Africa Telecoms

CONTENTS ISSUE 8 2010

24 Thought Leadership

An exclusive interview with Hannes van Rensberg, Chief Executive Officer, Fundamo

37 ZamtelAn Anatomy of a Privatisation The successful sale of the parastatal

41 SMS

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2 AFRICA TELECOMS Issue 8 2010

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06

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Guest Editorial

News

Calendar

Gadgets

Statistics

The latest local and global telecoms news.

Want the next big thing in portable devices? Our gadget review is here to help you choose.

Upcoming events, shows and conferences which you can’t afford to miss.

Africa Telecoms presents statistics and data relating to Mobile Banking in Africa.

Romeo KumaloExecutive Director: Commercial Vodacom

A history of the birth of a telecommunications phenomena

28 Ring, Ring... Ching, Ching

Africa’s example has the world talking about mobile bankingBy Lesley Stones

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Issue 8 2010 AFRICA TELECOMS 3

Executive EditorMohammed [email protected] EditorBradley [email protected] DirectorSarah [email protected]

Design Team:Alexander [email protected] [email protected] [email protected]

Sub-EditorNiki SampsonPrintingTandym Press

Contributors: Lesley Stones, Brett Haggard, Bradley Shaw, Mohammed Khan, Steven Ambrose, Deepali Velayuthan

Africa Telecoms and Africa Telecoms Online are published by:3i PublishingUnit 9 & 10, Planet Art 2, 32 Jamieson Street,Cape Town 8001T: +27 21 426 5590E: info@3ipublishing.co.zawww.3ipublishing.co.zawww.africatelecomsonline.comBPA Worldwide Business Publication Audit, Membership Applied for – October 2009.

FOR AFRICA TELECOMS

72 Last WordCommodore arises from the ashes

70 Job ListingA list of the latest telecoms positions from across Africa

54 Q&AWith Dare Okoudjou, Chief Executive Officer of Mobile Financial Services Africa

54 The African Reality of Mobile Mloney

How to ensure Africa’s mobile revolution continues. By Steven Ambrose

62 Financial Services

For the DisenfranchisedBy Brett Haggard

66 QualcommCelebrating 25 years of innovation. By Bradley Shaw

Guest Editorial


Romeo KumaloExecutive Director: Commercial Vodacom

Leading a mobiLe money revoLutionIn South Africa, the mobile communications industry, perhaps more so than any other, has the ability to drive real social and economic change. Yet, we are only just starting to realise the potential of mobile technology in this country and the rich opportunities it offers if harnessed effectively. Enter M-PESA; a shining example of mobile innovation. Simple in its design but totally revolutionary in its application and in making cellphone technology work to solve a basic need common to millions of South Africans; that of being able to transfer money from one person to another in a manner that is fast, safe and easy.

In South Africa, it is estimated that more than 13 million adults do not have bank accounts – 13 million people who have to rely on alternative ways of moving their money around. For these individuals, M-PESA is the answer. It provides a new way for those previously outside existing systems and without access to banking infrastructure to gain access to a simple account from which they can make payments, buy airtime and store their cash safely, whilst slowly ushering them into the economic mainstream.

The South African mobile money sector has seen the introduction of a number of new players in the past few years and whilst there are other cellphone banking products and money transfer services out there, there quite simply is nothing like this. In Kenya, where M-PESA was introduced in 2007, by 2009 it had become the most popular method of sending money with 46% of all Kenyan money transfers being done using M-PESA. Fast forward three years and there are 10 million people using the service having moved a staggering near R50 billion since launch.

The key to M-PESA’s success is twofold. Firstly, it is the only service that combines the convenience of being accessible via mobile phone without the need of requiring a bank account. Secondly, and very importantly, it is the depth and breadth of the distribution network that sets it apart from other mobile money solutions out there. In addition to all Vodashops, Nedbank branches (Nedbank is Vodacom’s banking partner in M-PESA) and ATMs, retail partners Pep Stores, Pick n Pay, Massmart, Edcon, GloCell, and Altech Autopage have all indicated their interest to get involved in M-PESA. Bolstered

by this partner commitment, and because anyone can receive M-PESA without having to be an M-PESA customer or even a Vodacom subscriber, M-PESA has the power to reach cellphone users anywhere in South Africa.

However, this is just the start. Once M-PESA finds its feet and has established itself it will be extended to offer all manner of financial services from bill payments and receiving salaries and social grants to buying groceries in local shops and paying taxi fares. The application opportunities of M-PESA are massive.

It is this mix of proven technology (M-PESA is backed by Vodafone) and a trusted distribution network that has created a powerful and compelling money transfer suitor in M-PESA for millions of people. Its introduction to this market is set to alter the way in which money is transferred across the country and to driving a new mobile money revolution in South Africa. AT

“ In South Africa it is estimated that more than

13 million adults do not have bank

accounts ”


>> Mpesa transfers in USD amount to roughly 10% of Kenyan GDP>>

According to Interconnection Determination No. 2 of 2010, the Communication Commission of Kenya reduced mobile interconnection rates from the current Kshs 4.42 per minute to Kshs 2.21, representing a 50% drop. The rates will progressively decline by 35%, 20% and 15% annually in 2011, 2012 and 2013 respectively to stand at Kshs 0.87 by 2014.

The CCK also developed pricing models for infrastructure sharing and co-location as well as broadband interconnection framework.

The CCK’s findings had recommended an immediate reduction of mobile termination rates to Kshs 0.87, but the Commission considered such a reduction as potentially disruptive to the business plans of the operators, and therefore opted for a three-year glide path.

“We believe the glide path will provide an acceptable balance between the regulatory objective of attaining efficient cost levels as soon as possible while maintaining stability in the business plans for the operators,” said CCK Director-General Mr. Charles J.K. Njoroge.

Meanwhile, the Commission will soon introduce price caps on the retail mobile and fixed markets in order to curtail the ‘club’ effect by operators with large subscriber base who maintain high off-net tariffs to discourage their subscribers from calling other networks.

Mr. Njoroge described this pricing mindset as offensive to competition as it entrenches traffic imbalances in favour of large operators and makes other operators net payers to large networks. The effective date for implementing price caps will be immediately after designation by the Commission of dominant operators in the retail mobile and fixed voice markets in line with

the existing laws and regulations.At the same time, the Commission considers the wholesale termination

rate of Kshs 2.00 per SMS negotiated by operators extremely high, given that the actual cost of terminating an SMS on both mobile and fixed networks is less than Kshs 0.01. The Commission has, therefore, directed all operators to renegotiate lower mobile and fixed SMS termination rates and file the new rates with the Commission within three months.

In respect to mobile money transfer services, the Commission noted the high charges imposed on the non-registered users and users of other networks. In line with the converged telecoms market, the Commission has directed all mobile money transfer service providers to pursue interconnectivity options for the service in line with regulatory obligations and review the charges accordingly.

The Commission will continue discussions with the Central Bank of Kenya in order to develop a fairly inclusive regulatory framework that delivers the benefits of this service to the public at cost-effective rates. AT

"The Commission has directed all operators to renegotiate lower mobile and fixed SMS

termination rates and file the new rates with the Commission within three months."

KENYA

CCK, Kenya sets new interconnection rates

NEWS

The Communications Commission of Kenya (CCK) has issued a new determination on interconnection tariffs for fixed and mobile telecommunications services in the country.

>> During the 2010 World Cup Final in South Africa people tweeted from 127 Countries in 27 different languages >>


A diverse group of ICT stakeholders comprising Ministers, Regulators, telecom operators and leading ICT global brands convened at the 5th Annual Connecting Rural Communities (CRC) 2010 conference in Accra, Ghana to discuss and explore potential future solutions for bridging the digital divide in Africa. Organized by the Commonwealth Telecommunications Organisation (CTO) and hosted in collaboration with the Ministry of Communications, Ghana, the National Communications Authority and the Ghana Investment Fund for Electronic Communications (GIFEC), the three-day conference was formally opened by Ghana’s Minister for Communications, Honourable Haruna Iddrisu.

In a speech read by the Communications Minister on behalf of the President of Ghana, His Excellency John Evans Atta Mills. Minister Iddrisu said that, “In connecting rural communities, we in Africa, should embrace ICT infrastructure deployment as part of a unified and comprehensive economic development strategy that also addresses issues of education, health, governance and commerce.”

Chaired by Ghana’s Deputy Minister for Communications, Honourable Gideon Quarcoo, and led by the CEO of the CTO, Dr. Ekwow Spio-Garbrah, it was noted that over seventy per cent of the people in Commonwealth countries remained without access to basic communication infrastructure and hence were unconnected despite advancements within the ICT sector. This issue needed to be addressed urgently, according to all parties. AT

CTO AfriCA forum adopts prudent measures to connect the unconnected

“In connecting rural communities, we in Africa, should embrace ICT infrastructure deployment as part of a unified and comprehensive economic development strategy" - His Excellency John Evans Atta Mills

MultiChoice and MTN Uganda have entered into an agreement which will enable DStv customers to renew their subscriptions using the MTN mobile money service, MOBILE MONEY. The deal will allow the the convenience of MTN mobile money usage to payments for such services as pay TV. DStv subscribers

will be required to obtain an MTN mobile money account to be able to access the service. The MultiChoice Uganda General Manager Charles Hamya said the service will create efficacy and timeliness for customers.

MTN EXTENDING MOBILE MONEY SERVICES IN UGANDA - AGREEMENT WITH MULTICHOICE

NEWS


>>Africa has only 9.9 million Facebook Users >>

NEWS

M-PESA, the money transfer service pioneered successfully by Kenya’s Safaricom, has officially been launched by Vodacom and Nedbank in South Africa, according to reports.

M-PESA is Africa’s leading mobile banking service offering a successfully road tested, fast, and safe way to transfer money from person to person without the need for a bank account. The service has revolutionized the way millions of Kenyan’s have access to basic banking facilities. It is hoped that the same success will take place in South Africa.

According to Pieter Uys, Vodacom’s Group CEO, “There are other cellphone banking products and money transfer services out there, but there quite simply is nothing like M-PESA. The beauty of this service is the ease and speed with which people can send money to each other anywhere in the country. As anyone can receive M-PESA without having to be an M-PESA customer or even a Vodacom subscriber, it has the power to reach all cellphone users. It is specifically designed to include those who do not have access to bank accounts.”

Initially, M-PESA will offer the basic money transfer service but will also add further services including bill payments, payments of school fees, payments of insurance premiums and salaries as the service is established.

“By making basic financial services available to all South Africans and creating entrepreneurial opportunities, this really could be a catalyst for economic development,” Uys concluded. AT

“There are other cellphone banking products and money transfer services out there, but there quite simply is nothing like M-PESA." - Pieter Uys, Vodacom’s Group CEO

Vodacom and Nedbank launch M-Pesa in South Africa

IN A LETTER TO THE DOTAFRICA Initiative, Jean Ping, Chairperson of the Commission of the African Union, has endorsed the “dotafrica” projects’ application for delegation

of the regional identifier top level domain – ‘.africa’ from the internet. This application for the domain is being completed through the Internet Corporation for Assigned Names and Numbers (ICANN).

The ‘.africa’ domain would allow individuals, entitities, professionals and corporations to own a regional identity similar to ‘.eu’ and ‘.asia’ domains. The African Union has pledged support for the initiative by offering assistance with African Ministers and Governments for the endorsement of the initiative across Africa. AT

AFRICAN UNION ENDORSES DOTAFRICA INITIATIVE

"The ‘.africa’ domain would allow individuals, entitities, professionals and corporations to own a regional identity

similar to ‘.eu’ and ‘.asia’ domains."

Jean Ping

Hits now in TanzaniaHits Telecom Holding Company, a Kuwait-based telecom company, has launched its operations in Tanzania. The Tanzanian unit, ExcellentCom, will cover 70% of the African country's territories.Hits CEO, Barr Erickson, said that over the coming months focus will be on building ExcellentCom's structure and network, as well as concluding strategic partnerships. Hits provides internet, fixed and mobile phone services, in addition to other telecom services through its units in Europe, Asia, America and Africa. AT

>>Free Skype to Skype calls account for 12% of all International Calling Minutes in 2010>>


NEWS

The Alpha release of the next major version of Fennec is now available for Android and Nokia N900 users to download and test. Fennec (codename for Firefox mobile) is the first mobile browser to offer add-ons and is built on the same technology that powers desktop Firefox. The latest version of Fennec builds on the rich set of features from the previous release and makes it easier for users to bring the Firefox experience to mobile devices.

Fennec Alpha now creates one fluid Web experience between desktop and mobile devices by providing Firefox Sync built-in into the browser, which provides seamless access to Awesome Bar browsing history, bookmarks, passwords, form-fill data and open tabs.

The main focus of this release is to increase performance and responsiveness to user actions. This is being implemented using two major technologies, “Electrolysis” and “Layers.” Electrolysis, allows the browser interface to run in a separate process from the one rendering Web content. By doing this, Fennec is able to react much faster to user input while pages are loading or CPU intensive JavaScript is running. The upcoming beta release will start taking advantage of Layers to greatly improve performance in graphic intensive actions like scrolling, zooming, animations and video. These actions will be optimised using the hardware-accelerated graphics rendering capabilities showing up in today’s mobile devices.

This first Alpha release of Fennec for Android is an exciting first step in bringing browser choice and customization, along with a seamless Web experience across devices, to a leading open mobile platform. Now, developers have the power to use the latest Web technologies like HTML5, CSS and JavaScript to build fast, powerful and beautiful mobile apps and add-ons that can reach many millions of devices. AT

In just two years, the percentage of women on the mobile web has risen 575%, according to Opera's latest 'State of the Mobile Web' report. South Africa leads the world's push for gender equality on the mobile web, with women accounting for nearly 44% of mobile web users. South Africa has the most female users, 43.5%, followed by the US with 35.6%, Russia with 32.4% and the UK with 31.5%. India has the fewest female users, 4%, followed by Nigeria with 5.4%, China with 11.6% and Vietnam with 17.9%. In South Africa, the percentage of female users increased from 24.7% to 43.5%. AT

FIREFOx MOBIlE (AKA FENNEC) AlPHA FOR ANDROID AND NOKIA N900

Women on the Mobile Web rises by 575% AND SOUTH AFRICA TOPS LIST

South Africa leads the world with women accounting for nearly 44 percent of mobile web users


>>Vodacom Tanzania has slashed its cost off net calls by more than 50% >>

NEWS

Commodore USA, LLC and Commodore Licensing B.V., a wholly owned subsidiary of Asiarim Corp, have announced their licensing agreement whereby Commodore USA, LLC will produce a full line of new Commodore branded “AIo” (All In one) keyboard computers, under an exclusive worldwide license granted by Commodore Licensing B.V. for this newly revitalized computer category.

mr. Barry Altman, President and Ceo of Commodore USA, LLC states “We are ecstatic to be partnering with Commodore Licensing B.V. in this new, exciting product launch. The legacy of the Commodore C64, which sold over 30 million units, making it the best selling computer of all time, and our reintroduction of this legendary form factor, combined with the world’s most recognizable

consumer electronics brand, is a once in a lifetime opportunity. We look forward to bringing these new products to market, and welcoming a whole new generation of computer users to the Commodore experience”.

In response to an overwhelming demand from former Commodore users worldwide, Commodore USA’s CTo Leo Nigro announced today that their new Commodore PC64 will be available for purchase this holiday season. Featuring an exact replica of the original beige chassis Commodore C64, this new addition to the lineup will include an Intel Atom 525 CPU with NVIdIA Ion2 graphics, 4GB ddr3 memory, 1TB Hdd, HdmI, dVd/Cd optical drive (Blu-ray optional), dual-link dVI, six USB ports, integrated 802.11n WiFi, bluetooth and a 6-in-1 media

COMMODORE ANNOUNCES EXCLUSIVE WORLDWIDE LICENSING RIGHTS

EMIrATES TELECOM SErVICE PrOVIDEr, Du, and communication services provider Injazat, have formally entered into a partnership agreement to provide business customers with networked IT services.

