco, licenses are only granted following public tender. As at the date of this article, there is no intention of the local regulator (the Moroccan National Telecommunication Regulatory Agency) to launch a tender for a further public network operator.
In light of the above, direct market entry as a licensed network operator and service provider may not be feasible. As with the position in Ethiopia, an option that can be explored by satellite broadband providers could be to partner with a local licensee, and structure their business as a subcontractor to the licensed operator.
2. Lack of ubiquitous / blanket licensing
The standard rollout of satellite broadband services for consumer use relies on the deployment of very small aperture terminals (VSATs) at end users’ homes. VSATs are similar to a small satellite dish that send and receive satellite signals. For such a network, multiple VSATs will be deployed by a satellite broadband provider to facilitate receipt of services by each end user.
While in some more developed jurisdictions, like the US and Europe, a much simpler blanket approach is taken to VSAT licensing (where each individual VSAT does not need licensing / certification, and instead can be deployed and configured based on technical criteria that eliminate the risk of interference), in some African jurisdictions (such as Tanzania and Zambia), each VSAT requires registration or licensing.
While jurisdictions without blanket licensing may have a “mass application process,” not all VSATs requiring licensing can be identified in the one go – especially for rollouts where customers are signing up and having VSATs installed at different times. This can significantly increase the burden for satellite broadband operators and become a barrier to efficient commencement of live services to end users.
Not much can be done in response to the unavailability of blanket licensing, and satellite broadband providers will need to consider how the lack of blanket licensing affects their service rollout, and any guarantees they make to end users around service commencement timeframes.
3. In-country infrastructure requirements
Satellite broadband providers looking to enter a market in Africa may already have existing gateway / earth station infrastructure in other countries or regions and may wish to use such “out-of-country” gateways in conjunction with the provision of services “in-country.” However, some jurisdictions in Africa have local infrastructure requirements which can present a challenge to using existing infrastructure.
in Senegal, it is a specific condition for local gateways to be used; and
in Zimbabwe, there is no requirement to specifically use gateways “in-country,” but if a gateway is to be located within the jurisdiction, existing infrastructure of a local operator must be used (with the relevant agreement entered into with the local operator needing to be approved by the regulator (POTRAZ)). A satellite broadband provider could not establish its own gateway in Zimbabwe.
A satellite broadband provider seeking to use its own “out-of-country” gateways in these jurisdictions could seek to obtain a waiver from the local regulator, but this would be entirely at the regulator’s discretion.
4. Exorbitant license fees
In some jurisdictions, licenses are available that would cover the provision of satellite broadband; however, it is expected that more traditional operators and service providers will apply for those licenses. As such, the applicable fees are set at a level which contemplate business models involving technologies which already have highly saturated demand and revenue streams, such as mobile network services. Such fees can be prohibitive for satellite network providers.
For example, in Zimbabwe an internet access provider license carries an upfront fee of between USD2.7 million and USD5.5 million.
The requirement to pay such high a fee, combined with the fact that this will add to the upfront investment required by a satellite broadband provider, can be prohibitive to market entry.
As has been shown by this article, while a satellite broadband provider may have plans to expand into Africa, there are a number of nuances to the local regulatory regime in a variety of African jurisdictions which will need to be considered by a satellite broadband provider before choosing to enter a market.
Ultimately, while there can be challenges to entry, there are workarounds available; however, these workarounds may mean a satellite provider may not be able to enter in the model they originally planned.