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Mobile telephony What mobile telephony brings to Uganda by Noel Meier, CEO, MTN Uganda NinetypercentofUganda’s1,200,000telephonesaremobile.Sevenyearsago,fewer than 10 per cent of Ugandans had ever made a phone call. Today, access is available throughoutthecountryand,despitethelow,fivepercentpenetration,almost90per centofUganda’sinhabitantshaveaccesstoandusethesystem.Thisremarkableturnaroundisduemainlytowirelesstechnology.Today,thecompetitivemobileoperator, whichbeganoperationsjustsevenyearsago,isnowthesecondgreatestsingletaxpayer inUganda. Noel Meier is the Chief Executive Officer of MTN Uganda. He served previously as the CEO of MTN Swaziland,andheadedtheimplementationteamsthatestablishedMTN’sGSMoperationsinRwanda andUganda.ActingasCEOforbothoperations,MrMeierinitiatedthestartupprocessuntilhandover topermanentCEOappointees.HebeganhiscareeratMTNasRegionalGeneralManager,responsible foroperationsinKwaZulu-NatalandtheEasternCape. NoelMeierstartedhiscareerwiththeDepartmentofPosts&Telecommunicationswherehegaineda wealthofexperienceintheTelecommunicationsindustry. Ugandahasapproximately26million peopleandaGDPperCapitaofsome US$330. Its tele-density of five per cent is impressive given that it grew from0.2per100peoplein1998when itstelecomsectorwasliberalised. That mobile subscribers account for 90percentofthe1,200,000connections highlights the importance of mobiletelephonyinUganda. The revolution in communications thathascutacrossAfrica,givingitthe reputation as the fastest growing mobilemarketintheworld,hastransformed Uganda, its people and their wayoflife,economically,sociallyand politically Sevenyearsago,nomorethan10per cent of Ugandans had ever made a call.Today,thereverseholds. Backthen,telecommunicationservices were only available, almost exclusively in urban areas of the country, whiletoday,allthe56districtsinthe countryhaveaccesstotelecomservicesthatmakeGSMcoverageavailable in70percentofthecountry. Although wire-line telecom services were available before 1998, access to serviceswasdifficultandthenumber of people waiting to get a connection was twice the number of those connected. Today, the many distribution pointssetupbymobileoperatorssell GSMSIMpacksacrossthecounter. ThegrowthofUganda’stelecommunicationsinrecentyearsisduepredominantly to mobile technology. Whilst the number of fixed line phones has grown45percentsince1998,toabout 80,000 lines, mobile phones have grownalmost100percentperyearin the same period. In Uganda, mobile technology has an enormous advantagecomparedtofixedwirelineservices,giventheabilityofwirelesstechnology to reach remote populations with a smaller investment than landlinesystems. Thestrengthofmobilityand wireless The key to the success of mobile telephonyinUgandaliesinthewirelessnatureofthetechnology.Thishas spurred fast rollout of the services eventotheremotestpartsofthecountry.Lookingback,weseethatthelack of telecommunications growth that African countries faced during the monopoly era was due mainly to the high cost and difficulty of rolling out fixed wire-line services. Mobile technologyhaschangedallthis. Improvedpolicyandregulatoryenvironments and the focus of these on promoting competition have played an important role in the sector’s growth. Although mobile telephony wasintroducedinUgandain1994,by 1998 the country only had about 10,000 GSM subscribers. This was mainlybecausethehighpricesadopted by the, then, sole GSM operator kepttheserviceasapreserveofafew rich. Increased liberalisation, which broughtintwoadditionalGSMlicenses,ledtoincreasedcompetitioninthe market,increasedcoverageandlower prices.Acquisitioncostsfellfromover US$1,500tolessthanUS$60includingthecostofthehandset.Similarly, astheresultofcompetition,retailuser tariffshavefallensignificantly.Today Uganda is probably the country with 54
Mobile telephony the lowest tariffs anywhereontheAfricancontinent. Equally important has been the increase in Uganda’s public access services. Initially, the telecoms operators’ Universal Access obligations spurred the growth of public access. Subsequently public access evolved into a small-investoropportunityasindividualUgandans begantoofferpaidpublic access using their own phones. The country now has an estimated 50,000publicaccesspointslocatedin grocery stores, barbershops and on the streets. GSM mobile phones providemostofthisaccessand,onaverage,eachservestento50usersaday, dependingonthelocation. Mobiletelephonybenefitsin Uganda MobiletelephonyhasenabledUganda andothercountriestoleapfrogseveral generations of communications technology.Today,Ugandanshaveaccess to services that previously were the exclusivepreserveofthosewithaccess tofixedlineservices. The financing of telephone service rolloutinruralareaswasonceconsideredwaybeyondthemeansofdevelopingcountriessuchasUganda.Asan example,thecompetitivemobileoperator’slicenceinUgandarequireditto install89,000linesinafive-yearperiodbeginningin1998.Atthetime,all thoughtthisaformidable,difficultto achieve, target. They