The new agreement will allow du and Injazat, who currently have a long standing partnership, to quickly integrate Injazat's latest managed networked IT services with du's and Injazat's combined telecommunication services and business solutions.The two companies share tremendous synergies in the area of managed networks.

"The benefits of a potential joint proposition could see customers gain significant return from their networks through greater productivity and reduced operating expenses," commented Fareed Faraidooni, Chief Commercial Officer, Du.

"Not only will this potential collaboration be beneficial to the UAE's business by making these services available to them, but it will serve as a benchmark for the increased adoption of managed networked IT services in the region," he added. AT

Du and injazat unite in iT agreement

>>AT&T plans on covering 70-75 million people with a LTE network by the end of 2011>>


NEWS

card reader.With the recent introduction of their flagship Phoenix model, Commodore USA

has once again catapulted the Commodore namesake to the forefront of consumer electronics brand recognition. other Commodore keyboard computers include the Amigo, a basic entry level computer featuring a system on chip configuration, and the Invictus, featuring a small portable form factor with an embedded LCd screen display. For those of us who were fans of the original C64, this will be a real retro treat, now to bring a return of Atari hardware, and our return to the heady days of 80’s computer world will be complete. AT

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mi-Fone, the commercial entity behind “mi” mobile devices has, over recent weeks, launched an advertising campaign that takes a humorous jab at the leading mobile phone manufacturers.

The campaign is neither subtle nor apologetic. It is clear, brash and uncompromising. The first ad in the campaign is “the darker the Berry ... the sweeter the juice” ad to market the mi-Q range of mobile phones. The mi-Q+, mi-Q1 and mi-Q5 are all, low cost QWerTY SmArTPHoNe devices.

The second ad in the campaign is the cheeky “Now you tell me which APPLe you prefer?”

To market mi Fone’s dual-sim devices, the third ad in the campaign celebrates having the best of both worlds, Why have one when you can have two?

No-one is spared the unorthodox approach. In reference to Samsung, mi Fone asks “Are you tired of the same song?” even LG get featured in mi Fone’s comparative advertising onslaught that reads Life's Great with a mi Fone and not just Good as the LG pay off line suggests. Whether the campaign is successful remains to be seen, but it certainly does inject some humour into the telecoms market. AT

Mi-Fone’s tongue in cheek campaign


>> LinkedIn has 50 million users worldwide >>

NEWS

New types of SMS mobile banking alerts will help to treble the volume of mobile banking messages to almost 90 billion p.a. by 2015, equating to one message every 2 days, per mobile banking user, according to a new in depth study by Juniper research.

Juniper’s in-depth interviews with mobile banking vendors and banks revealed that there is considerable scope for banks to offer new messaging based services on top of basic balance alerts. Banks are seeking to exploit these new process alerts to speed up customer communications during applications for products such as loans and mortgages.

Mobile Banking report author Howard Wilcox explained: "Our research found that messaging is a ‘win-win’ for banks. They can improve customer service significantly, whilst simultaneously eliminating the cost of servicing customer enquiries placed with call centres."

The Juniper report, however, identified that some banks are

still to seize the potential of SMS services. The overall strategy behind alert messaging development is to encourage customers towards the self-service world, with information delivery SMS which most people are familiar with.

Juniper research also announced that the winner for the Future Mobile Award for Mobile Banking 2010 has been Wells Fargo, taking account of its multiple platform strategy and continued service innovation such as the recent near real-time warning of potentially fraudulent activity.

FURTHER FINDINGS OF THE REPORT INCLUDE THAT:

• Over 80% of banks offer some form of mobile banking• Western Europe will be the region with the highest penetration of users in 2015• Transactional mobile banking usage will see similar growth rates to SMS.

The report features the Juniper Mobile Banking Technology Strategies Survey of 77 banks across all regions which determined the popularity of SMS, mobile browser, smartphone apps including iPhone and Android and other apps such as Java. AT

Mobile Banking Services to generate almost 90 billion text messages per year by 2015, up from 30 billion this year

ACCOrDING TO


>> Mobile Banking Clients forecast to grow from 55 million users in 2009 to 894 million in 2015>>

NEWS

INTEL, THE MICrOPrOCESSOr giant, which controls more than 70% of the global market for microchips, will pay $48 for each share of McAfee.

A spokesperson for Intel said the deal highlights "that security is now a fundamental component of online computing".

Paul Otellini, President and Chief Executive of Intel, added: "With the rapid expansion of growth across a vast array of internet-connected devices, more and more of the elements of our lives have moved online. In the past, energy-efficient performance and connectivity have defined computing requirements. Looking forward, security will join those as a third pillar of what people demand from all computing experiences."

The deal has been unanimously approved by both companies' boards of directors, though still requires approval from McAfee shareholders and clearance from regulators.

The McAfee President and Chief Executive, Dave DeWalt, said the deal "is big news for McAfee and big news for Intel, but bigger news for our combined customers, the security industry and the future of the internet".

The acquisition – Intel's biggest since buying Level One Communications for $2.2bn in 1999 – signals the company's intent to expand outside the confines of hardware.

In Q2 2010, Intel recorded its largest quarterly net income in a decade, citing a stronger computer market as propelling its fortunes.

Otellini said: "Now that corporations

have some breathing room in the economy and their budgets, you're starting to see those machines that were four or five years old get refreshed." AT

INTel To buy McAFee For $7.7bN

"With the rapid expansion of growth across a vast

array of internet-connected devices, more and more of

the elements of our lives have moved online."

Paul Otellini, President and Chief Executive of Intel

Paul Otellini

Alcatel-Lucent will extend the West Africa Cable System (WACS) from Portugal to the UK to meet the increasing need for capacity driven by broadband services penetration. Spanning 2,000 km and operating at 40 gigabit per second (40G), this new section will increase the overall design capacity from 3.8 Terabit/s (Tbit/s) to 5.12 Tbit/s, equal to the download of 8 million mP3 files or over 8 thousand dVds in 60 seconds.This extension follows the recent successful field trial with Alcatel-Lucent of 40G solution, which also leverages next-generation coherent technology, and will further bolster connectivity along the Africa-europe route, by enabling improved communications and Internet services that are crucial for a social and economic development.

The WACS consortium is composed of 12 parties: Angola Cables, Broadband Infraco, Cable & Wireless, Congo Telecom, mTN, office Congolais des Postes et TA lA communications, Portugal Telecom/Cabo Verde Telecom, Tata Communications/Neotel, Telecom Namibia, Telkom SA, Togo Telecom and Vodacom.

With commercial service expected by 2011, WACS will provide Namibia, the democratic republic of Congo, Togo and the republic of Congo with the first direct access to the global submarine cable communication network. It will connect South Africa to the UK with landings in Namibia, Angola, the democratic republic of Congo, the republic of Congo, Cameroon, Nigeria, Togo, Ghana, CAA'te d'Ivoire, Cape Verde, the Canary Islands, and Portugal.

Under the terms of this contract extension, WACS will deploy advanced GmPLS capabilities providing dynamic and automated service provisioning for highest quality of service. Thanks to this 'intelligent' network management, WACS will be able to optimize the network's resource usage which will improve the network's resiliency.

'The African continent is definitely one of the continents still yearning for affordable connectivity. meeting the needs for increased capacity along the cable route, this network will enable the landing countries to be served by a new system offering greater capacity and lowering the cost of broadband access in support of innovative applications such as e-education and e-health that can positively impact peoples' lives,' said Kobus Stoeder, Chairman of the WACS management Committee. AT

ALCATEL EXTENDS WACS CABLE

Driving the Next Stage ofGrowth in African Telecoms

THE LEADING PAN-AFRICAN COMMUNICATIONS EVENT.... FREE

passes for African

operators worthUS$2299

10-11 November 2010Cape Town ConventionCentre, South Africa

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NEW 8 SpecialFocus Sessions:

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If you are in Africantelecoms, there is nowheremore important to be….Hear from 30% MORE CxO Level Operator Speakers:

Marc Rennard,Executive Vice President forAfrica, the Middle East and Asia,Orange Group

Nkateko Nyoka,Chief Officer - Regulatory &Stakeholder Relations,Vodacom Group

Mickael Ghossein,CEO,Orange Telkom Kenya

Wessel Van der Vyver,General Manager, TelecomNamibia International

Noel Herrity,CEO,Zantel Tanzania

Megan Arthur,General Manager for CustomerDevelopment & Retention,MTN South Africa

Nazar H. Sahal,Information Technology Director,Expresso TelecomGroup Ltd

Jose dos Santos,CEO,Vodacom Mozambique

Rachid Sefrioui, ExecutiveVP of Strategy & Regulation,Wana, Morocco

Paul Edwards,Chairman,Starcomms Nigeria

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EVENTS CALENDAR

2010


2011

sep

oct

nov

13 Cape Town

South AfricaJulie Phillips

+27 11 516 4058Terrapinn

www.comworldseries.com

28 Lagos

NigeriaCaroline Wiezien

+44 207 017 5605Informa Telecoms & Media


06-07 Maputu

MozambiqueHelen Moroney

+44 148 088 0774AITEC Africa

www.aitecafrica.com

26 Cairo

EgyptVeronika Pete



10 Cape Town

South AfricaCaroline Wiezien



17-18 Hong KongGSMA

www.mobileasiacongress.com

30 Dubai

UAEVeronika Pete


www.comworldseries.com/me

TELECOMS wORLd AFRICA 2010

nIgERIA COM

AITEC MOzAMbIquE ICT COngRESS

nORTh AFRICA COM

AFRICACOM

gSMA MObILEASIA COngRESS

gSM 3g MIddLE EAST TELCO wORLd SuMMIT

20-24 Sri-LankaRumana Bukht

+44 208 600 3800C.T.O

http://www.cto.int

8Th AnnuAL CTO FORuM 2010

jan

26-27 SingaporeTM Forum

http://www.tmforum.org

MAnAgEMEnT wORLd ASIA 2011

20-21 Cape Town

South AfricaMagenta Global

www.magenta-global.com.sg/3g4g/3.9 g: 3g TO 4g Patricia Chong

+65 6391 2555

Sao PaoloBrazil

André Veiga +41 3314 3205

Allcomm Partnershttp://www.futurecom.com.br/

FuTuRECOM 201025-28

DATE EVENT CITY CONTACT ORGANISER

feb 01-01 South AfricaRumana Bukht

+44 208 600 3800C.T.O

http://www.cto.int

6Th AnnuAL dIgITAL bROAdCASTIng SwITChOvER FORuM SOuTh AFRICA

SEpTEmbER 2010 - SEpTEmbER 2011


11-17 Barcelona

SpainGSMA

www.mobileworldcongress.com

31 Johannesburg


+27 11 516 4058Terrapinn

www.terrapinn.com/2011

28 Johannesburg


+27 11 516 4058Terrapinn

www.terrapinn.com/2011

gSMA MObILEwORLd COngRESS

pREpAId CARdS AFRICA 2011

MObILE MOnEy wORLd AFRICA

may

mar

23-27Nice

FranceTM Forum


01-02Dubai

UAE

TM Forum


MAnAgEMEnT wORLd 2011

MAnAgEMEnT wORLd MIddLE EAST 2011

30 Johannesburg


+27 11 516 4058Terrapinn

www.terrapinn.com/2011SATCOM 2011 AFRICA

If you would like Africa Telecoms to add an event to the calendar, please contact Mr. Bradley Shaw at: [email protected]

jun

sep20-21

JohannesburgSouth Africa

TM Forumhttp://www.tmforum.org

15-16 Dakar

SenegalVeronika Pete


www.comworldseries.comwEST & CEnTRAL AFRICA COM

MAnAgEMEnT wORLd AFRICA 2011

jul

02-03 Nairobi

KenyaHelen Moroney

+44 148 088 0774AITEC Africa

www.aitecafrica.com

AITEC bAnkIng & MObILE MOnEy COMESA 2011

11-12 Accra

GhanaHelen Moroney

+44 148 088 0774AITEC Africa

www.aitecafrica.com

AITEC bAnkIng & MObILE MOnEy wEST AFRICA 2011

28-29 Johannesburg

South AfricaHelen Moroney

+44 148 088 0774AITEC Africa

www.aitecafrica.com

AITEC bAnkIng & MObILE MOnEy SOuThERn AFRICA 2011

12-13 Nairobi

KenyaVeronika Pete


www.comworldseries.comEAST AFRICA COMapr

01-03 5Th AnnuAL E-gOv AFRICA FORuM

Rumana Bukht+44 208 600 3800

C.T.Ohttp://www.cto.int

21-23 hR4ICT11Nairobi

KenyaRumana Bukht

+44 208 600 3800C.T.O

http://www.cto.int

DATE EVENT CITY CONTACT ORGANISER

Gadgets Africa Telecoms takes a look at some of the latest digital devices and accessories to give you the latest on what’s hot in the gadget realm.

H Uncool HH Poor HHH Average HHHH Excellent HHHHH Died and gone to heaven


Logitech Bluetooth Mouse M555BNEED TO KNOWBluetooth wireless technology, Hyper-fast scrolling, Smart sleep mode feature, Smooth and responsive cursor control.

COsT: Approximately R 570RaTiNG: HHHHH

Let’s be honest for a second. It’s near impossible to make a mouse that will appeal to everybody. Which is as it should be, as we all have different sized hands, need different functionality features and use our mice for a variety of tasks. The Logitech Bluetooth M555b mouse offers all of the important things, in one tiny device: a cable-free connection, extreme portability, and convenience.

Logitech’s newest mobile mouse is designed for notebooks and netbooks that have built-in Bluetooth wireless. As such there’s no USB receiver to fuss with or worry about misplacing. This mouse is built for speed and allows you to zip through web pages using hyper-fast scrolling that is virtually frictionless, with minimal delay. You’ll love this functionality if you’re a speed-reader as it lets you fly through long documents to get to the parts you want. Or you could switch to click-to-click mode for more control with lists, slides, or photos.

If you’re looking for something that’s extremely reliable with plug-and-play simplicity, you’ll be very chuffed with this purchase.

skullcandy iPhone Full Metal JacketNEED TO KNOWEarphones for iPhone, Inline mic and call button, Comes with silicone and foam ear tips, Designed with style in mind.

COsT: Approximately R 630 RaTiNG: HHHH

If you’re looking for a replacement or an upgrade to the standard earphones that came with your iPhone, the Skullcandy FMJ should prove to be an affordable, quality improvement on what you’re used to.

The set is designed to be ergonomically slick, but the flashy design runs the risk of being a bit out-there for some. You’ll either love or hate these edgy earphones that feature earpieces adorned with skulls.

The emphasis here is on a deep bass that’s pretty thumping, bringing the low end of songs into the foreground and masking some midrange and treble detail in the process, perfect for listening to doef-doef club-type music, but not so great for classical tunes.

You will be pleased with the microphone - it is definitely the one of the best we’ve seen for the iPhone to date, and makes a positive first impression. It works well, making for clear, perfectly audible hands-free iPhone calling.

GaDGETs


Exspect iPhone in-Car HolderNEED TO KNOWFastens to windscreen using suction mount, Twist and lock mechanism, Rotates to either portrait or landscape, Access to all functions of iPhone.

COsT: Approximately R 200 RaTiNG: HHHHH

Getting caught by the police whilst driving and talking on your cell phone could lead to a hefty fine. Put that money to better use instead, and get yourself a handy, easy-to-use car kit – like this one from Exspect. This is a seriously neat, compact in-car holder for the iPhone, and it’s compatible with all iPhone models.

It offers you versatility for optimal use in your car, as it mounts firmly to your windscreen or dashboard, much like a GPS device. However, unlike a GPS, it can swivel, so you can use your iPhone in either portrait or landscape mode, depending on your preference. It’s dead simple to attach to your windscreen/dashboard, as all it requires is a simple twist-and-turn operation in accordance with the arrows shown on the mount.

