The Impact of Telecommunications Services on Doing Business in

Transcription

The Impact of Telecommunications
Services on Doing Business
in Ethiopia
December 2010
Dominique Baron
Chief Executive, Horus Telecom & Utilities S.A.
and team of local consultants
Produced and distributed by
Addis Ababa Chamber of Commerce and
Sectoral Associations with financial support from
the Swedish Agency for
International Development Cooperation, Sida
 Private Sector Development Hub/Addis Ababa Chamber of Commerce and Sectoral
Associations, 2010
P. O. Box 2458, Mexico Square, Addis Ababa, Ethiopia
Tel: +251 (0)11 550 4570, Fax: +251 (0)11 554 2404
Email: [email protected]
All Rights Reserved
No part of this publication may be produced or transmitted in any form or by any
means without the prior permission of the copyright holder. The only exception is for
a reviewer, who may quote short excerpts in a review.
Disclaimer: The views expressed in the study do not necessarily reflect the views of the
PSD Hub or the Addis Ababa Chamber of Commerce and Sectoral Associations or
Sida. They are solely the responsibilities of the author.
Table of Contents
List of Tables............................................................................................................................ii
List of Figures........................................................................................................................ iii
Abbreviations and Acronyms..................................................................................................iv
1 Introduction.........................................................................................................................1
2 Methodology of the Study...................................................................................................3
3 Telecommunications Sector Review...................................................................................5
3.1 Ethiopia – Key Statistics.............................................................................................5
3.2 Market Overview.........................................................................................................6
3.3 Regulatory Environment.............................................................................................8
3.4 Telecommunication Infrastructures and Capacity.....................................................10
3.5 Services and Customer Bases....................................................................................16
3.6 International Benchmark...........................................................................................24
4 The Business Sector and Telecommunications in Ethiopia..............................................33
4.1 Summary of the Ethiopian Business Sector...............................................................33
4.2 Telecom Equipment, Opinions and Needs of the Business Sector.............................36
5 Conclusions: Telecommunications Services and Business Activity in Ethiopia...............45
6 Opportunity Costs of Telecommunications Service Weaknesses......................................47
6.1 Identifying the Direct and Indirect Benefits of ICT..................................................48
6.2 Evaluating the Direct and Indirect Benefits..............................................................50
7 Proposed Short- and Medium-term Targets for Telecommunications Services................55
7.1 Bringing Ethiopia to the African Median..................................................................55
7.2 Responding to the Needs Expressed by the Business Sector....................................57
7.3 Summarized Target for the Telecommunications Sector...........................................59
8 Required Investment.........................................................................................................61
9 Business and Social Benefits from Improvement of Telecommunications Services........63
10Main Constraints to the Improvement of Telecommunications Services.........................65
10.1 Internal Constraints of the Sector/Operator.............................................................65
10.2 Market Constraints...................................................................................................66
11 Conclusions and Recommendations.................................................................................69
11.1 Conclusions.............................................................................................................69
11.2 Recommendations...................................................................................................71
12Glossary of Terms.............................................................................................................77
13References.........................................................................................................................81
Appendix. Company Survey Results.....................................................................................83
I
List of Tables
Table 1. Country Statistics.......................................................................................................5
Table 2. Telecommunications Statistics...................................................................................5
Table 3. Fixed regional capacities.......................................................................................... 11
Table 4. Fixed line evolution.................................................................................................16
Table 5. ETC fixed to fixed/fixed to CDMA WLL and vice versa calling charges................17
Table 6. Mobile subscriber evolution.....................................................................................17
Table 7. Mobile GSM tariffs – post-paid access charge........................................................18