based this assumption on the fixed wire-line model. Taking a developmental approach, using international development grantsandloans,wasthoughttheonly waytoaddressthechallengesofanatural monopoly and of developing a nationwidetelecommunicationsinfrastructure. However, liberalisation, based upon a progressive regulatory regime, stimulated a mobile explosion.Todate,themarkethasslightly over 1,000,000 mobile users, 65 per cent of these are on the competitive operator’snetworkalone. Mobile Telephony has had a great impactonUgandansystemsofgovernance. Because of widespread GSM Figure 1: Improved policy and regulation, as well as higher competition, have played an important role in the sector’s growth. deployment, e-Government is rapidly becoming a reality. The country’s recentlyapprovedICTpolicypointsto e-Governmentasaspecificgoaltobe achieved in addition to the goal of effectively employing ICT to better Uganda’seconomicsituation. Mobiletechnology The economic success that Uganda hasenjoyed,withGDPgrowthofover fivepercentperannum,mightnever havebeenrealised,mightneverhave reached the same level, without the exponential growth of telecommunication services made possible by mobile technology. Indeed, the competitive mobile operator, a company thatstartedoperationsinUgandajust seven years ago, is now the second greatestsingletaxpayerinUganda. "The financing of telephone service rollout in rural areas was once considered way beyond the means of developing countries such as Uganda." Businesses of all sizes comprise the country’s diverse economic sectors and mobile telephony has connected them all, from the small farm dealer checking the price of produce, to the stranded fisherman contacting the collectionvanathisdock,tobusinessmen negotiating off-shore investments, and all have benefited as a result. Social interaction in Uganda has not been the same since the advent of mobile telephony. In a land where social bonds are highly regarded, accessible and affordable communication, a text messaging or a quick phone call, is a welcome additionanyday. Futurechallenges In spite of its rapid growthinmobiletelephony,Uganda’sfivepercent mobile penetration lags behind its neighbours Kenya with 12 per cent, Tanzania with 10 per cent, and many other African countries. Still Uganda’s prices are the lowest in the EastAfricanregionandsteadygrowth isexpected. Uganda’spolicymakerswanttokeep increasingcompetition,hencethenew telecompolicy,upontheexpiryofthe initialexclusivityperiodinJuly2005, willprobablyaimhighandcallforthe growth of tele-density to 20 per cent by the year 2010. Mobile and fixed wirelesstelephonyseemtobetheonly ways to meet such an ambitious target, given the time and investment neededtorolloutwirelinecapacityin ruralareas. Thereare,however,certainmacrofactors holding back the growth in demandthatneedtobeaddressedto meetUganda’sambitiousgoals. The high taxes charged users for mobile services are among the most important inhibiting factors. These taxes, including a 12 per cent excise dutychargedonlyformobileservices, totalapproximately30percent.Low demand is also a direct result of the country’sUS$330percapitaincome. ThelowpenetrationofICT,including thelackofresidentialPCs,greatlylimits the use of enhanced non-voice mobiletelephonyservices. Mobiletechnologycandeliversomeof these services and are being consideredbymobileserviceproviderswho will soon introduce GPRS services to both the pre-paid and post-paid customerbase.Mobileoperatorsarealso driving the convergence of fixed and mobiletelephonybyintroducingmore advancedtechnologiessuchasCDMA andfibreopticforconnectionstothe network. 55
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T his issue of Connect-World EMEA (
Page 7 and 8: Contents 1-Connections 5-Contents N
Page 9 and 10: Getting the good route won’t be h
Page 11: National development "The universal
Page 14: Regional communications to carry th
Page 18: IP networks IP provides a foundatio
Page 21 and 22: IP communications assurance Getting
Page 24 and 25: Broadband The broadband revolution:
Page 27 and 28: Broadband High-performance broadban
Page 29 and 30: Broadband "Today’s basic highcapa
Page 31 and 32: Broadband You are a decision maker
Page 33 and 34: mtcatheer-mtcatheer-mtcatheer-mtcat
Page 35 and 36: Triple play other technologies, a k
Page 37 and 38: Triple play "More and more, consume
Page 40 and 41: Triple play Enhancingtheenduser exp
Page 42 and 43: Africa’s most comprehensive RFID
Page 44 and 45: Designing Future Business Think for
Page 46: Mobile convergence minute. Enhanced
Page 49 and 50: Mobile value-added services Voice-b
Page 51 and 52: Mobile value-added services riers t
Page 54 and 55: Mobile telepnony claim there are no
Page 58 and 59: Mobile telephony the lowest tariffs
Page 60: Business communications their freed
Page 63 and 64: Cultural development and the Intern
Page 65 and 66: Service assurance Service assurance
Page 67 and 68: Service assurance agesandofferacomp
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