Because it’s such a simple affair to set up in your car, it’s just as easy to remove and relocate to another car. Perfect for you if you have more than one car in the garage, or you spend a fair amount of travelling, and it packs away neatly as there are no cables to hassle with. Maximum convenience in the fact that all functions of the iPhone can be accessed whilst fitted to the holder.

aperture 3NEED TO KNOWWorks well with the iPhoto software, Faces and places features, Precision non-destructive Brushes, Custom multimedia slideshows.

COsT: Approximately R 2,000 RaTiNG: HHHHH

If you’re a Mac user, you’ll more than likely have experienced iPhoto, which comes pre-loaded with all Mac computers. You’ll probably also have, at some point, wished you could do more with iPhoto. If you’re nodding your head at this assumption then Aperture 3 will more than likely blow your socks off. Aperture 3 is Apple’s version of photo processing and management software and it bears some similarity to Adobe’s Lightroom application – it sits somewhere between Lightroom and Photoshop in terms of functionality and ease of use.

Version 3 has seen Apple adding over 200 new features, all of which are intended to attract casual photographers (comfortable with iPhoto) into the lucrative realm of paid-for photo processing software. Luckily, the added features are actually worth the cash, and top on our list of likes is the Faces and Places functionality as it allows for better image organising, through intelligent tagging and recognition and this feature gives you the option to upload directly to the web, so you can share easily to Facebook and Flickr, and you can e-mail your photographs easily as well.

This software is laid out well, it’s easy to use, and it gives you everything that iPhoto doesn’t – more choice, more functionality, better organisation and more intelligent features.

GaDGETs


sony MHs-CM5 camcorderNEED TO KNOW1080p and 720p video, 2.5-inch swiveling LCD, One-touch upload to web, 5 x optical zoom.

COsT: TBCRaTiNG: HHHH

The digital camcorder that’s more bag-friendly than pocket-friendly, the Sony MHS-CM5 is fondly dubbed the “Bloggie” and it’s perfect for capturing those YouTube-worthy moments or recording home video, or even your own video blog posts. In the age of the social media network, everyone is a potential broadcaster, and everyone is a potential star, and this is the perfect camcorder to get you started.

The Bloggie sees a return to old-school pistol-grip design, and while this means a bit of a sacrifice in terms of size, (hence being more bag-friendly than pocket-friendly) going bigger does have its advantages. There’s a noticeable difference between the digital zoom found in the flip models and the 5x optical zoom on the Bloggie. Digital zoom is a complete waste of time and money, because the picture degrades as you zoom, and while the Bloggie’s optical zoom isn’t mind-boggling and the autofocus tends to be a little on the slow side when you zoom, the image is relatively sharp. Colours are rich, autofocus is snappy and sound quality is pretty good.

In short, this camcorder does exactly what it’s supposed to do - it lets you create video content that’s suitable for uploading to and sharing on the Internet, so super-high, HD- quality video capture isn’t really necessary here, is it?

sansui MP4 PlayerNEED TO KNOW1.8” colour LCD, Plays audio, video and JPEG files, Integrated FM radio, Available in 2GB, 4GB, 8GB sizes.

COsT: Approximately: (2GB) R 500(4GB) R 600(8GB) R 800

RaTiNG: HHHH

iPods are great, if you’re prepared to shell out a large sum of cash. Which might seem a bit silly, seeing as all they’re supposed to do is allow you to listen to music, stream radio, watch video clips and view photographs. The Sansui MP4 media player can do all of these things, at a fraction of the price – making it a much easier purchase to justify.

It looks great and the slim build with black, glossy finish and metallic silver scroll wheel contrasts beautifully and provides a focal point for navigation through the device. There’s also a matching silver rocker button on the side of the device that grants access to volume control. The 1.8” colour LCD display really pops, and detail is so crisp and clear, it’s easy to forget that it’s smaller than two inches.

Slim and compact, this is a device that’s perfect for taking your music wherever you go. It also has an impressive storage capacity, and the 2GB unit is capable of holding up to 6 hours of video or 500 songs – which is enough content to keep you entertained for significant periods of time.

Available in 2GB, 4GB and 8GB varieties – there’s a size out there that should fit you perfectly.

GaDGETs


Logic 3 screenbeat UsB speakersNEED TO KNOWUSB powered PC/Mac speakers, Sufficiently compact to fit into laptop bag, Built-in sound card ensures sound quality.

COsT: Approximately R 330RaTiNG: HHHH

If your desktop computer is still lacking speakers and you’re looking for something that wont take up too much of your deskspace, or you’re looking for a set of compact USB-powered speakers to pack into your laptop bag and take on the road with you – we’ve found your perfect match, so look no further. The Logic 3 Screenbeat speakers are ideal for placing in front of or beside a PC or laptop screen.

They’re not just any old computer speakers either, they have an entirely distinctive and usefully quirky side as well. A unique feature is seen in the hidden magnets inside the speakers which, when joined together, create a single soundbar to place in front of your computer display. Or, if you wanted a slightly different acoustic arrangement, you could separate them to form two upright speakers and then can position them to the left and right of your screen to create your own sound bubble.

If you were impressed with the fact that these speakers will work with your desktop and your laptop, you’ll be even more impressed to know that there’s a 3.5mm stereo line-in connector that allows you to use your speakers with all MP3 players and just about any other audio device. This small, dynamite system comes with its own compact protective case so that it can be safely stored when not in use and this also means they’re portable, very portable.

Fuji FinePix JZ 500 compact digital cameraNEED TO KNOW14 MP camera with face detection, 10x wide angle optical, dual-image stabilised zoom, Capture HD movies in 720p with sound, Tracking auto focus.

COsT: TBCRaTiNG: HHHHH

If you’re a fan of compact cameras, but often find yourself wishing for just a little bit more shooting flexibility and just a dollop more functionality, and maybe even a zoom that’s just a smidge bigger, then you’ll be dead chuffed with the Fuji FinePix JZ500. It gives you all of the comfortable convenience of a compact and gives you a range of shooting modes to choose from, all accessible from the new mode dial that adds even more functional flair to an already slick and simple compact.

This kind of digital camera has been classed as a compact ultrazoom and the wide-angle lens with a 10x zoom more than justifies this label. The menu system is easy to manage, as there are only two tabs: one for system settings, the other for shooting settings. Around that dial you’ll find shooting settings for scene recognition auto, natural light and with flash (which takes two pictures: one natural light and one with flash), scene positions, and movie (which incidentally, is 1280 x 720p HD resolution video, with mono sound).

This nifty little compact ticks all the right boxes in terms of size, performance, zoom capability as well as shooting variety and it’s perfectly capable of capturing amazing photos and movies in high-definition 16:9 format. With the six scene recognition auto setting options, scenery and faces can be captured and optimised with various intelligent detection functions, making perfection readily available, using this compact.


T H O U G H T L E A D E R S H I P

by brett Haggard

FUNDAMO HAS OVER THE PAST TEN YEARS BECOME A HOUSEHOLD NAME IN THE M-BANKING WORLD. WE TAKE A CLOSER LOOK AT WHAT MAKES THE COMPANY AND ITS FOUNDER, HANNES VAN RENSBURG TICK.

DominanceA decade of


LEAD STORY

10 year old Fundamo has risen to the top of the m-banking industry, becoming a household name for those in the know. After a decade in the "ring", Fundamo is still the undisputed champion in the mobile banking market.


Founded in September 2000 with the aspirations of bringing financial transactions to the mobile phone market, Fundamo has in ten short years become one of

the most recognized names in the mobile banking arena.Within two years of opening its doors, it had notched up

one of the most impressive implementations ever – a new m-banking solution for Cellpay in Zambia – and within a further five years, had become the MTN group’s m-banking supplier of choice.

And the hits just kept on coming.In 2008, the company opened its first international office – in

Singapore – and today services clients in over 35 countries. It’s been an interesting ride to say the least.

RIGHT IDEA, RIGHT TIMEThey say that the best companies start with one, perfectly timed reason for existence. And if you use Fundamo as an example,

that’s definitely true.A decade ago, the term ‘m-banking’ hadn’t been coined yet

and electronic or Internet banking was in its infancy. Instead of targeting those with access to banking services

however, Hannes van Rensburg, Fundamo’s CEO says that his company realized that the majority of the world’s population is disenfranchised – and one of the key reasons was that they didn’t have access to suitable financial services.

“If you think about it, these people find it difficult to save funds, can’t remit funds to others, but have access to a mobile phone,” he says.

It’s the marriage made in heaven. And with research showing that somewhere near 1.7bn people fall squarely into this demographic, the potential is massive.

That’s not to say that the company could rely on the opportunity in the market to carry it through.

Van Rensburg says, just like any other company, Fundamo had to do something unique.

Instead of targeting those with access to banking services however, Hannes van Rensburg, Fundamo’s CEO says that his company realized that the majority of the world’s population is disenfranchised – and one of the key reasons was that they didn’t have access to suitable financial services.

HaNNeS VaN reNSbUrg CEO - Fundamo


SOUND DIFFERENTIATION“And in this regard, I think our three strongest differentiators are our understanding of how important our customers are, our determination with regards to getting the impossible done and the constant innovation we employ in that process,” he says.

While van Rensburg admits that Fundamo’s timing was good, he counters that many m-banking solutions tend to flounder and never reach a stage of completion, since there’s never any real deadlines to contend with.

“Because there’s no imperative for getting a solution like this finished, like a tax deadline or qualified audit report – many of the solutions being developed get some way towards completion and then hit a snag – and tend to wander around aimlessly from that point on.

“Unless the partner chosen by the bank or telco has the determination to push forward regardless of the obstacles, in our experience m-banking solutions don’t finish, rather fading into obscurity,” he says.

Van Rensburg says a great deal of the determination and innovation that goes into keeping a project on track and moving forward comes from the fact that Fundamo has become the oldest, largest and most accomplished player in the m-banking space over the past years, both in terms of the awards its received, the deals its concluded and the customers its won.

And these are all important metrics to bear in mind.

DIFFERENT TO OTHER STARTUPSWhere Internet startups need to be young, new, innovative and maverick players in order for them to be noticed and trusted, Van Rensburg says m-banking players have to be the trusted, experienced players with a sound track record for them to achieve the same limelight status.

“Since we’re working with money that belongs to the poor, it’s important that we’re not the clown or the maverick player in our market. We need to be a known quantity,” he says.

“We’re reliable, robust, predictable and at all times, operate with a high level of integrity. And that matters a great deal,” he adds.

The GSM Association’s Mobile Money Tracker – a list of live deployments that are delivering tangible benefits to the unbanked – echoes this sentiment.

Out of the 61 deployments listed in the latest installment of this report, Fundamo has the lion’s share and is well ahead of all competitors.

Another interesting fact is that 51% of the projects we centred on the African market, while close behind that, 38% focused on Asia.

AFRICA – A SEEDBED FOR INNOVATIONLooking at how the mobile money market will shape up over

the coming years, van Rensburg says there are a number of reasons Africa has been a top-ranker in the m-banking space

NEXT GENERATION INNOVATION

"Think about the fact that there are over 2000 islands in the Maldives

and that each needs to be connected to a banking network."

A project Fundamo is currently involved with in the Maldives, where experts are touting the stakeholders work as the way financial services should work in the future.

Called the Maldives Monetary Authority Project and sponsored by the World Bank, van Rensburg says the consortium to which Fundamo belongs is in the process of rewiring the Maldives’ financial services infrastructure – from the consumer all the way to the central bank including how each transaction is switched, how every settlement is made etc.

Think about the fact that there are over 2000 islands in the Maldives and that each needs to be connected to a banking network.

“Delivering this using wireless infrastructure means the costs can be dramatically reduced. In fact, mobile payment is critical and a large part of the innovation that makes the rewiring of the Maldivian banking system plausible,” he says.

While van Rensburg says that in this instance, Fundamo and its consortium has the backing and the support of the government in changing the status quo in banking, often it is a challenge working within the regulatory environments of different countries.

“We make a point of working within those boundaries however and unlike the tendency in our market towards bending and shaping the rules to one’s interest, we prefer to toe the line,” he says.


and will continue to be a strong contender over the coming years.

“Africa is well-positioned as an innovator,” he says. “For starters, there’s very little infrastructure in Africa and

one of the biggest challenge banks face when they embark on projects such as m-banking in developed markets is the need to integrate with existing, rigid infrastructure,” he continues.

“Africa doesn’t face that problem,” he says, “and to a great degree it’s able to lay the right foundations from the word go.”

“There’s also a greater need for these kinds of solutions by comparison to a region such as, for example the U.S. where every person has a credit card. In Africa, people don’t have bank accounts, let alone a credit rating, so the need is greater,” he says.

Because there’s no precedent however it’s also a clean slate environment, so more innovative products that are more cost effective and flexible can become a reality.

“Africa is also well positioned to be innovative with regards to next-generation financial services,” he says.

Looking at innovation, van Rensburg points to MTN Ghana’s m-banking solution that launched with integration with the seven major banks in the country.

DEALING WITH REGULATIONS“Over the years, Fundamo has learnt how to deal with

differing regulations in the markets it operates and because our platform is open enough to adapt to these changes, it’s far easier for us to comply with regulations than what it is for a number of our peers,” he adds.

Van Rensburg says there’s a great deal of work being done in this space and things are likely to change over the coming

years, as the regulators in Africa, Asia and other growing markets realise that current regulations don’t suit the mass market and were set up to benefit those that have access to vital amenities.

“In fact,” he says, “we’re participating in a study with the Stellenbosch University into how regulations would be set up in order to benefit people in low income brackets.

“We also do our part in think tanks and workgroups around the world to develop the concepts and regulations that underpin practices such as branchless banking and mobile money for the unbanked,” he says.

Van Rensburg says that the market should also not forget the role that technology plays in all of this.

FUTURE PROSPECTSVan Rensburg says that over the coming years, the market

is likely to see activity around two main areas, namely the expansion of current m-banking solutions into the realm of international remittances (cross currency/border payment capabilities) and the use of these platforms – which are essentially geared up for facilitating payments - to provide risk, savings and loan products tailored to the low income, unbanked market segment.

This leaves an interesting road ahead. Not only are there markets in Africa, Asia and the Latin

America regions that desperately need the basic payment capabilities provided by m-banking solutions, those markets that are showing the first signs of maturation have a lot to look forward to.

And the next ten years are shaping up to provide us with as dramatic a paradigm shift as what the first ten years have. AT

“We’re quick to focus on the challenges the regulatory environment presents and often forget how critical a role technology plays in the mobile money for the unbanked space,” he says.

“It’s quite remarkable, really. We’re talking about processing a far higher volume of transactions than any other traditional banking solution in real-time,” van Rensburg says.

“And the most interesting part is that we’re able to deliver a high level of reliability and data integrity on infrastructure that wasn’t originally designed for this job.

“There are a number of challenges to overcome, but they’re ones that we as an industry are doing a great job of conquering,” he says.

Looking at what lies ahead, the regulations and technology that will be required to deliver the banking services of the future will undoubtedly be interesting.

DON’T FORGET THE TECHFundamo HQ - Cape Town, South Africa


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RING,RING... CHING,CHINGMobile technologies pioneered in Africa and other emerging economies are finally getting the rest of the world talking.

BY LESLEY STONES


Third World mobile banking systems are piquing the attention of international operators and international banking organisations.

The result – if all goes well – could be a fresh influx of investment and technological know-how poured into an arena where third world countries are the innovators. Hopefully, the interest being shown by regulators will also create legislation that encourages innovation and allows more players to enter the fray. The fear, of course, is that new legislation may stifle these developments if banking organisations regard them as unwelcome incursions into their hallowed territory.

Europe and the US have made little progress with mobile banking because there simply isn’t much need for it. At best, it’s an add-on service for people who already have plenty of physical branches and good internet access if they choose to bank online.

Yet, in the emerging nations, massive populations have no access to banks and so little money to spend that the cost and hassle of opening a bank account has never been worth it. Yet everyone needs to give money to someone else, whether it’s to pay for a bus ticket, a grocery bill, or to send money to their relatives.