Table 8. Mobile GSM tariffs – pre-paid access charge..........................................................18
Table 9. Mobile GSM tariffs – mobile to mobile normal call rate (ETB/min)......................19
Table 10. Mobile to fixed/fixed to mobile normal call rate (ETB/min).................................19
Table 11. Development of Internet users and subscribers......................................................19
Table 12. Estimated Internet subscriber distribution per access technology.........................20
Table 13. Internet data – summarized tariffs. Dial-up Internet..............................................21
Table 14. Internet data – summarized tariffs. Fixed broadband Internet service...................21
Table 15. Subscription and usage charge for EVDO with full mobility................................22
Table 16. Digital Data Network (DDN).................................................................................22
Table 17. International benchmark. Geographic & economic data.......................................25
Table 18. International benchmark. Telecommunications data: fixed and mobile.................26
Table 19. International benchmark. Telecommunications data: Internet data and tariffs......27
Table 20. Urban employment.................................................................................................34
Table 21. Summary of number of companies and employees 2010 in urban areas...............35
Table 22. Size distribution of companies...............................................................................35
Table 23. Distribution of employment by size of company...................................................35
Table 24. Distribution of businesses by region......................................................................36
Table 25. Estimated impact of “additional GDP” linked to the mobile penetration rate.......52
Table 26. Estimated impact of the mobile penetration rate on tax revenue...........................52
Table 27. Expected mobile market evolution........................................................................56
Table 28. Ethiopian Internet penetration vs. average African Internet penetration...............56
Table 29. Sectoral distribution of companies in Addis Ababa...............................................83
Table 30. Sectoral distribution of companies in regions........................................................83
Table 31. Company activity, status, structure and size – Addis Ababa..................................84
II
Table 32. Company activity, status, structure and size – regions...........................................84
Table 33. Regional distribution of company sample.............................................................85
Table 34. Organization and commercial relationships – Addis Ababa..................................85
Table 35. Organization and commercial relationships – regions...........................................85
Table 36. Telecommunications equipment.............................................................................86
Table 37. Personal access to IT and telecommunications facilities.......................................87
Table 38. Preferred means of communication – Addis Ababa...............................................87
Table 39. Preferred means of communication – regions........................................................87
Table 40. Internet use – Addis Ababa....................................................................................88
Table 41. Internet use – regions.............................................................................................88
Table 42. Focus on e-mailing – Addis Ababa........................................................................89
Table 43. Focus on e-mailing – regions.................................................................................89
Table 44. Web site – Addis Ababa.........................................................................................89
Table 45. Web site – regions..................................................................................................89
Table 46. Availability of the services – Addis Ababa............................................................90
Table 47. Availability of the services – regions.....................................................................90
Table 48. Quality of service...................................................................................................91
Table 49. Tariffs.....................................................................................................................91
Table 50. Global opinion about the telecommunications services – Addis Ababa................92
Table 51. Global opinion about the telecommunications services – regions.........................92
Table 52. Impact on doing business.......................................................................................93
Table 53. Frequency of key words in comments on expected developments........................93
List of Figures
Figure 1. Planned GSM coverage..........................................................................................13
Figure 2. Existing transmission network...............................................................................14
Figure 3. International connectivity schematic......................................................................16
Figure 4. Ethiopian mobile penetration rate vs. African mobile penetration rate..................51
Figure 5. Mobile telephony penetration before and after the introduction of competition....74
III
Abbreviations and Acronyms
ADSL:
Asymmetric Digital Subscriber Line
ARPU:
Average Revenue Per User
BSC:
Base Station Controller
BSS:
Base Station Subsystem
BTS:
Base Transceiver Station
