Preparing for a new generation of African digital consumers
Jonathan Plant, Marketing Director at Openet discusses the evolution of digital consumers in Africa.
Global excitement surrounding the global availability of 5G has been tempered in parts of Africa. While further launches are anticipated in 2020, only South Africa and Lesotho can currently boast commercially live 5G networks. The reality for most African countries is that commercially available 5G services won’t arrive for another five years or more.
The rate of 5G development across Africa must be viewed in the appropriate context, however. While mobile broadband technology is the most popular way of enabling internet access, 3G and 4G connections only surpassed 2G in Sub-Saharan Africa last year (GSMA Intelligence, 2019). Nobody doubts that Africa will embrace 5G, but it will do so at a pace that makes most commercial sense to operators in each African country.
Playing the 5G long game
Most African operators have invested a lot of money in 4G technology and are some way away from sweating these assets. With the widespread absence of fibre infrastructure in many African countries, 3G and 4G are the key technologies providing access to a new generation of young, ‘digital-first’ African subscribers. There is a growing familiarity across this new demographic when it comes to accessing new digital platforms, including new content services and social media. In most cases, 4G provides more than adequate connectivity to power these apps and services, leaving most operators content to play the 5G long game.
However, according to GSMA Intelligence, 44 per cent of Sub-Saharan Africa’s population, equivalent to just over 450 million people, are under the age of 15 years, and most will own a mobile phone for the first time over the next decade. This young demographic will take a digital-first approach to life – the work they do, the channels via which they communicate and the content they consume. Will their thirst for digital inclusion accelerate appetite for 5G? Maybe, but only if the business case supports it.
Riding multiple horses
Africa offers such a diverse collection of mobile industry economies, all at different stages of technological maturity. Many operators are managing the complexity of running 2G, 3G, 4G technologies in tandem. In addition, Africa is by and large a prepaid mobile market with many African subscribers carrying multiple SIM cards from multiple providers in search of the best tariffs.
Most African subscribers are extremely cost-conscious, and so will be unwilling—or unable—to spend money on a lot of data. But if operators are to reach wider audiences and entice subscribers to consume more content and data, they must do so in innovative and creative ways. For example, through ad-funded or zero-rated services. In South Africa, Vodacom has launched the “Vodacom Flex” service, which allows subscribers to “snack” on limited internet services when they run out of data. Flex is backdropped by advertisements which in turn generate advertising revenue for the operator and increases brand engagement. Monetising these new services will be key as African operators seek to grow their subscriber base and extend their 4G offering.
With so much emphasis on monetising 3G and 4G, it is easy to understand why 5G is regarded as five years away from becoming a mainstream African reality. But that isn’t stopping Rain and Vodacom pressing ahead with 5G network deployments in South Africa, nor MTN planning a launch in Nigeria, nor Safaricom in Kenya. But then many of these projects are based on different ROI calculations and use cases. Fixed wireless access is one of the most compelling African 5G use cases – the means to leverage a high throughput mobile broadband technology to deliver an effective replacement for inadequate fixed line infrastructure. This places less emphasis on prioritising 5G cellular mobile access; but then, will 5G fixed wireless access adoption accelerate the delivery of 5G mobile broadband?
Preparing for the unexpected
As with all other generations of technology, 5G uptake in Africa will start when the economics of deployment and consumption work for all parties. African subscribers will only buy into the 5G dream once they have fully enjoyed 4G. The pricing and availability for new digital services today will therefore be critical in capturing the imaginations of the new digital native African user. This will require agility and flexibility from African operators. It will force them to react to new opportunities and bring new services to market faster than ever before. Cost considerations will always be critical so a major focus on efficiency will also be vital.
This new era of digital inclusion in Africa will require next generation digital BSS to become reality. African operators will need the flexibility to trial new services, across all technology generations, to react to customer needs and demands. New digital BSS exists as adjunct systems that can be plugged into legacy systems to support and monetise specific services at significantly reduced cost. These systems are based on open APIs and are both microservices-based and developed using DevOps approaches. This ensures they can react to and keep pace with current opportunities, while helping African operators to cope with the demands of 3G and 4G services, and to cost effectively prepare for the arrival of 5G.
For more information on business topics in Africa, please take a look at the latest edition of Business Chief EMEA.