BANK ACCOUNT, WHAT BANK ACCOUNT?Being able to use a cellphone to make purchases or transfer money has rapidly won an enormous customer base. Ease-of-use, speed, price and accessibility may have overshadowed the concerns about security that would be raised in countries where this is far from an essential service. So as the user base grows and money starts crossing borders, the authorities as well as the banks and global

operators are paying attention.Gartner estimates the number of mobile payment users

worldwide will top 108 million in 2010, up 54.5% from 70.2 million in 2009. It expects Europe, the Middle East and Africa to account for 27.1 million of those, representing just 2.1% of all mobile users in the region.

Yet Nigeria alone has 25 million people with a cellphone but no bank account, says Rosemarie Pringle-Smith, a Senior Vice-President for m-banking applications developer Fundamo. And the operators are keen to capitalise on that. “African mobile operators have identified a gap in the market to provide customers with an affordable service they need, leveraging on their brand, large subscriber base and distribution capabilities,” she says. “The minute people are able to do financial services

on their mobile handset, a mobile operator’s subscriber churn reduces immensely.”

Nigeria’s banking regulator is giving more freedom to mobile operators, while the local governments have started paying social grants to the unbanked via mobile services.

The global awakening of interest is highlighted by the numerous conferences being held to debate mobile banking and thrash out strategies for its regulation.

In August, financial regulators attended a seminar in South Africa to improve their understanding of these new technologies and business models. The event staged

by the Centre for Financial Regulation and Inclusion (Cenfri) welcomed delegates from 12 African nations, and further afield including Mexico, Malaysia, Russia, the Philippines, Pakistan and Ecuador.

“During the last few years there has been a growing interest

Being able to use a cellphone to make purchases or transfer

money has rapidly won an enormous customer base. Ease-of-use, speed, price

and accessibility may have overshadowed the concerns

about security that would be raised in countries where this is

far from an essential service.

Europe and the US have made little progress with mobile banking because there simply isn’t much need for it. At best it’s an add-on service for people who already have plenty of physical branches and good internet access if they choose to bank online.

Third World mobile banking systems are piquing the attention of international operators and international banking organisations.

The result – if all goes well – could be a fresh influx of investment and technological know-how poured into an arena where third world countries are the innovators. Hopefully, the interest being shown by regulators will also create legislation that encourages innovation and allows more players to enter the fray. The fear, of course, is that new legislation may stifle

Europe and the US have made little progress with mobile banking because there simply isn’t much need for it. At best it’s an add-on service for people who already have plenty of physical branches and good internet access if they choose to bank online.


globally and specifically here in Africa to provide financial services to people that have traditionally not been served by banks,” said Doubell Chamberlain, Executive Director of Cenfri. “Recent developments in mobile phone-enabled financial services suggest we are on the cusp of a revolution in the way we deliver financial services. Any individual with access to a mobile phone - no matter how poor or how far away from a bank they may be - will soon have a safe place to store their money. Regulators now have to deal with the challenges of regulating unconventional, innovative financial services that are being created in response to this need.”

Delegates debated ways to enable innovation without creating undue risk to operators or their customers, while adhering to national and international security standards including preventing money laundering and the financing of terrorism.

Their worry is that operators introducing financial services to millions of unserved people may expose the financial sector and payment systems to new risks that existing regulations do not address. Or perhaps they are just worried that the banks they regulate are under threat from new rivals they are too slow and staid to retaliate against.

The seminar culminated by establishing a Working Group on Mobile Financial Services, to allow policymakers to continue sharing their experiences in this rapidly evolving area.

Harnessing the power of technology could dramatically increase access to financial services for poor people, says the Consultative Group to Assist the Poor (CGAP), a microfinance group within the World Bank. But it can only happen if regulators and private firms strike the right balance between protecting customers and allowing innovation to flourish.

“Poor people need a safe way to save and send money, and African innovations like M-Pesa and M-Kesho are showing us how to reach the billion people worldwide who have a cellphone but no bank account,” says Alexia Latortue, acting CEO of CGAP. “Millions of people could be given access to safe, low-cost financial services using mobile phones and other technologies, giving them opportunities to manage their financial lives.”

Some of the most innovative solutions for financial inclusion have come from Africa and people need to learn from these experiences and examples, says Alfred Hannig, executive director of the Alliance for Financial Inclusion (AFI). The experiences in Africa will accelerate the exchange of knowledge and best practices and help identify key opportunities to drive more financial inclusion initiatives.

POWER TO THE PEOPLEThe mobile phone is a pervasive device that has penetrated the poorest economies due to the overwhelming demand for communications. That makes it a useful tool for banking as well. Africa’s abundance of people untouched by traditional financial services is usually viewed as a challenge, when it is actually an opportunity to explore new ways to bring people

A study by CGAP and the GSMA in 2009 concluded that a billion people do not have a bank account but do have a mobile phone, and by 2012 that will grow to 1.7 billion, making mobile phones a direct conduit to nearly half of the world’s unbanked.

As many as 364 million low-income, unbanked peo-ple will use mobile money by 2012, generating $7.8 billion in new revenue via transaction fees, improved loyalty, and more cost-efficient airtime distribution, the report predicts. Those projections are based on relatively conservative assumptions about the num-ber of operators that will launch such services and the percentage of customers who will use them.

To successfully capture this opportunity, operators must understand the financial lives of unbanked, low-income consumers. Most of the target market receive their incomes in cash, and keep their money at home in a hiding place, or join a saving club. When asked what additional services they may use, low-income users asked for a saving facility so they could safely store their money and access it via a handset.

IS THERE A DEMAND?IS THERE A DEMAND?


into the financial environment though mobile banking, says Hannes van Rensburg, CEO at Fundamo.

Financial institutions in Africa recognise that to achieve greater penetration and greater profits they need to explore new methods of banking. “Africa is a cash-based society, and companies are proving it can be used as a tool to facilitate virtually any form of payment, directly from a mobile phone,” says Van Rensburg.

As an example, FNB-owned Celpay in Zambia and the Democratic Republic of the Congo offers virtual bank accounts via a cellphone with features that compare to many normal accounts. Account transfers, bill payments, cash deposits, withdrawals and prepaid airtime vending are all supported. Celpay has also developed an m-banking cash-on-delivery payment that BP, MultiChoice, supermarkets and O’Hagan’s in Zambia are using.

A thriving network of agents is vital to the success of mobile banking, but building and sustaining that network is challenging. In a survey of Safaricom’s M-Pesa service in Kenya, CGAP found it had successfully established large agent networks, but they were not all profitable.

M-Pesa has more than 5 million users and handles about 160,000 transactions per day worth US$4 million. Agents earn a commission on each transaction, and a typical agent generates more than twice as much revenue through M-Pesa than by selling airtime. But some rural agents lost money because they used up their cash float and had to travel to the nearest bank, which swallowed up their commission, CGAP found.

CGAP also looked at why M-Pesa, which lets people safely send money to family and friends, was nowhere near as successful for Vodacom in neighbouring Tanzania.

People assumed that what happened in Kenya would be

replicated in Tanzania, yet there are important differences in demographics and cultures, market structures, business models, and strategic implementations that make them quite distinct. Tanzania is almost twice the size of Kenya and is less densely populated, with only three main urban centres, so Kenya’s geography lends itself much more readily to establishing agents. Moreover, when M-Pesa launched in Kenya it had no rivals. Players in Tanzania had time to defend themselves, so Zantel and Zain launched their own m-banking offerings while two of the largest banks, NMB Bank and CRDB, also launched m-banking.

Safaricom has a better distribution network and charges a flat fee. In Tanzania, it is more affordable for customers to move small amounts of money but it gets more expensive for larger amounts.

While Kenya’s experiences may serve as a useful guide for other countries introducing m-banking, a carbon copy replication is impossible even next door, CGAP warns.

Several developing countries have issued regulations, yet there are challenges in ensuring adequate consumer protection. The services have been available for only a short while, so there are no “off-the-shelf” regulatory frameworks to mitigate risks and address problems in complex branchless banking systems.

BUT IS IT SAFE?Regulators can also expect new security issues to arise, as an increasingly complex financial system triggers more sophisticated frauds. CGAP says the first step is to define the activities subject to licensing, regulation and supervision by the financial authorities. Service providers must also clearly

M-Pesa has more than 5 million users and handles about 160,000 transactions per day worth US$4 million.

Several developing countries have issued regulations, yet there are challenges in ensuring adequate consumer protection. The services have been available for only a short

The mobile phone is a pervasive device that has penetrated

the poorest economies due to the overwhelming demand for

communications. That makes it a useful tool for banking as well.


“In under-developed countries they are just going ahead with what’s available, like SMS, not caring much about the technology hurdles,” Pau said. In comparison,

operators in developed countries see it as a technology project demanding security and additional capacity. “The progress isn’t in Europe, its elsewhere, including Africa and South Africa,” Pau said.

Among the banks, the most visionary recognise it as a way to win more customers and lower their operating costs by reducing their dependency on branch infrastructures. But most banks – in Europe at least – are reluctant at best and obstructive at worst. “They don’t see it as a way to increase customer acquisition and few of them have back-end systems geared up to deal with the security issues. The only people pushing it are some operators in the developing world,” Pau said.

Many banks are also using old systems that are not as scalable or adaptable as the technology architectures of the mobile networks.

Not surprisingly, only 20% to 25% of banking customers in European countries use mobile banking, although that is up dramatically from less than 6% three years ago. Yet Pau expects mobile banking to become as important as internet banking in Europe within five years. He predicts that it will overtake internet banking in Italy quite soon, “because it’s a society where mobility and agility are key behaviours.”

disclosure their prices and offerings, and abide by data privacy and security rules.

All players agree that policymakers must ensure the needs of the poor remain central as they develop regulations for this innovative sector. “Mobile banking holds great potential, and CGAP is encouraged to see that governments everywhere are being deliberate and thoughtful as they merge the domains of finance, payments and telecoms to create a framework that balances customer needs with concerns around security and prudential regulation,” says CGAP.

Special challenges will include allowing local merchants to conduct transactions directly with customers, ensuring effective consumer protection, and making sure payment systems are open to all players and adequately supervised.

Prof Louis-Francois Pau from the Rotterdam School of Management recently presented some European findings to students at Johannesburg’s Gordon Institute of Business Management.

The Euro-centric research highlighted major differences between developed and developing nations. It also probed whether banks or operators are in the best position to offer mobile banking, but didn’t reach a solid conclusion. There are pros and cons no matter which side tackles the challenge.

Operators are keen to explore mobile banking to increase traffic, boost customer loyalty and improve their service offerings, and obviously because their portion of the relatively cheap transaction fees mount up.

IN CONCLUSIONThe greatest beneficiaries are undoubtedly customers in under-developed countries, who can now make or receive instant payments easily.

M-banking services and technologies can be complicated as there are numerous players in the ecosystem, including network operators, banks and financial institutes, payment and credit card providers, payment processing systems, merchants that collect payments via mobile terminals, terminal vendors, chip vendors, SIM card manufacturers and security companies.

Pau believes mobile operators should automatically get limited banking licences to offer short-term loans, overdrafts and handle payments for their customers, while banks should be given communications licences to run secure hotspots to increase the range of services they can offer at ATMs.

The Group of 20 (G20) Leaders has developed a set of principles to support innovative efforts to accelerate the delivery of financial services to the poor. The principles emphasise the need for strong leadership, product diversity, proper incentives for financial institutions to get involved, and sound consumer protection.

The principles urge policymakers to harness new approaches to reach more than 2.7 billion people who are unable to open a bank account, get insurance, or receive loans to invest in their homes or businesses.

The next step is to formulate concrete actions so policy makers and the private sector in every country can move towards delivering financial services to the unbanked. AT

EUROPE VS AFRICA

Prof Louis-Francois Pau from the Rotterdam School of Management recently presented some European findings to students at Johannesburg’s Gordon Institute of Business Management.

AN ANATOMY OF A PRIVATISATIONSAVING ZAMTEL:

In July 2009, the government of the Republic of Zambia announced its intention to privatise Zamtel through the sale of up to 75% of the Company’s equity. The

government also announced its intention to retain a minimum of 25% of Zamtel’s equity, and its intention to reserve the right to list some, or all of that stake on the Lusaka stock exchange. Per the Zambia Development Agency Act of 2006, the government tasked the Zambia Development Agency (ZDA) with the implementation of the privatisation of Zamtel. The ZDA had appointed legal, financial and other advisors to assist it in successfully implementing the transaction.

The privatisation process formally began on the 15th September 2009, with the issuance of an announcement in the national, regional and international media, and ended on July 10th 2010, with the announcement that a Libyan telecommunication firm has bought seventy five percent of the shares in Zamtel. Lap Green Networks (Lap GreenN) has agreed to pay a total of US$ 257 million for seventy five percent of the equity in Zamtel.

According to a Ministerial statement by Hon. Felic C. Mutati MP, Minister of Commerce, Trade and Industry, Zamtel had been struggling financially and commercially for many years. For this reason, the government had been seeking ways to revive the fortunes of the company. Initially in 1999, cabinet directed that up to 20% of the shares in Zamtel be offered to a minority shareholder, with the government retaining full management rights of the company. This proved decidedly unpopular with the private sector and gained little traction.

Zamtel’s fortunes continued to worsen. Its customer base continued to decline with costs rising disproportionately. Staff costs made it impossible for Zamtel to operate viably. As of March 2010, with a customer base of approximately 400,000, Zamtel employed 2,340. Zain, on the other hand, had a subscriber base of over 3 million with approximately 750 employees. Therefore Zamtel’s ratio of employees to phone lines was 1:170, whilst Zain’s was 1:4,000. Zamtel had become unsustainable and faced insolvency.

ZAMTEL: A HISTORYFormed in 1994 as a result of the division of the Post and Telecommunications Corporation, Zambia Telecommunications Company Limited (Zamtel) is Zambia’s exclusive fixed (PSTN) network operator, and has operations spanning the entire ICT sector, including fixed-wireless (wireless local loop), mobile, fibre, VSAT (Very Small Aperture Terminal) and internet service provision.

Headquartered in Ndola, and with its main network control and switching facilities in the capital Lusaka, Zamtel’s fixed network connects all major population centres through 94 regional exchanges.


FEW CHOICES LEFT With the situation in such a dire state, the government was left

with no option but to re-examine the case for privatization. To assist in the privatization process, RP Capital Advisors was contracted by the government to conduct a study of the options for Zamtel, and to prepare a valuation of the company. The conclusion reached by RP CAPITAL was that the most effective means by which Zamtel’s future could be secured was to effect the sale of a majority stake of up to 75% of the equity in Zamtel to a strategic investor.

The deadline for submission of prequalification applications was 16th October 2009. At the time of closing, eight submissions were received, from the following:

Altimo Holdings of Russia •Bharat Sanchar Nigam Limited (BSNL) of India •Lap Green Networks of Libya (Lap GreenN)•Mahanagar Telephone Nigam Limited (MTNL) of India •Portugal Telecom •Telecel Globe (part of Orascom Telecom) •Telkom South Africa; and •Unitel / Angola Cables of Angola •

On 23rd October 2009, tender instructions were sent by the ZDA to all eight prequalified bidders, inviting them to take part in due diligence. All bidders were asked to submit non-binding bids for up to 75% of the equity in Zamtel by 23rd December 2009. By the close of 23rd December 2009, and with the first round of bidding complete, the shortlist had been reduced to 4 bidders. These were Altimo, BSNL, Lap GreenN and Unitel.

According to documents received by Africa Telecoms, the following criteria was employed to assess the first-round bids:

I) Enterprise value: the primary criterion was the enterprise value ascribed by each bidder for 100% of Zamtel, on a debt-free, cash-free basis. The ZDA calculated an unadjusted threshold enterprise value, based on the forecast value of Zamtel’s external liabilities at transaction closure. This was the enterprise value required so that, in the event of the sale of 75% of the equity in Zamtel, the proceeds received by the government would be sufficient to cover 100% of Zamtel’s external liabilities at transaction closure.

The forecast of total external liabilities at the point of transaction were estimated at US$ 176 million. Given this, the unadjusted threshold enterprise value was US$ 235 million. This was the minimum enterprise value for 100% of Zamtel.