CDMA:
Code Division Multiple Access
CPE:
Customer Premise Equipment
CSA:
Central Statistical Agency (of Ethiopia)
DSLAM: Digital Subscriber Line Access Multiplexer
IV
ETB:
Ethiopian Birr
EVDO:
Evolution Data Optimized
FDM:
Frequency Division Multiplex
FTTx:
Fibre To The… (e.g. FTTH: Fibre To The Home, FTTO: Fibre To The Office)
FO:
Fibre Optic
Gbps:
Gigabit per second
GDP:
Gross Domestic Product
GNI:
Gross National Income
GPON:
Gigabit Passive Optical Network
GSM:
Global System for Mobiles
HF:
High Frequency
HSPA:
High Speed Packet Access
ICT:
Information and Communication Technology
ISDN:
Integrated Services Digital Network
ITU:
International Telecommunications Union
kbps:
Kilobit per second
Mbps:
Megabit per second
MGW:
Media Gateway
MSAG:
Multi Services Access Gateway
Modem:
Modulator Demodulator
MSC:
Mobile Switching Centre
ISP:
Internet Service Provider
IT:
Information Technology
OECD:
Organization for Economic Co-operation and Development
OPGW:
Optical Ground Wire
PABX:
Private Automatic Branch Exchange
PPP:
Purchasing Power Parity
PSTN:
Public Switched Telephone Network
RFID
Radio Frequency identification
RNC:
Radio Network Controller
SCADA:
Supervisory Control and Data Acquisition
SIM (card):Subscriber Identity Module
SLA:
Service Level Agreement
TNMS:
Telecommunications Network Management System
TV:
Television
UHF:
Ultra High Frequency
UMTS:
Universal Mobile Telephone Service
USB:
Universal Serial Bus
USD:
US Dollar
VAS:
Value Added Services
VAT:
Value-Added Tax
VHF:
Very High Frequency
VSAT:
Very Small Aperture Terminal
WCDMA: Wideband Code Division Multiple Access
WLL:
Wireless Local Loop
V
1 Introduction
In recent years, there has been a growing body of evidence that the spread of ICT (information and communications technologies) can have substantial benefits for economic development. The growing use of the Internet and email has, for many people
and organisations, revolutionised the speed and ease of communications, both within
their own countries and, especially, across international borders. It is not surprising,
therefore, that studies have shown that growth in telecommunications generates a
dividend in terms of additional overall GDP growth and that this is becoming especially significant in developing countries.
Conversely, in countries where the telecommunications infrastructure is weak, this
can act as a significant brake on development and imposes economic costs on all
groups in society: these include increased transaction costs for business, reduced efficiency of markets; and lower productivity, amongst others. Government is not immune from the effects either: improved communications technologies can increase
the effectiveness of public service delivery and reduce its cost; poor infrastructure
prevents the realisation of such benefits.
Regardless of the indicator used, Ethiopia’s telecommunications infrastructure is
lagging behind. The existing weak telecommunications infrastructure in Ethiopia
acts as a severe constraint on the development of the Ethiopian business community
and imposes additional costs on business activities. This both reduces the private
sector’s competitiveness and impedes access to foreign markets (and even its own
domestic market).
Whilst these shortcomings of the Ethiopian telecommunications infrastructure are
well known, no attempt has previously been made to quantify the costs to the economy, particularly the costs to business and to government. The Private Sector Development Hub therefore commissioned this study on the impact of the telecommunications systems on business in Ethiopia.
The objective of the study is to provide the PSD Hub with an initial assessment of the
weaknesses of the Ethiopian telecommunications infrastructure and services and to
assess the direct, indirect and opportunity costs incurred by business and government
as a result. More specifically, the study:
• Compares the Ethiopian telecommunications environment with that of other
selected African countries;
• Identifies constraints limiting the improvement of Ethiopian telecommunication services and propose ways to reduce these constraints;
• Attempts to quantify the economic benefits of improved telecommunications infra-structure and the concomitant increase in access to telecommunication services for all parts of the Ethiopian society.
The scope of the work includes (i) reviewing the current status of the telecommunications sector in Ethiopia, both in absolute terms and in comparison with the situa1
tion in other sub-Saharan African countries; (ii) identifying the economic impacts,
direct and indirect, on both government and business; (iii) estimating the nature and
size of the benefits arising from improvements to the telecommunications infrastructure; and (iv) identifying potential mechanisms for accelerating such improvements.
The report is structured as follows:
• Chapter 2 presents the methodology of the study;
• Chapter 3 is a telecommunication market review including the market overview, the review of current infrastructures and services and the international
benchmark;
• Chapter 4 presents the analysis of the Ethiopian business sector and the results of a survey carried out among 97 companies;
• Chapter 5 presents the first conclusions regarding the state of the telecommunication sector and its impact on business activity in Ethiopia;
• Chapter 6 analyzes the cost of telecommunication weaknesses in the business sector;
• Chapter 7 proposes short- and medium-term targets for the development of
telecommunications services;
• Chapter 8 presents an estimate of the required investment;
• Chapter 9 analyses the expected benefits for Ethiopia after improvements in
the telecommunication sector;
• Chapter 10 identifies the main constraints of the development in telecommunication services;
• Chapter 11 presents the conclusions of the study and the consultant’s recommendations.
