African Mobile Networks: The Smartphone Dilemma

Thursday, 17 November 2011 11:25  |  Tom Makau

Mobile penetration in Africa is now second only to Asia, according to a report by the GSMA which found that subscriber levels have grown by almost 20 percent for each of the past five years. The total is expected to hit 735 million by the end of 2012.

This impressive growth has seen the continent become a hub of pioneering mobile innovations, from mobile money transfer to m-commerce; users can pay electricity bills, buy goods and even run bank accounts from their mobile phones.

The majority of these mobile value added services have been designed to run on even the most basic of mobile handsets. This was a deliberate move because majority of mobile phone users in Africa use low-end 'feature' phones and not high-end 'smart' phones.

Survey results released by Nielsen research in October 2011 show that in the US, 62% of users in the 25 - 34 age bracket now own a smartphone. Of these, 43% use an Android-based phone, 28% own an iPhone while 18% own a Blackberry. These results point towards the adoption of smartphones in Africa – especially Android-based phones – in the not-too-distant future. Smartphone adoption in Africa is not a matter of 'if' but 'when', especially as several operators have introduced sub-$100 IDEOS phones into the market.

To the end users, smartphones present an immense opportunity to transform the way they communicate and connect to each other. The high-speed internet capabilities of these phones will make broadband ubiquitous and not just the preserve of the few. The rapid development of mobile applications (apps) will create new ways in which this high-speed internet connection is utilised in addition to the normal web browsing.

Data explosion

The result of widespread adoption of smartphones in Africa is that data traffic generated by mobile devices will increase tremendously as users increasingly turn to smartphones for internet connectivity.

At a casual glance, this is good news for operators - they stand to cash in on the data explosion that is currently underway. I am however of the opinion that unless mobile operators in the continent carefully plan how to meet this demand, they might find themselves unable to adequately satisfy it.

The biggest obstacle for mobile operators in Africa who want to prepare their networks to meet this demand is billing. The majority of African subscribers are pre-paid and not post-paid, unlike the US and EU where majority are on post-paid contracts.  A predominantly post-paid client base makes network capacity planning easier because the mobile operator has a more precise view of the expected demand. On the other hand, a pre-paid client base makes capacity planning difficult due to the many variables it introduces into the equation, such as top-up times and disposable income available to the users.  The majority of pre-paid users have unpredictable income patterns and mobile top-up is part of their disposable income, while post-paid users have a fairly predictable income pattern. The other issue to note is that pre-paid mobile internet usage patterns are characterised with 'spikes' in usage, especially at the period immediately after a top-up or purchase of a data bundle. Post-paid mobile internet usage however is fairly steady, and a usage trend emerges that can help operators in network capacity planning.

The predominantly pre-paid African subscriber base therefore poses a challenge to operators who are not able to accurately predict mobile internet usage patterns. The adoption of cheap (sub-$100) smartphones means that majority of these prepaid users will own a smartphone sooner or later. The issue of data usage predictability is further complicated because these phones will introduce random and higher spikes in mobile internet usage. This makes proactive planning difficult.

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