II) Capital Expenditure Projection (CAPEX): the bidders’ forecasts for capital expenditure for the two years immediately following transaction closure were employed as a supplementary assessment criterion. The ZDA calculated a minimum threshold value for CAPEX based on a discounted cash flow model of Zamtel. The CAPEX threshold was estimated at US$ 125 million over two years. This was considered to be the minimum

investment in infrastructure required to affect a viable turnaround, from the perspective of network coverage, quality and capacity.

On 11th January 2010, all four bids were accepted by the board of the ZDA as the remaining 4 bids met the minimum threshold values and assessment criteria employed. The bidders were then requested to submit their final bids which included the final price they were prepared to pay for a 75% stake in Zamtel, a proposed debt/equity ratio for 36 months, and 5 year business plans for the company.

The price range as determined by the RP Capital valuation was between US$ 142 million and US$ 204 million. This was based on a very detailed discounted cash flow valuation and a number of assumptions on the future potential of the company.

In his address to Parliament, the Hon. Minister expressed that Lap GreenN’s bid comprised a cash consideration of US$ 257 million, and was the highest total cash consideration for Zamtel in comparison to the other two bidders. The Lap GreenN bid also comprised of funding of the pension liability of US$ 20 million; Settlement of loans from Chinese banks (US$ 32.7 million); and paying redundancy costs of US$ 97.7 million for all staff of Zamtel. Lap GreenN proposed making 100% of the existing workforce redundant, after which it indicated that it would re-hire employees as needed; Initial equity investment of US$ 64 million for the first three years of operations; and payment of US$ 42.6 million as proceeds to the government.

On March 31st 2010, in addition to Lap GreenN’s poposal, the ZDA board also accepted Unitel’s second round bid and proceeded to enter into final negotiations with the two companies. Altimo were kept in reserve as a bidder, if either Lap GreenN or Unitel withdrew their offers.

During the final negotiation stages, with the Lap GreenN bid offering a higher capital investment than Unitel, Lap GreenN enhanced their bid by offering the government a “bonus” payment if Zamtel was able to achieve the targets in the business plan submitted. That bonus, payable at the end of the third year of


Zamtel Onatel(Burkina Faso)

Sotelma(Mali)

Ghana Tel Nitel (Niger)

1 800

1 600

1 400

1 200

1 000

800

600

400

200

0

1 770

1 137

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756687

Graph, Enterprise Value Per Subscriber

Zamtel operations post-privatisation, would be paid by Lap Green, and not by Zamtel, to the government. It’s value could be up to around US$ 30 million in present value terms.

With Unitel stalling on increasing their bid, it was recommended by an external negotiation team, that the ZDA, the Government of Zambia and Zamtel accept Lap GreenN’s bid as superior.

Following cabinet approval, the Minister of Finance and National Planning and Lap Green networks signed the transaction on 5 June 2010 and US$ 64.25 million (25% of the transaction) was paid to Zamtel.

LAP GREEN NETWORKSAccording to reports, Lap Green Networks is a telecommunications operator, 100% owned by Libya Africa Investments Portfolio (LAP). LAP is a sovereign wealth fund, wholly owned by the Libyan investment authority.

Lap GreenN has telecoms operations networks in Rwanda, Ivory Coast, Uganda, Sierra Leone, Niger and Togo. It has also recently completed the acquisition of an operator in Southern Sudan.

More significantly, Lap GreenN has undertaken similar acquisitions in other African countries such as Rwanda and Uganda where it has purchased former state-owned incumbent operators and delivered a rapid and effective turnaround.

Lap Green Networks has built a customer base of over 4.5 million subscribers and has an equity base of US$ 500 million and a capital base of US$ 8 billion as of December 2009.

The Minister concluded that had the privatisation not been successfully agreed, Zamtel would have fallen bankrupt by October this year, and the consequences of which would have been too dire to comprehend. It was also highlighted that the price achieved of US$ 257 million, measured on the basis of enterprise value per subscriber, is the highest ever achieved on the African


continent (see graph for comparisons).

Director General of the Zambia Development Agency, Andrew Chipwende explained, “We have pioneered a new approach to make this work and are setting an example for other countries to follow. Zambia has always led the way in privatization but we are now setting new standards for ourselves. We have shown that we can make a deal like this work – to the benefit of all Zambians while at the same time making it attractive for investors to pay a premium. This is a boost for those who want to work and create jobs here.”

Nonetheless, the honeymoon is already over and the success of the privatization is quickly making way for the reality of reversing the fortunes of ailing Zamtel. Trade Unions have already begun charging Lap GreenN of not fulfilling its obligations as per the agreement and that the mass redundancy will mean only a handful of previous Zamtel employees will be offered positions at the newly privatized company. AT

Zamtel’s mobile network is currently being expanded by over 60%, with 83 cell sites being deployed over the forthcoming 12 months. These new cell sites will all be EDGE-enabled, allowing the company to begin offering mobile internet access and other value-added services.

Zamtel is also in the process of completing a national fibre backbone network, which is designed connect all of its regional exchange infrastructure, as well as facilitating a direct fibre connection to a subsea optical fibre network. Zamtel is a shareholder in the East African Submarine Cable System (EASSy), a 10,000km long subsea fibre network with 1.4TBit/s capacity, which has become operational during the first half of 2010.

The completion of Zamtel’s national fibre backbone and its connection to subsea fibre are expected to have a considerable impact on the Zambian telecommunications market. Zambia has struggled for many years under a profound lack of bandwidth and international voice capacity. During 2010, fibre connectivity has allowed for a substantial increase in capacity and a marked reduction in price.

Zamtel, and the Zambian telecommunications market as a whole, have expected to benefit.

WHAT THE FuTuRE HOLdS?

and everything in between

sms1

FROm mERRY CHRIsTmAs TO mOBILE BANKING



T he humble 160 character Short Message Service or SMS, pioneered in the early 1990’s as a part of the

GSM system, has remained a staple of mobile phone use. While other technologies have been replaced and modernized, and others such as MMS simply have not caught on, SMS has remained unchanged, even within the notoriously fickle and fluid telecoms landscape.

For instance, in December 2009, the amount of data traffic carried over mobile networks, for the first time, exceeded the amount of traffic generated from voice calls and on Thursday, July 8, 2010, another milestone was reached, when according to Ericsson the 5 billionth subscription was added. Amidst all this staggering progress and expansion the SMS remains the killer data application and continues to contribute the largest portion of the data traffic and revenues, particularly within developing markets such as Africa.

The applications for SMS range from consumer driven communication, to the fundamental tool for services such as mobile banking. In the case of mobile banking, recent research by Juniper, expects that mobile banking services to generate approximately 90 billion text messages by 2015, all through the SMS channel.

“It will soon be possible, for instance, for a business man in New York to dictate instructions and have them appear instantly in type in London or elsewhere.”

Back to the FutureIn 1909, Nikola Tesla, the maverick inventor, revolutionary scientist and one of the early pioneers of the use of high-voltage alternating current (A/C), was interviewed for Popular Mechanic Magazine. The title of the article was “Wireless of the Future,” and in it Tesla outlined his vision of where wireless devices will be in the future. He states in the article:

“It will soon be possible, for instance, for a business man in New York to dictate instructions and have them appear instantly in type in London or elsewhere. He will be able to call up from his desk and talk with any telephone subscriber in the world. It will only be necessary to carry an inexpensive instrument not bigger than a watch, which will enable its bearer to hear anywhere on sea or land for distances of thousands of miles. Thus it will be a simple matter to keep the uttermost parts of the world in instant touch with each other.”

Read in 1909, this could sound like the musings of a mad man, separated from the constraints of physical reality. However, in today’s digital world, it describes perfectly the state of modern telephony, and it is here that the humble SMS reigns supreme.

the Birth oF a PhenomenonSMS was an unexpected and rarely seen success story that shocked the mobile networks out of their complacency and malaise in their efforts to isolate new revenue streams and services. When Neil Papworth, a young engineer at the Sema Group, sent the first SMS (Merry Christmas) to his colleague at Vodafone, Richard Jarvis, few people envisaged that this humble 160 character based service would have the effect of changing the manner in which we communicate, and even more implausibly become a primary revenue stream for mobile networks. With little promotion or fanfare, SMS was quietly adopted and has become the behemoth, worth more than US$ 80 billion, we know today. SMS was borne out of the GSM system, as a corollary, or value- added service to the basic teleservices (call and fax).

According to Finn Trosby, Senior Advisor in Telenor Nordic Mobile and former Chairman of the Draft Group on Message Handling (DGMH) for the Implementation of Data and Telematic Services Experts Group (IDEG), the history of SMS is a genuine story about innovation. IDEG was

compromised of working groups for the GSM community focused on defining the specifications of the GSM system. He explains, “All the other services of the GSM system – speech, fax, and all the variants of circuit switched data – were well known services, copied from the fixed network, in particular ISDN. Between 1987 and 1990, the DGMH had isolated three services on short text messages. These covered Short Message Point-to-Point Terminated, Short Message Point-to-Point Originated and Short Message Cell Broadcast.”

Unfortunately, the short message cell service was never fully implemented by the mobile operators, leaving them to focus on the mobile terminated and mobile originated services, or what came to be known as SMS.

It has been argued that the rise of SMS was a victory for the power of the consumer against the mobile companies, who did not foresee the profitability and longevity of this simple yet powerful tool. In conjunction with the success of the pre-paid model, and its adoption by the youth market, SMS became a primary tool of communication for those with limited spend

Nikola Tesla


160 CHARACTERs – WHY?

90/160Send Menu

Messages


Proposals for text messaging as a service in GSM were made by Nordic, German and French operators, who were all co-operating in the task under the auspices of The European Telecommunications Standards Institute (ETSI) and The European Conference of Postal and Telecommunications Administrations (CEPT).

According to ETSI, the Nordic operators focused their work on text messaging by using an access to a message handling system, a service similar to e-mail. This service was standardized by the GSM committee and led to a technical report on the technical realization of the access to Message Handling Systems.

The German and French operators focused their work on ‘Short Message Transmission’. This service uses a dedicated service centre and transmits the text messages over existing signaling paths of the GSM telephony system on a lower priority basis.

The first phase of the SMS specifications consisted of service definitions, network architecture, topology and protocols, acknowledgement capabilities, functionality for alerting on messages waiting, time stamping and capabilities of identifying application protocols.

Friedhelm Hillebrand , at that time a communications researcher for DETECON and Chairperson of IDEG, tasked with overseeing the various working parties defining GSM specifications included the Draft Group on Message Handeling (DGMH), was typing out random sentences on his typewriter in Bonn, Germany. The reason was to determine a suitable length for messages that he and his fellow researchers had formulating that allowed early wireless networks, applied predominantly for car phones, to send and receive simple text messages.

Anecdotally, it’s been recorded that in these random jumble of letters, numbers, spaces and symbols, Hillebrand seemed to consistently reach a number under 160 characters.

“This is perfectly sufficient,” he told the LA Times. “Perfectly sufficient.”By 1986, he pushed forward the group’s plans which decreed

that all cellular carriers and mobile phones, must support the short messaging service (SMS) on their networks.

Still, his committee wondered, would the 160-character maximum be enough space to prove a useful form of communication? Having zero market research, they based their

initial assumptions on two “convincing arguments”, Hillebrand said.For one, they found that postcards often contained fewer than

150 characters.Second, they analyzed a set of messages sent through Telex.

Coincidentally, telex transmissions were usually about the same length as postcards. Therefore, it was decided that 160 characters would be a suitable size to convey messages.

For Finn Trosby, the rationale for the limitation was more technical and mundane. “When analysing the ‘forward short message‘ operation and removing the overhead, we found that there were somewhat more than 160 characters of the alphabet chosen left for user data. It was decided to round down the figure to the closest decade, and so the number 160 became the eventual size for regular SMS”

However, length wasn’t the SMS’s only limitation. “The input was cumbersome,” Hillebrand said. The user interface meant that multiple letters had to be assigned to each number button on the keypad, meaning that to find a single correct letter could take three or four taps, as the user rolled through the alphabet.

T9 predictive texting became the next major innovation, that greatly assisted in the adoption of SMS. T9 (Text on 9 keys), is a predictive text technology for mobile phones that was a major enabler in facilitating the drafting of text messages and meant that messages became easier to type. Again, the simple application of existing technology, in this case predictive texting, allowed users to type out messages quickly and efficiently. Another hurdle had been overcome.

For Hillebrand, Trosby and their fellow researchers and pioneers of the GSM system, it was astounding how receptive the industry, and more tellingly, the young, cost-conscious consumer, would be in adopting the technology, with its fiddly input and character limitations. Yet, despite these basic issues, the 160 character SMS has become a technical, cultural, and commercial success story, used universally by anyone with the simplest and most modest of mobile handsets.

To:

abc

and low ARPU’s. There are four primary classifications of SMS. These include:

Person to Person (P2P) – SMS from one individual •subscriber to anotherPerson to Application (P2A) – SMS from a •subscriber to the service provider for premium services including ringtones, games, and downloads Application to Person (A2P) – SMS from a service •provider to the subscriber including alerts, notifications,andadvertisingInternet to Person (I2P) – SMS from Internet to •mobile subscriber

For Cor Stutterheim, former CEO of Anglo-Dutch information technology firm CMG, whose company lays claim to creating SMS as a commercially viable value-added service, explains that SMS was “started as a message service, allowing operators to inform all their own customers about things such as problems with the network. When we created SMS it was not really meant to communicate from consumer to consumer and certainly not meant to become the main channel which the younger generation would use to communicate with each other.”

A major factor in the adoption of SMS arose from the development of the pre-paid model, which enabled phone users with bad, limited or no credit, the ability to purchase airtime.

Although the pre-paid model warrants a separate discussion that is beyond the scope of this article, credit must be given to the importance the model played in making SMS the huge success we see today. The ability for the mass adoption of mobile phone use through the development of the pre-paid model meant that youth markets, lower income markets and short-term user markets could be targeted by the mobile operators. Despite call and usage prices being higher than their post-paid counterparts, the ability for anyone, and at any budget to be able to purchase airtime ensured that other low

cost services associated with mobile telephony, mainly SMS would be used to maximize the customers pre-paid credit.

However, in the early days of the pre-paid model, the networks had not provisioned a billing system for pre-paid accounts SMS usage. In effect, a pre-paid customer would be able to send text messages at no cost as the links between the operators’ pre-paid platform, the billing system and the Message Centers were not yet in place.

This invariably saw a sudden surge in SMS use amongst pre-paid customers which nevertheless was short-lived, with the network operators implementing a system to enable the networks to charge pre-paid customers for the use of the SMS service. This change for the pre-paid users saw a sudden and dramatic dip in use followed by a steady and sustained increase in the volumes that continues today.

In the UK, for example, Ofcom, the Independent Regulator and Competition Authority for the UK communications industries, reported in “The Communications Market 2010” (August) that “[D]espite the increasing use of internet-based communications services such as social networking sites and instant messaging, the numbers of text messages sent by mobile users continued to climb, growing by nearly one-third to 104.4 billion messages in 2009 (representing an average of over four a day for every person in the UK), a faster rate of growth than in 2008 (24.8%) but on a similar level to annual growth between 2005 and 2007. Meanwhile, the volume of MMS grew by just 5.8% during 2009 to around half a billion messages.

An increasing proportion of mobile users, particularly in younger age groups, rely on SMS as their main means of communication via a mobile handset, rather than mobile telecoms. In fact, penetration of SMS on a daily basis is actually higher among mobile users than is voice.

SMS was “started as a message service, allowing operators to inform all their own customers about things such as problems with the network.” Cor Stutterheim


This increasing growth in SMS volumes is likely to reflect the increasing availability of tariff plans with unlimited text allowances at lower price points; attractive not only to younger users but also to most cost conscious consumers.”