2
2 Methodology of the Study
The methodology of the survey comprised three main steps:
• A review of the state of the telecommunication sector through:
o The collation of detailed technical and commercial documentation;
o Meetings with senior executives of the sector.
This review has made possible an exhaustive analysis of the existing telecommunication infrastructure, ongoing projects and the current range of services, tariffs and customer bases.
• An international benchmark comparing the Ethiopian telecommunication
sector to those observed in seven other countries including:
o Four East and Central African countries: Kenya, Tanzania, Uganda, Nigeria;
o Two West and North African countries: Ivory Coast and Egypt;
o One South East Asian country: Vietnam.
These countries were selected according to their location, size, income level
(GDP per capita) and level of development of their telecommunications.
• A survey carried out among 97 medium and large Ethiopian companies organized according to sector of activity includes:
o 38 companies, mainly large sized (more than 100 employees) in Addis
Ababa;
o 59 companies, mainly medium sized (less than 100 employees) in 11
other cities of Ethiopia.
The survey was carried out in July and August 2010 by a team from the Private Sector Development Hub holding face to face interviews with executives (mainly the
CEOs) of each company.
Prior to the survey, an analysis of the structure of the Ethiopian business sector had
been carried out based on the statistics published by the Central Statistical Agency
of Ethiopia.
In addition to these three main steps, a review of a number of international studies
has enabled an identification of some international ratios in order to estimate the
impact of ICTs on the economic growth of developing countries.
3
3 Telecommunications Sector Review
3.1 Ethiopia – Key Statistics
Basic statistics on Ethiopia and on the telecommunications situation in the country
are shown in Tables 1 and 2 below.
Table 1. Country Statistics
1. General
Surface area
1,104,300 km2
Population
80,713,434
Density
73 inh/km2
Rate of urbanization
17%
Population annual growth rate (2003-2008)
2.6%
2.Economy GDP (nominal)
USD 33,920 million
GDP real growth rate 2009
9%
GDP (nominal) per capita
USD 420
GDP (PPP)
USD 75,910 million
GDP per capita (PPP)
USD 940
GDP – composition by sector
Agriculture
44%
Industry
13%
Services
42%
3. Socio economy Household size
4.2
Literacy rate (adult > 15 y.o.)
36%
Electrification rate
15%
Electric power consumption per capita
40 kWh
Sources: ETC, World Bank, IMF, CSA
Table 2. Telecommunications Statistics
Telecommunications revenue (% GDP)
1.7%
Fixed telephone
Number of fixed-line operators
1
Fixed telephone lines in service
Total number of fixed subscribers
Fixed teledensity
960,700
1.2%
5
Table 2. Telecommunications Statistics (continued)
Mobile telephone
Number of mobile operators
1
Number of GSM SIM cards
6,677,903
SIM card penetration
8%
Estimated number of SIMs/subscriber
Number of GSM subscribers
Estimated number of Mobile CDMA subscribers
Total estimated number of mobile subscribers
Mobile teledensity
1
6,870,000
70,000
6,940,000
8.6%
Public fixed telephones
5,241
Rural Com (Wireless)
15,359
Gota
341
Data and Internet
Internet users (estimated)
Internet penetration
Data & Internet subscribers
550,000
0.7%
Narrow Band (dial-up, 1X, GPRS)
Broadband (ADSL, WCDMA, EVDO)
110,000
11,600
Data & Internet teledensity
0.151%
Broadband teledensity
0.014%
Universal Access
School Net, Woreda Net, Agri Net
1,364
International Links
Roaming Partners
International Links capacity
Total revenue 2009
326
5,995
USD 594 million
Sources: ETC, World Bank, IMF and CSA
3.2 Market Overview
• Ethiopia recently overtook Egypt to become the second most populous nation in Africa after Nigeria. However, as one of the poorest countries in the
world (approximately 80% of the population rely on subsistence agriculture, which accounts for nearly half of the country’s GDP), Ethiopia has the
second lowest telephone penetration rate on the continent (only Eritrea is
lower).
• The government tries to encourage foreign investment over a broad range
of industries. Foreigners are allowed to hold up to 100% equity ownership.
To permit private participation in telecom services the government amended the Investment Proclamation in 1998, providing for private companies,
national or foreign, to invest in the telecom sector in partnership with the
government.
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• However, the government-owned service provider, Ethiopian Telecommunications Corporation (ETC), has not been privatized and Ethiopia remains the
last country in Africa to allow a national monopoly on all telecom services
including fixed, mobile, Internet and data communications. The lack of liberalization of Ethiopia’s tele-communications markets is an obstacle to the
country’s entry into the World Trade Organization (WTO).
The Ethiopian Telecommunications Authority (ETA) has been developing plans for
partial privatization of ETC, but no time schedule has been set.
• Despite the monopoly situation, subscriber growth in the mobile sector has
been excellent, with a compound annual growth rate (CAGR) of almost 90%
since its inception in 1999 and more than 100% in the past six years. However, demand continues to be strong, and ETC has been unable to satisfy it.
• Ethiopia’s mobile market penetration remains one of the lowest in the world
at around 8.5%.
• Fixed-line penetration is even lower, and this has also impacted on the development of the Internet sector. Broadband connection prices are excessive.
• Improvements are picking up following massive investments in fixed wireless and mobile network infrastructure, including 3G mobile technology, as
well as a national fibre optic backbone.
Ethiopia is investing an unusually large amount, around 10% of its GDP, into information and communication technology (ICT). The government has invested around
USD 15 billion over the past ten years. However, telecommunications revenue has
grown only moderately in comparison, at around 16% per annum over ten years,
reaching an estimated USD 590 million in 2009. It remains below 2% of GDP, a low
figure when compared to neighbouring countries and the African average of over
3%.
• The recently announced management contract with France Telecom is expected to lead to improved performance by ETC in all market sectors and is
seen as a first step towards liberalization.
• ETC provides all telecom services including local, long-distance and international networks, mobile, Internet and public data services, Integrated
Services Digital Network (ISDN), analogue and digital leased lines, telex
services, repairs, assembly and manufacture of telecom equipment, as well
as training services.
• With around 8,000 employees, the corporation made a net profit of ETB 379.5
million in the first nine months of the 2005/06 financial year. Revenues were
ETB 1.53 billion, of which ETB 622.7 million were from fixed-line services
(41%), ETB 603.8 million from mobile services (39%), ETB 243.9 million
from international services (16%) and ETB 61.7 million from Internet services (4%).
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• ETC reduced its termination rate for incoming international calls to USD 0.23
per minute in early 2005. International traffic (particularly incoming traffic)
used to account for up to 70% of ETC’s total revenues. However, following
the reduction of international settlement rates and the spread of VoIP, the
international portion of revenues now makes up less than 20% of the total,
while a growing position is being taken by mobile and Internet services.
• In 2009, with around 12,000 employees, the revenues reached ETB7,050
million, divided as follows (ETC):
o Fixed PSTN:
o International Revenue:
o Mobile (including roaming):
o Internet and Data:
ETB 1,067 million
(15%)
ETB 1,270 million
(18%)
ETB 4,482 million
(64%)
ETB 139 million
(2%)
ETB 92 million
(1%)
o VAS and other:
• Thanks to the rapid growth of the mobile market, ETC’s revenues have multiplied by 3.5 in ETB and 2.6 in current US Dollars (+27% per year), while
the Internet and data revenues have shown growth of only 14% per year.
Total revenues represent only 1.7% of GDP.
3.3 Regulatory Environment
3.3.1 Regulatory Authority
The Ethiopian Telecommunications Agency (ETA) was established as an independent regulatory authority in 1996 and is responsible for licensing and monitoring
service quality. It operates under the Ministry of Communications and Information
Technology and is responsible for the definition of national telecom policy, excluding radio and television broadcasting.