Taco Schoute, Head of Messaging at Acision, sums it up eloquently, describing that “the enduring success of SMS among users is intimately connected to its ease of use, low cost and reach. With its growing ubiquity as a means of updating, informing and alerting in business communication processes, enterprises are also increasingly using mobile messaging for delivering consistently higher levels of service to their customers. For the mobile services providers and their customers, this will mean a far wider range of services that are faster, more relevant, more effective and more flexible than ever before. From text reminders to personalised content,

enterprise applications to consumer-facing offerings, these services will not only enrich the end-user experience but open up significant new revenue channels.”

In the end, the simple SMS has been a win-win situation for service providers, network operators and most importantly, consumers. With innovative thinking and correct product offerings, SMS revenues can continue to grow, volumes increase and this almost overlooked by-product of the GSM system, can remain the unexpected success story the service has become. From an African context, the cost-effective and easy to use, universally recognized SMS will continue to grow as new service offerings become more ubiquitous including mobile banking, that will mean SMS will continue to be the killer application for the majority of users across the continent for years to come. AT


Another day and another big announcement that promises to revolutionise the way we bank in Africa. The news is coming thick and fast of late.

In the past few months we have had announcements from First National Bank, with PayPal, then ABSA and now Nedbank with Vodacom offering the widely known M-PESA money transfer system.

BY Steven AmBroSe

The AfricAn

reality of mobile money

The context of all of these systems is that for the first time in the history of banking in Africa, the power is moving out of the big shiny Ivory Banking towers and onto the most successful device technology offers on the African continent, the mobile phone. The challenge that all countries in the developing continent of Africa share, is that of banking the so called unbanked. In order to grow and effectively compete globally, Africa needs more sophisticated financial banking systems that reach as far and as deep into all areas of the various countries.

M-PESA which was developed by Vodaphone for Safaricom in Kenya has become the poster child of mobile innovation, and coupled with the explosion of mobile communication in Kenya and other parts of Africa, has added more people to the ranks of the banked than any other system. No longer were financial transactions held hostage by infrastructure and sophisticated systems, no longer did the banks rule the financial roost. People and their mobile phones were in charge and M-PESA and Safaricom now bank over 10 million Kenyans in an unprecedented and simple manner.

In many ways Africa’s new found connectivity to the rest of the world is spurring on this revolution. In the last year two significant new undersea cable have touched down in Africa, Seacom and EASY, and have brought much needed relief to the last poorly connected continent. Bandwidth prices have dropped dramatically, but of much greater importance is the fact that innovation and the growth of technology, mostly in the form of mobile technology has proceeded exponentially. The good news is that this will continue as more and more connectivity comes on line and telecommunication operators look for more and more innovative ways to capitalise on this new found capacity.

The big question that is being asked, is will M-PESA have the same impact in South Africa that it did in Kenya? The two countries may both be in Africa but that is where the comparison ends. The mobile landscape in South Africa is far more mature and advanced than in Kenya and the banking

account called M-KESHOIn South Africa, due to banking regulations, M-PESA as

operated in the Kenyan context was a nonstarter, so enter the partnership with Nedbank Ltd. Nedbank, which is the smallest of the big four banks in South Africa, has been aggressively looking for solutions to enter the lower end of the unbanked market, and M-PESA may be the way. At a recent SANGONeT “Fundraising in the Digital World” Conference 2010” held in Johannesburg, Susie Lonie, M-PESA, Executive Head, Vodacom Payment Services, commented that the association with Nedbank had been far more positive than she would have thought, and has brought benefits that would not be possible without a banking partner, such as the possibility of a savings account such as M-KESHO from day one.

In operation M-PESA is extremely simple, a Vodacom subscriber registers their phone with M-PESA, and their number becomes their account. Once registered they can go to any Nedbank branch or Pick and Pay, Makro, and hopefully soon, many more retail outlets,

>>

and financial services infrastructure is vastly more pervasive and evolved than that of much of Africa. This in itself is a challenge, as along with maturity comes a level of regulation and sophistication that militates against clever and nimble solutions such as M-PESA. Safaricom in Kenya does not have to be associated with a bank in order to operate; in fact much of the success was the fact that the system was essentially bankless, very easy to operate, low cost, and fast, not something most of us associate with banking solutions. As M-PESA matured the need for banking involvement became clear especially once savings options were introduced, and now Safaricom works with Equity Bank in Kenya to offer a savings

>>


and “load” money onto their M-PESA account, they can then use this money to pay anybody with a cellphone number. The person who gets paid via an M-PESA virtual voucher, can cash their voucher in at any of the above mentioned dealers, or if they are an M-PESA member, they can use the funds to pay other people or suppliers of services. The charges appear reasonable, once the convenience factor is taken into account. Altogether M-PESA appears as frictionless a banking type service as it can get. The last significant point is that it is a completely pay as you go service, unlike most of the current banking services, whereby if you don’t transact you don’t pay. One other major benefit of M-PESA is that there is no application or widget on the user’s mobile phone, in fact there is nothing needed more advanced than the ability to send and receive SMS’s.

In the context of the SANGONET conference, one overlooked M-PESA ability that was highlighted, is the easy collection of donations in a manner similar to the current Premium SMS services, at far lower cost. For example if you are asked to SMS the word “Help” at a cost of ZAR20 for a charity, currently the SMS provider can take a large chunk of around 20% of the ZAR20 or ZAR4 per message. With M-PESA this could be setup and transacted at far lower cost to the charity, which is a powerful use of the system. The main challenge will be to get as many people as possible onto the system in as short a possible time, in order to obtain a critical mass of users, as only once this occurs, will M-PESA become compelling to users and merchants.

As a solution to move money around between people, and the ability of M-PESA to allow the transfer of funds to any person anywhere they have a cellphone signal, there are no direct competitors currently available in the South African Market. FNB’s send Money system is cheap, effective, and simple to use, but someone in the transaction must be banked with FNB to use it. M-PESA’s unique advantage is that the only downside to not being a registered M-PESA user is a higher cost to use the system. Many have argued that South Africa and Kenya are not comparable and systems like M-PESA that are very successful in Kenya may not work in South

Africa, for many reasons, not least of them being that there are so many other options available to people in South Africa. M-PESA, in my opinion, will surprise us all. It is simple to understand, inexpensive to use, and if used creatively has wide applications outside of simple money transfer and bill payment.

Innovation and application are often very different things. Africa has proven very resourceful in the use of the mobile phone, coupled with the growth of the various networks and their almost ubiquitous coverage over much of the continent, to actually deliver innovative solutions.

These factors should ensure that simple yet innovative systems like M-PESA will succeed, often way beyond their creators wildest imaginings. Whilst there are many offerings available to pay bills and use your mobile phone as a virtual bank, the simplicity and universal applicability of M-PESA, as well as the market penetration and clout of Vodacom and Nedbank, will in all likelihood result in M-PESA becoming a huge success in South Africa as well. AT


As we all know, strategic alliances and interworking between two organizations is in general very complicated. It is difficult to structure such

collaborations, and even more challenging to manage them. This is especially true when stakeholders are large, powerful and from different industries with fundamentally distinct business models, as the case is with Banks and Mobile Network Operators (MNO’s). Are they both dependent on each other to provision Mobile Money Services? Absolutely. Therefore, what are the different ways that these two segments can come together and structure a mutually beneficial partnership to offer mobile money services?

While a good deal of ambiguity remains on the value that each stakeholder can bring and the roles each can play in deploying mobile money, the core issues remain.

in provisioning Mobile Money Services today

Coopetition between MNO’s and Banks

BY Deepali VelaYuthan,Director Mobile Money at Seamless


Such as:• What are the strengths that each

party brings to the table? • What functions and activities

can each party take ownership of, and which ones can be jointly developed?

• What types of regulations must each party consider that influence the nature of the partnership?

• What principles guide the sharing of costs and revenues?

Mobile Money, in my view, will have various versions and solutions for different needs and markets. There is “banking the unbanked”. This consumer segment will look to Mobile Money for their basic needs: a place to store their ‘cash’ (Store Value Account) in the absence of a regular bank account, and secondly, a means to send it to someone else, i.e., remittance or peer-to-peer transfer. Most MNO’s or Mobile Wallet Operators, for the past 2 years on an average, have seen that Cash-in/Cash-out is the single biggest transaction or application used by this segment, filling the mobile wallet and withdrawing cash from it. At the unbanked level,

when ones income is so low, their first requirement is for food. Thus cash is still king in this market. Until an MNO can build an

1

2

3

→→

ecosystem that includes retailers and small stores so consumers can use the balance in the mobile, the behavior is always the same. And it is MNO’s that are most well poised to build this network with their expertise in the areas of distribution, branding such a service and managing it.

On the other hand, banks usually use ATMs as a solution to give customers easier access to cash. When these “unbanked” customers start to require more than just basic cash services from agents, then the banks step-in with trained individuals that offer advice and guidance for money management, loans and access to card-products. Mobile Operators would need the expertise of a bank to be able to provide this support. Alternatively, they will have to follow an expensive banking model of physical branches, comply with banking regulations, put in expensive systems and a process to manage money risk. It may be very difficult and challenging for an MNO to use their existing systems and IN’s/ Prepaid platforms to achieve this.

Looking at it from both sides of the value chain, MNO’s, in the very least, need a basic Banking Solution and Regulatory Compliance, even for successfully running applications of Cash-in/Cash-out, and definitely for micropayments. And banks can definitely use the expertise of MNO’s when it comes to customer acquisition, managing the brand of the service, and deploying an efficient distribution system. Notwithstanding the fact that the ubiquity of mobilephones makes MNO’s the base for the spread of the Mobile Money service.

The models in the future, in my opinion, will see huge shift towards co-operation between banks and MNO’s and bringing both parties closer, or merging to create the ideal value for customers. It needs both banks and MNO’s who bring different things to the customer, to come together, and symbiotically, bring down the cost of banking and distribution to increase service uptake.

Having said that, we can see that parties do best when they focus on their respective core competencies. MNO’s are strongest in driving customer-facing activities such as branding and distribution. Banks, meanwhile, are understandably well-positioned in dealing with liquidity management and regulatory engagement. Importantly, both stakeholders must have a genuine commitment to shaping an alliance that brings mutual benefits. If a partner is not fully satisfied with the negotiated agreement, the partnership – even if initially agreed to – will eventually fall apart. In launching M-Pesa, for example, senior management at Vodacom and Equity Bank spent many months ironing out a solution which each stakeholder was genuinely content with. Crucially, what this also shows is that it

is possible for MNO’s and banks to compete and co-operate at the same time – a phenomenon in academic circles called “coopetition”. Banks in general fiercely compete with MNO’s on everything from retail agents to money transfer services to customer loyalty. But this aspect has neither stopped them both from having their own branches as agents, or using its ATMs for cashless withdrawals, and jointly developing a sophisticated Mobile Money product in many markets across the globe. Their approach has shattered an understandable but misguided belief that many still hold in mobile money: that the relationship between a bank and MNO is an “either-or” proposition between competition and collaboration.

The reality is that both are possible, the era of coopetition is here. AT

Deepali VelaYuthan, Director MoBile MoneY at SeaMleSS. As Director of Mobile Money at Seamless, Deepali Velayuthan supports initiatives of mobile operators, banks and finance institutes that consider entering the mobile money arena with Seamless’ solutions. She has a career that spans 15 years in the Telecom and Software space with well known brands like the Australian operator Telstra and Finnish networks vendor Nokia Networks, where Deepali was managing key accounts in Asia-Pacific, Europe and USA. She continued to a mobile billing software leader, Technotree, where she launched markets and developed the business in Middle East and Asia Pacific. Before joining Seamless, she was at Secure Computing, the largest messaging security solution provider in USA.


with DARE OKOUDJOUCEO, MFS AFRiCA

Having been with MTN developing the Group’s strategy for Mobile Money outside of South Africa after the MTN Banking experimentation in that country, could you give us some insight into this experience, and why you think mobile financial services has been so successful in Africa?

I think that there are two measures of success that need to be paid attention to here. The first one is getting the mobile industry to buy into the case of mobile financial services. From that point of view, it is a definite success as more operators are weighing the variable cost of investment with the cost of not rolling out services along with the social benefits it can bring to Africa. More and more operators feel the scales have been tipped and cannot afford to be left behind. So we continue to see new deployments and services. Expectations have been exceeded here, as the mobile industry receives strong support from governments, development organisations, NGOs and in many instances financial regulators across the continent. In short, we have come a long way in a short time and there is clear momentum behind mobile financial services.

The second measure of success – the one that really matters in the long run – is utilising mobile financial services to benefit millions in Africa. I think that is still a work in progress. Successes are still too far between and isolated. But this is not cause for despair. Most innovations follow an even slower adoption curve. The uneasiness that some industry practioners and analysts are feeling comes mostly as a result of the high expectations placed on mobile financial services. It reminds me of the 3G rush in the late 90s. It developed more slowly than we all anticipated but now it’s a reality in markets globally.

Why do you think the M-PESA Model has been so successful in Kenya? And do you think the recent launch in South Africa of M-PESA by Vodacom and Nedbank will be as successful as the Safaricom deployment? And why?

I think the M-PESA story has been much commented and documented. The general consensus on why it’s been such a runaway success is as follows:

a) It was launched in a favorable market with a void around simple and

affordable ways of transferring money and paying basic bills

b) It is a very simple service with a great educational campaign

c) The support of The Central Bank of Kenya was key

d) The commitment of Safaricom at the highest level of the organization to the service. In my opinion the last two are probably the most important ones and also the hardest to replicate.

South Africa is a very different market and Vodacom knows that. So I expect the team will keep what needs to be kept and change what needs to be changed. One word I don’t believe in is “impossible”. It could just be hard. And I think South Africa will be harder than Kenya because bank penetration is higher with multiple options to send money and pay bills. In South Africa, an obvious target market is illegal migrant workers who cannot access banking services for transfers, and therefore would current regulations allow for M-PESA to enroll them? Again, the M-PESA team in South Africa certainly knows all of this and has factored it in.

Africa has been an innovator in the mobile


financial services space. How do you feel that this is changing Africa and where do you see the future of M-Banking taking Africa?

The changes are currently more apparent in the East than anywhere else. Besides M-PESA, we now have MTN Mobile Money in Uganda and Rwanda. MTN Ghana, Cote d’Ivoire, Benin and Cameroon have also launched their service and are at various level of uptake. We have Zain Zap and not to forget the banks’ own initiatives to provide mobile access to their existing clients. One good thing that the mobile financial services has already done for Africa is to attract attention to the need for better financial services. I think financial institutions, from large banks to smaller micro-finance institutions (MFIs), insurance companies and investement houses, are now looking at ways to leverage mobile technology to expand reach and lower cost. So give it few more years and more tangible results will start appearing.

Coming back to yourself, Mobile Financial Services (MFS) Africa, is a new venture that you started, which seems to have the vision of bridging the gap between current mobile financial services products and a full set of financial services? Is this an accurate summation and please give us a brief description of how you see this being possible?

MFS Africa has been set up indeed to bridge what we call the “mobile financial services gap”. The gap is in the disconnect between the expectations of mobile financial services operators (on what service they will be able to provide) and the reality of what they are actually providing. Many players underestimate what a huge undertaking it is to rollout a mobile financial services scheme that can simply do domestic transfers and airtime top-up. To put these basics in place, you still have to deal with matters

of regulation, agent network setup and management, platform implementation, marketing aspects, and the day to day operation of the business.

MFS Africa bridges that gap by providing a range of value added services on a turn-key basis. Take international remittance for instance; all mobile financial services operators have it high on their roadmap, but most are discovering that it is quite challenging to implement. What MFS Africa brings in this context, is a “ready to use” connection to a number of money transfer companies that can cover the target markets (where senders are based). All the mobile operator needs to do is to include the product in its offering and market it locally. We take care of the sending markets and the management of the money transfer companies. In this way, the operators’ clients could receive money from anywhere directly on their mobile wallet.

MFS Africa aims to accelerate the growth of mobile financial services. How can this be achievable in such a complex

business environment working with the telecommunications and financial regulators and operators?

We thrive best when faced with complex issues. It is exactly because the mobile financial services ecosystem is complex that MFS Africa was established to deliver offerings that take away the complexity for the key players in the market and lets them focus on what they do best. For all the services that we provide we spend lot of time and energy analysing the specific value chain and rearranging the different pieces so that we can provide a simple and cost effective service through the mobile phone. For all of them we, consistently ask four questions: What can we eliminate? What can we introduce? What can reduce? and what can we augment?

So what we offer today, is a package that is the result of asking again and again these questions across markets. Operators benefit from this refinement and can therefore accelerate the monetization of their investment in mobile financial services.


You have Plug & Play Integration with your Clients Information Systems. This must involve some fairly complex programming considering the number of different systems that are run across Africa. How has this been achieved?

It does. And again that’s our strength. The team has a very deep understanding of how mobile financial services are designed and deployed, and all of us have been part of deployment teams across Africa and beyond. The MM VAS-Box (Mobile Money Value Added Services Box) that we deploy has been designed to take away the complexity of mobile financial service platforms and connect them to the simple world of web services. But our proposition does not stop at the technical level. We see that as a hygiene factor really. We pride ourselves in also simplifying operational complexity (which is the main complexity in deploying these services) and design services that work with the networks. So when we work with an insurance company, for instance, to design and deploy m-insurance services, we do not only simplify the technical

complexity of such service through our MM VAS-Box, but we ensure that the product we are designing can be consumed through the mobile device. As you can imagine payment is only one aspect of this. We have to re-engineer the entire client life cycle, from acquisition to the processing of claims. And we do this with two main things in mind: simplicity and cost effectiveness. In which countries are you currently operating and how can a startup manage to operate across the continent?

We are currently operating in several countries: Ghana, Cote d’Ivoire Uganda and Congo (DRC). In each of the countries, we are in discussions with a number of mobile financial service operators to provide our services. In Ghana, Cote d’Ivoire and Congo, we are already at the pilot stage and will commence commercial operation soon. Nigeria, Cameroon, Benin, Malawi, Rwanda and Morocco are our next target markets. Nigeria (which is the biggest market of the four) is still waiting for the Central Bank of Nigeria to issue the

required licenses. I learned quite a few things from

my MTN experience about operating across Africa these included:

a) You need good people who are comfortable with traveling and operating across languages and cultures; so we are very picky and apply strict rules in our recruitment (for instance we all speak fluent French and English in addition to our native languages)

b) Mobile financial service models need to be standardized to enable economies of scale and part of it has to be localized to meet local demand; for this, we partner with local entrepreneurs that can support us in localizing the proposition.

c) You have to be driven by a purpose that is beyond immediate financial gain to cope with the adverse business environment that you encounter. Our purpose is to make life a bit better for millions across the continent by providing, simple, relevant and affordable financial services.

Currently, you have 4 service offerings, namely Bill Payments, International Money Transfer, Online Payments and Microfinance Transactions. Could you tell us more about these offerings also with specific reference to the differences between the Bill and Online Payments offering?

Our International Money Transfer service allows existing money transfer companies to send money to mobile wallets across Africa. Mobile money transfer companies already offer different payout options such as cash (the main one) but also directly into a bank account, or as a check. We simply allow them to add onother option, the one that is likely to be the most relevant in Africa in the near future: the mobile wallet payout.

Our Bill Payment Service complements the traditional bill payments that mobile money operators


offer directly. It goes beyond simple payments to offer a complete shopping experience over the mobile phone. Many of our clients want their customers to change their options, and add new services, before they pay. Most mobile money operators do not have the ability to handle such complex demands.

Online payment refers specifically to e-commerce where we enable websites to accept payment from mobile wallets.

Our MFI transactions include services such as credit (apply for and receive loan through the phone), savings and insurance (buy and pay for basic coverage through the phone).

In the future, do you see the possibility for all current banking offerings such as investments through unit trusts and other such complex saving structures to be offered to mobile financial services clients?

Definitely. Although this may sound like a niche product, there is no reason why mobile technology cannot open up new opportunities like these offerings. The mistake will be to only see the payment component that makes mobile financial services possible. We take a holistic view. From how I acquire the clients to how I retain him, with the mobile as the key technology throughout. It is our ability to take a broader view and transform a service such as a unit trust investment and make it available to millions though the mobile phone. If you focus on just the payments you will miss out on the broader and bigger opportunities.

Having been a founding member of the GSMA Working Group for Mobile Money Transfer and Mobile Money for the Unbanked, how do you feel the African perspective is different from other parts of the world where Mobile financial services are taking off such as Latin America and the Asian Pacific regions?

In many ways the market conditions and challenges are similar. But the differences are probably around the much lower financial services penetration in Africa when compared to places like Asia where MFIs have been able to pull quite a large number of people in the financial system, or Latin America where banking penetration is relatively high. One of the root causes of this is obviously the smaller infrastructure base that we have in Africa which constrains the growth of many industries not just financial services.

And it is precisely because of this lack of infrastructure that development has been held up. Mobile represents a fantastic opportunity to change this as it takes away time and distance. That is why we are also seeing more mobile financial services activity in Africa than anywhere else.

What do you think some of the major risks are in the mobile financial services in Africa? Do you offer solutions that overcome these risks which would be of benefit to operators and financial institutions wanting to role out

M-Banking services in Africa?

The biggest risk I see might well be impatience. Impatience of players, analysts and investors to monetise this opportunity. What we offer (at MFS Africa) are ways to shorten the “time to money”. We are able to offer the appealing services that operators need to drive uptake and usage.

Is MFS Africa focusing its energies solely on Africa? And do you think that your expertise will be exported to other markets where similar challenges and opportunities lie? Where do you think this will be in the future?

Our roots are solidly in Africa, but our perspectives are global, as our clients and investors. Our plan is to perfect our model in Africa first and take it to other emerging markets as the next step. We have not identified a specific region yet, but we are watching closely the developments in key markets like Pakistan, Brazil, Indonesia and Mexico. AT

The purpose of this page is to give readers of Africa Telecoms a brief overview as to the growth and statistics related to the Telecoms and ICT markets in Africa. What we will be doing on an annual basis is relooking at the statistics, this way over time Africa Telecoms will have a basis for tracking developments and growth in the Africa Market. Each Edition of Africa Telecoms will be focused on a specific area. This month we focus on Mobile Banking in Africa, and to this end

we have tried to include a range of Mobile Banking related statistics relevant to the African Market.

I trust that you will find this information of value and interest. Should you have comments on this page or statistics that you think would be relevant that we have not included (or that you have access to and would be of interest to our readership) the Africa Telecoms team would appreciate an e-mail to [email protected]


Total Mobile Phone Users (m) Who use Mobile Banking Information Services Split by 8 Key Regions 2010 & 2013

Juniper Research Juniper Research

Africa & Middle East

Rest of Asia Pacific

Indian Sub Continent

Far East & China

Central & Eastern Europe

Western Europe

Latin AmericaNorth America

AFRICA TELECOM STATS

Total Number of Mobile Banking Information Service SMS Messages sent to Mobile Banking Users (m)

Africa & Middle East

Rest of Asia Pacific

Indian Sub Continent

Far East & China

Central & Eastern Europe

Western Europe

Latin AmericaNorth America

2010 2015

100,000

2010 2013

500


GSMA Mobile Money for the Unbanked Deployment Tracker African Country Figures extracted from GSMA Mobile Money & Wireless Intelligence 26/08/2010

Figures not available*

DIRECT CREDITS ($, MILLIONS)

INBOUND REMITTANCES

% OF GDP

TOTAL INBOUND REMITTANCES ($, MILLIONS)

TOTAL OUTBOUND

REMITTANCE ($, MILLIONS)

5.72 17 10.03 390 497 2391 0.31 4 018.7 20.11 35.64 13350 32416 0.14 15 102330

92.52 40.88 47.48 45323 0.83 195 19164377.21 40.88 42.72 119327 353327 5.34 8694 180589772.0466.82 16 50.8 6214 35949 0.79 128 6151865.0356.39 10 45 10990 80 4.9 1692 157171285.175.84 28 60.65 23893 132673 7.98 6891 52436255.5823.82 21 27.91 30330 132673 0.12 11 21691599628.23 22 41.52 4669 16686 3.93 344 83112923.3220.01 21 17.83 1535 6867 1 183671.7919.98 31 28.45 2510 8920 1.48 79 2974030.4559.48 15 50.11 37040 419396 4.71 9980 103216272.0130.12 23 27.78 7757 1.15 51 681960104336.76 13 41.81 1713 5881 7.68 150 13672538.161.95 27 52.39 5252 26828 9.75 1288 143173942.586.18 20.11 30.42 790 2838 3124

44.68 5 41.06 12179 45432 0.09 19 46135341.06

MOBILE PENETRATION

(%)

FINANCIAL SERVICES

(%)

URBAN POPULATION

(%)

ADULT LITERACY RATE (%)

CASH PAYMENTS

($, MILLIONS)GDP

PPP ($)

39.66 20 12.89 9677 357688 3.37 489 281114773.697.07 46 59.04 46304 608534 0.3 823 1133101368841.81 15 37.96 1131 0.48 68 1246162148290.68 31 61.6 78672 3560 1.27 2202670975.3959.7 25 42.17 20482 163380 0.1 82 6036252

44.58 32 1608 3565 14481 4.06 271 67160840.54116.92 47 54.35 2326 773 1.14 148 1201490782.8523.23 26 16.28 3914 18251 0.63 50 44126828.7344.44 24 55.07 7696 49382 0.72 167 10355.07

116.44 40 61.56 348 2984 8.97 155 6347283.7810.4 19 43.31 1174 4217740

24.29 20.11 28.55 5047 1366616638.9 20 49.09 203 1057 2.26 12115775.06

73.25 40.88 56.53 2695 14737391910.71 40.88 93.44 367 2762 3.47 30 5239658.79 59.75 22.83 5149 26159180583.29 12 22.21 1129 58767485.49 14 18.83 7462 37210 1.46 387 15898

112.51 39 86.87 2865 21747 0.08 11 1861454586.1781.79 20.11 24.5 509 1829 8.19 64 121395 49.97 20 40.67 3618 13000 1.68 72 119101437.3 20.11 37.68 369 958 30 548664.55

45.24 17 19.06 192 2974 27.33 443 2190848.12 11 45.21 6.99 6137355.55

164.63 27 87.69 20024 253613 0.02 16 7621419255.5569.81 40.88 70.46 1757 10166 0.07205555.884.19 54 44.81 3966 29397 2.49 215 141201187.4135.28 12 39.57 3962 25041 1.19 116 5790344.3883.78 28 35.29 560 13645 0.19 16 16661287.96

109.05 41 60.91 135 1880 1.44 12 212082943.89 15 43.47 38991 137081 5.31 3100 2230961.55 35 23.03 454 119 3.84 100 8574919.12 28 37.61 6141 10.08 284 35142681298.2 42 65.43 18141 73424 4.65 1870 15800277.7

14.93 34 36.71 26891.17

MozambiqueNamibiaSeychellesSudanSwazilandTogoTunisiaZimbabwe

COUNTRY

BurundiCongo (DRC)Cote d’IvoireEgyptGhanaKenyaMoroccoMadagascarMaliMalawiNigerNigeriaRwandaSierra LeoneSenegalSomaliaTanzaniaUgandaSouth AfricaZambiaAlgeriaAngolaBeninBotswana

Burkina FasoCameroon

Cape VerdeCentral African RepublicChadComorosCongoDjiboutiEquatorial GuineaEritreaEthiopiaGabonGambiaGuineaGuinea-BissauLesothoLiberiaLibyaMauritaniaMauritius

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While as a general rule, Africa lags behind the rest of the world as far as technical innovation, access to vital amenities and potential customer base are

concerned, m-banking and m-payments are the one area where Africa is the worldwide pioneer.

This sentiment is well borne out by the GSM Association’s most recent edition of the Mobile Money for the Unbanked (MMU) Tracker, which shows Africa as the owner of 51% of the m-banking and m-payment solutions in the world that are worth mentioning.

It goes without saying that the African condition as described by so many publications, tertiary professors and academic journals is the primary reason for the ready adoption of m-banking and m-payment solutions in Africa.

Where need existsOne of the largest portions of the world’s population lives in Africa and it’s no coincidence that the vast majority of those people are poor and disenfranchised, and one of the reasons for this is that there’s a shortage of financial services capable of meeting their needs.

The majority of these people live in rural parts of Africa and because it’s virtually impossible for a bank to have branches in each rural village of the country in which it operates, those people have in the past simply fallen by the way side.

Adding to this difficult situation, most of these people aren’t employable, since the majority of employers require their staff to have bank accounts.

And it’s probably worth mentioning at the same time that the vast majority of Africa’s population is precluded from renting property, buying a vehicle or any of the purchasing activities you expect a successful individual to engage in, since most of these require access to a bank account.

electronic solutionsThe first step to solving this problem is to allow for these people to make payments to each other, without having ready access to one of their banking institution’s branches. And to a great degree this is where the majority of success has been achieved in Africa.

The mobile financial services space is one of the most exciting sectors of the technology sector to be involved in, mainly because there’s massive demand for these services and what matters to users in different regions and cultures, differs substantially. We take a closer look at where this market is and where it’s heading in the coming years.

services for the disenfranchised

By BreTT Haggard


(MMU) Tracker, which shows Africa as the owner of 51% of the m-banking and m-payment solutions in the world that are worth mentioning.

It goes without saying that the African condition as described by so many publications, tertiary professors and academic journals is the primary reason for the ready adoption of m-banking and m-payment solutions in Africa.

Where need existsOne of the largest portions of the world’s population lives in Africa and it’s no coincidence that the vast majority of those people are poor and disenfranchised, and one of the reasons for this is that there’s a shortage of financial services capable of meeting their needs.

The majority of these people live in rural parts of Africa and because it’s virtually impossible for a bank to have branches in each rural village of the country in which it operates, those people have in the past simply fallen by the way side.

Adding to this difficult situation, most of these people aren’t employable, since the majority of employers require their staff to have bank accounts.

And it’s probably worth mentioning at the same time that the vast majority of Africa’s population is precluded from renting property, buying a vehicle or any of the purchasing activities you expect a successful individual to engage in, since most of these require access to a bank account.

electronic solutionsThe first step to solving this problem is to allow for these people to make payments to each other, without having ready access to one of their banking institution’s branches. And to a great degree this is where the majority of success has been achieved in Africa.

heading in the coming years.


But mobile payments can only take the market so far. True mobile banking is required if the world is to make any dent in extending financial services to the masses.

“It’s important to draw the distinction between m-payments and m-banking,” says Arthur Goldstuck, managing director of World Wide Worx.

“Mobile banking is where customers are able to access their bank accounts from a mobile device, from looking at their balance through to making transactions.

“And South Africa is one of the leaders here,” he says.M-payments on the other hand are mobile money transfers

between individuals that don’t necessarily need to have access to a bank account.

“And this is where Africa is a dominant player,” he adds.

horses for courses“Because South Africa has access to more advanced services in m-banking, it doesn’t have as great a need for m-payment solutions as its African counterparts do,” he says.

But then again, Goldstuck says, South Africa has a much higher proportion of banked individuals per capita than most of its African counterparts – and a bank account is a prerequisite for m-banking.

Goldstuck says that it goes without saying that solutions need to be appropriate for the market they’re targeted at.

“Part of the Kenyan success story with M-PESA stems from the pervasive need across the population – and the fact that there was an overall shortage of banking/payment solutions, even in urban areas,” he says.

In fact, Goldstuck says, the captive market in the urban parts of Kenya was the original reason M-PESA took off to the extent it did.

“The need for a certain type of solution is the primary reason I think that over the coming years, the Asian market will leapfrog the African market when it comes to the uptake of m-banking solutions, but that the solutions rolled out in the Asian market will be far more comprehensive than the

m-payment solutions being used so pervasively in Africa,” he says.

“Another reason M-PESA took off in Kenya to the extent it did,” Goldstuck continues, “is cultural.

cultural fit“Kenya has a remittance-based economy, meaning that a high portion of the economy works away from home and sends funds home on a monthly basis,” he says.

“Western Union has built a strong presence throughout Africa by facilitating this exact process,” he says.

“The fact that M-PESA allowed this to take place from the convenience of a cellphone and the experience was furthermore reliable and convenient, made it successful,” Goldstuck says.

Goldstuck says that those same drivers don’t necessarily exist to the same extent in South Africa, where the M-PESA service was recently launched and because the population is far better banked in South African than what it is in Kenya, the service might not be as successful here.

“Similarly, the Asian market is far better banked than Africa,” he says, “and there’s no remittance economy in Asia. That means, m-payment solutions will not have the same impact in Asia as they have had in Africa.”

While there are similarities in need from one African country to the next, the point is that each solution needs to be unique in that it appeals to the needs in a specific country.

“The M-PESA model can’t simply be superimposed into the South African market – or any other African market for that matter – and be expected to succeed.

“There are different factors at play and I question how much the solution has been adapted to suit the South African market,” he says.

For starters, Goldstuck says that there are two partners involved in the South African implementation, namely Vodacom and Nedbank, where only one party, the operator in Kenya, namely Safaricom was involved in the original rollout.

“...majority of success has

been achieved in Africa.”


“Another worry for me is Nedbank CEO, Mike Brown’s prediction that because M-PESA quickly garnered a user-baser of 13m in Kenya it should achieve the same success in South Africa relatively speedily too.

“I think the factors are quite different and that’s a leap of logic Mr. Brown needs to explain more thoroughly,” he says.

looking aheadWhile mobile payments are in the spotlight in Africa today, it’s safe to assume that these services will in time move towards offering more banking centric functionality

Looking forward, Goldstuck says there will undoubtedly be innovation in this space, since you can’t ignore the fact that every cellphone equipped adult in Africa has a potentially useful financial instrument in their hand.

“The trick will be to find models that work in every territory,” he says.

“For example, MTN mobile money is taking off like wildfire in Uganda and Ghana. What we need to do as an industry is research why certain things work in certain territories and be cognizant of factors such as choosing marketing and go-to-market-strategies that appeal to users in each of those territories,” he says.

Hannes van Rensburg, CEO of Fundamo says the innovation will be focused on two specific areas, namely international or cross-border remittances and the provision of more advanced financial services.

“Fundamo was the first vendor certified as a Western Union integrator and with Telinor in Pakistan, we’ve launched an inbound remittance service that supports 35 countries,” he says.

“In the next decade this will become a more common practice and where we have node-driven solutions today – for example Pakistan supporting inbound remittances from 35 countries – these will be combined with other nodes – like Bahrain’s support of inbound remittances from 12 countries and Qatar’s support for inbound remittances from two countries – so that the ‘spokes’ interconnect and create a cloud-like effect.

“Ultimately this will mean instead of the ‘remittance-hubs’ that so many players are predicting, all of these nodes will interconnect in a cloud-like environment and allow users to pay money in one currency and have it delivered in another, purely because of the number of different nodes involved,” he says.

“After all,” he says, the Internet is a cloud, not a hub and it makes sense that the m-banking and m-payment markets evolve in the same way.”

The second big area of innovation, says van Rensburg is more advanced forms of financial service, such as insurance, risk and loan-based products.

“There’s a great deal of work going on in this space,” he says, “and obviously, they’re centred around how you as the provider perform the risk scoring of the individuals.

“There’s also the difficulty around how you set-up repayments and physically do the payout of the loan,” he says.

“When it comes to assessing the individual’s risk profile it’s not just the fact that you know very little about the individual, it’s that you don’t have a payment history to go on.

“As you get people involved in the m-payment space however, this problem solves itself, since they start building up a payment history,” van Rensburg adds.

“And let’s not forget that since they have an instrument in the field, they can contact you easily and are easily contactable too. More importantly, it’s a device that can be used as collateral and easily switched off remotely, thereby increasing the likelihood of loan being repaid,” he says.

Goldstuck believes that although these are noble and interesting ideas, the risk is too high and the bad debts untenable.

“Where efforts have been made to address poorly-vetted target markets, the consequences have been disastrous. And I don’t believe the technology will make it any easier. AT


Pictured above: (left) Co-Founder Dr Irwin M Jacobs, (centre) Chairman of the Board and Chief Executive Officer Dr Paul E Jacobs, (right) Dennis Morgigno


F rom the early days of Qualcomm, the goal was to create an innovative team that could rapidly find commercial solutions to some of the most challenging problems

in the communications field. This certainly happened with the first demonstration of a mobile telephone call using a Code Division Multiple Access (CDMA) network on the 7th November 1989 in front of an audience of influential communications executives in San Diego, California.

Dr. Irwin Jacobs and his team had worked tirelessly over a 6 month period leading up to this demonstration and even minutes before the demo Dr. Jacobs was only given the ‘thumbs up’ by the supporting engineers while he was on stage giving his opening remarks.

Following up on this innovation, in February of 1993 Qualcomm demonstrated the first basic packet data (TCP/IP) service over a mobile network establishing themselves as early innovators in mobile internet connectivity.

How the industry has changed since then. Now, Third Generation (3G) networks are found worldwide and all 3G networks being based on CDMA technology (whether they are WCDMA/EV-DO/HSPA/HSUPA). Many markets are still implementing 3G networks and some are now starting to move into the Fourth Generation (4G) network arena. One thing is certain. The future of mobile communications is data, with voice revenues declining worldwide, data revenues are

Celebrating 25 Years of Wireless Innovation

Founder of Qualcomm Irwin Jacobs

It is amazing to think what has transpired in 25 years. In July 1985, while Duran Duran’s “A View to kill” and Prince’s “Raspberry Beret” where at number 1 and 2 on the music charts respectively in the USA, seven industry veterans came together in the home of Dr. Irwin Jacobs. They included Franklin Antonio, Adelia Coffman, Andrew Cohen, Klein Gilhousen, Irwin Jacobs, Andrew Viterbi and Harvey White. They decided they wanted to build “Quality Communications”; and this is how Qualcomm was born. Africa Telecoms looks back at the celebrated company and what the future holds for Qualcomm.

BY BRADLEY SHAW

growing from strength to strength.The growth of wireless data communications has

been astounding worldwide whether it is in Afghanistan, Sweden, China or the United States of America, mobile data communications have transformed the world. This is making the global village a reality with access to information at the fingertips of most. Bridging the divide between those who have access and those who don’t is at the top of most industry body’s agendas.

The Company has proven itself as the leader in various fields but their key differentiator is in research and development, with an annual reinvestment of about 20% of total revenue back into development and furtherance of the wireless communications industry, hence ensuring the “Quality Communications” of the future. The results of this research range from the Snapdragon™ chipset with speeds in excess of 1Ghz for mobile devices, to the Mirasol that mimics the natural light-reflecting properties found in a butterfly’s wings to produce a compact and lower power consuming screen technology.

Qualcomm’s Wireless Reach Initiative is an exemplary model of how a multinational firm can assist in bridging the digital divide with projects up and running in all areas of the world from Brazil to China. In partnership with various companies and bodies, Qualcomm is making a difference


in people’s lives through this initiative. Wireless Reach in Tanzania is such an example. For this project, Qualcomm has teamed up with Vodacom Tanzania and the GSMA Development Fund to convert Shipping Containers into Communication Centres. The model is simple and effective, giving local entrepreneurs the opportunity to take out micro-financing to purchase the communication centres which are housed in shipping containers, an environmentally friendly and affordable resource. In this way they have been able to offer 3 previously unconnected communities in Tanzania the ability to be connected via high speed broadband wireless network to the internet, as well as the opportunity for a local entrepreneur to have a sustainable business. “Our goals are to expand the use of our services and empower the people of Tanzania through our technology. How do you gain knowledge? The public internet cafe is a tool for this. Tanzanians now have access to information from anywhere in the world and it empowers them,” explains Peter Correia, Chief Operating Officer, Vodacom Tanzania.

By 2014, Monthly Worldwide mobile data traffic is expected to exceed 2008 Annual mobile data traffic (ABI Research Sep. ‘09). This leaves mobile operators the world over with challenges as to how to ensure that they can meet the demand for this ever growing appetite for data. One such company that is working closely with Qualcomm to ensure that this appetite can be met is AT&T, a Tier 1 mobile operator in arguably one of the most data hungry markets in the world, the USA. They have seen a 5000% increase in mobile broadband usage in the last 3 years according to a study done CTIA and Gartner.

Due to this growth in demand for data, AT&T are currently deploying an HSPA+ network and have already started planning the deployment of a Long Term Evolution (LTE) Network which expected to start being deployed within 2011.

Africa is somewhat further behind overall in its network deployments and many countries are now rolling out 3G

Part of the work that Qualcomm has endeavoured to do over the years is to assist network operators through its Engineering Services Group (ESG) to improve efficiencies of their networks. This can be achieved by ensuring efficient management of spectrum usage and coverage optimization. To this end Qualcomm recently assisted MTN South Africa, with network optimisation at key locations for the recent 2010 FIFA World Cup™. MTN and Qualcomm worked together to optimize these systems using Qualcomm Engineering Simulation Tools (QUEST), a solution that analyzes the dimensions of wireless networks to deliver optimal coverage and capacity. The custom-designed technology tools have helped other tier-one operators enhance their mobile capabilities for similar large-scale events, such as the 2010 U.S. football championship in Miami, Florida. “As the first African global sponsor of the 2010 FIFA World Cup™, MTN was committed to providing its local customers and international visitors with a seamless experience during the 2010 World Cup and proactively identified ways in which this could be done,” said Sameer Dave, Chief Technology Officer of MTN South Africa. “All the fans within the stadium and the communities living and working around that stadium had to experience a world-class, quality and seamless service throughout the event.”“Mobile subscribers increasingly rely on wireless connectivity to access information and share memorable life events, such as attending one of the world’s largest and most celebrated sporting events,” said James Munn, vice president of Qualcomm Sub-Sahara Africa. “We are very pleased to have collaborated with MTN South Africa on such an exciting project. Through similar collaborations, Qualcomm is helping operators around the world to fortify their mobile networks for the next wave of wireless data services.”

MTN NeTwork opTiMisaTioN

networks and extending the coverage of the existing 3G networks to cover larger portions of the African continent. As this takes place and data becomes more readily available the consumption will come. Local content will become more readily available as local entrepreneurs produce such content. The importance of this was shown that a 10% increase in broadband penetration in developing countries can be give rise to a 1.38% growth in GDP per capita (Source – World Bank Information and Communications for Development 2009: Extending Reach and Increasing Impact).

As Africa continues to see a rise in broadband penetration, there are new technologies that become available, to manage healthcare, government services and entertainment. This is where the future of wireless, and how the day to day life of peoples can be changed by technology.

Dr Paul Jacobs, the current Chairman and President of Qualcomm said the following: “We focus on what’s the next new thing, how do we catalyze the industry, how do we build the next capability that will go into a device that will do something that will excite the consumer or excite an enterprise customer or excite an operator? And it’s just a different mindset.”

So, celebrating 25 years of wireless innovation of a company that has been a true pioneer and market leader to the wireless industry, it will be exciting to look forward to the next 25 years of innovation. AT


Qualcomm Wireless HealtHHealth is a global issue with 400 million people being classified as clinically obese and 860 million people suffering from a chronic disease (Source: World Health Organization, McKinsey, Pfizer). There is a huge opportunity for mobile devices to assist in the treatment and monitoring of many of these diseases and chronic illnesses, in a variety of ways from monitoring glucose levels for diabetics, to monitoring the vital signs and location of those suffering from Alzheimer’s disease.

Qualcomm along with various partners is developing ways that these technologies can be put into commercial usage sooner than one might expect; the current forecast is that by 2014, 400 million wearable wireless sensors will be shipped (Source ABI Research 2009). At the moment the sporting industry is the predominant user of these technologies for training purposes. However by 2014 the trend will be reversing so that professional on-site healthcare devices will be the predominant user of wireless sensors.

Qualcomm supports and invests in many Wireless Health initiatives. The Gary & Mary West Wireless Health Institute is just one example of this. This institute has as its mission to advance health and wellbeing around the world by identifying, validating and accelerating the use of innovative and cost effective wireless solutions to critical, unmet medical and community needs.

As far as the current commercialization of wireless health care products, 2 have possibilities within an African context. Although not available currently in Africa, the 3M, Littmann® Electronic Stethescope allows for on-board recording capabilities with Bluetooth® communication to diagnosis-supporting software.

This could then be used by a doctor in a rural area where the closest cardiac surgeon is 500-1000km away and yet the cardiac surgeon would be able to listen directly to either a recording of a patient’s heart sound or live via mobile phone. This could be the difference between life and death if the problem is severe enough. And this is all made possible by a wireless 3G connection that is embedded into the device and enables it to transmit data.

Another innovation is from a company called Dexcom which prides itself as “The Glucose Sensor Company”. The “device”, which looks a little more than a Band-Aid that is stuck to the skin on one’s body, monitors glucose levels for diabetics. However, the applications are clear and can make huge differences to the lives of many, with constant glucose monitoring, with customizable alerts depending on the persons specific requirements. This information can be sent directly to a patients physician and would give them the power to know immediately if glucose levels exceeded the normal parameters.

Qualcomm’s 5.7” XGA mirasol Color Display

THE LAST WORD

COMMODORE ARISES FROM THE ASHES"I think there is a world market for maybe five computers." - Thomas Watson, Chairman of IBM, 1943

On April Fools Day in 1976, with the demonstration of the Apple I and the launch of the Apple II in 1977, the home computer industry was born. The Apple II ran with 1MHz processor with 4Kb of RAM. Apple’s main competitor at the time was Commodore International with their PET (Personal Electronic Transactor) range of machines.

By 1982, and with Commodore going strong, the West Chester, Pennsylvania based company was trumpeting the launch of its new C64. The C64 with 64K of RAM with an 8-bit processor was to become the highest selling home computer of all time with over 17 million units sold. The C64 was an icon of its time. This was before the birth of Playstations, X-boxes or Nintendo’s. The C64 was at the forefront of the home computer revolution and with its successor, the Commodore Amiga, the company was at the pinnacle of the computer revolution and showcased the power and potential of the nascent computer industry.

From this vantage point, Commodore was to fall a slow and steady decline until the name was erased from the collective consciousness to remain only in spirit to a few diehard fans and aficionados, kept alive with web emulators. Since those heady days of the 70’s and 80’s much has changed. Rewind 30 years...

South Africa was still a Pariah State, with one Mr. Mandela incarcerated on a small island in the middle of the Atlantic and thoughts of World Cups were limited to where

to find a TV to watch one. Freddie Mercury was still trying to

break free.Twitter was still the sound birds made

rather than the latest cellphone trend. In fact, what was a cellphone for that matter?

David Hasslehoff was still a sex symbol, sober enough to drive his computer car KIT. Good thing the car could drive itself.

Mr. William Gates III was still a college dropout working out of offices in Albuquerque, New Mexico with no Windows in sight.

Communism was still a legitimate and viable ideology stretching from the Ukraine to the Caribbean.

Google was still a Googol, a 10 followed by a hundred zero’s (10100).

Madonna was still a virgin being touched for the very first time.

Robert Mugabe was still the President of Zimbabwe, fighting against all manner of injustice and the British. Clearly much has changed but seemingly not everything.

With the re-launch of the Commodore brand in 2010, the world is a very different place from Commodore’s heyday. Let us hope the times are not that different after all. It is always nice to see a new market entrant compete for market share from the more established players. It is

even sweeter when that entrant was a market leader in years gone by, ready to make a resurgence. For those amongst us who used the C64 and the Amiga, the return of these iconic machines is not only a blast from the past, but also a reminder of the power of brands and their legacy.

In the immortal words of another 80's icon, Dallas’ J.R. Ewing, "Like my daddy always said, where there's a way, there's a will." For Commodore, let's hope there is both. AT

THE AUTHOR | Bradley Shaw is the Managing Editor of Africa Telecoms Magazine

"From this vantage point, Commodore was to fall a slow and steady decline until the name was erased from the collective consciousness to

remain only in spirit to a few diehard fans and aficionados. "


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