ETA’s responsibilities include:
• Specifying technical standards and procedures;
• Licensing and supervising telecom operators;
• Authorizing and supervising allotted frequency use;
• Ensuring service quality;
• Regulating tariffs;
• Regulating types of equipment;
• Ensuring the implementation of treaties.
The provision of terminal equipment is fully liberalized, subject to ETA type approval.
8
3.3.2 Telecom Service Licences
Telecom service licences did not exist in Ethiopia prior to the reform of the telecom
sector in 1996. The service was controlled by the government, which acted as operator, regulator and policy-maker. Since then, some moves have been made towards a
structured licensing system to establish conditions and requirements for the provision of telecom services, with a view eventually to opening up the market to outside
investors.
Licensing procedures and guidelines were established under Regulation 47/1999,
and a licence for each of the services provided by ETC was drafted by the ETA. The
licensee is obliged to comply with the conditions established in the licence regarding
the quality of service, tariffs, etc. and has to fulfil rollout and service targets in line
with the national telecom policy as set out by the government. However, the licences
are still being discussed and ETC has delayed signing them.
3.3.3 Liberalization of the Telecom Sector
ETC has practically total control over telecommunications services in Ethiopia, except for the sale of customer premises equipment (CPE), which even for private
use is still subject to ETA authorization. The use of any telecom technology that
could bypass the local network is strictly prohibited. Currently no licences have
been granted to private operators to sell or resell telecom services, either basic or
enhanced. This also means that Voice over Internet Protocol (VoIP) and call back
are illegal.
In terms of reselling services, the numerous street phone shops and the visible Internet cafes are tolerated by the authorities, although ETC is concerned about the
possible use of VoIP and the consequent decrease of international traffic revenues. In
2006 ETC created a new organization, the Network Operation Centre, to fight illegal
Internet telephony. In the last few years, around 20 entities have obtained special authorizations to have independent VSAT links supplied by ETC, including Ethiopian
Airlines, the Civil Service College, which is running remote learning courses, the
UN Economic Commission for Africa (UNECA) for its Internet connection, and the
World Bank within the framework of development activities in Ethiopia.
3.3.4 Privatization of ETC
The government has been planning the partial privatization of ETC, aiming to allow the participation of a strategic investor, which should bring in new funding and
new management techniques and skills. To permit private participation in telecom
services, the Investment Proclamation was amended in 1998, providing for private
companies, national or foreign, to invest in the telecom sector in partnership with the
government.
In August 2002, the Ethiopian Privatization Agency (EPA) invited international investors to acquire a 30% stake plus management control in ETC. Although a number
of companies expressed an interest in acquiring the stake, no further progress was
9
made until the government announced a new plan to sell off 49% of ETC in mid2005. Under a new CEO, however, this plan was once more taken off the agenda.
As a first step towards privatization, ETC awarded a two-year management contract
to France Telecom (FT) in February 2010 after it won a tender against South Africa’s
MTN and BSNL from India. FT will be paid an annual management fee.
3.4 Telecommunication Infrastructures and Capacity
3.4.1 Fixed-line infrastructure
Although it has been continuously expanding since the 1970s, ETC’s fixed-line network is still among the least developed in the world with a teledensity of little more
than 1% and a marked disparity between urban and rural areas. However, such a
situation can be observed in most Sub-Saharan African countries, and growth has
been accelerated by the large scale introduction of fixed-wireless access since 2005.
ETC started an investment program in 2001 to expand its fixed-line capacity to
800,000 (1% penetration) by 2005, and the target was overachieved with an installed
capacity of 872,000. The programme was designed to meet all pending demands
from both urban and rural populations. With little more than 600,000 lines in service,
the official waiting list for fixed lines was still 59,000 in 2005, although that was a
significant reduction from 157,000 the previous year.
For the 2005/06 financial year, ETC had an investment budget of ETB 5.4 billion
(US 644 million) for the expansion of its infrastructure, including the rollout of
250,000 new fixed lines. The switching network has been 98% digital since 2004. In
August 2006, ETC signed a USD 4.9 million contract with Huawei Technologies for
the upgrade of 260 switches, to be completed by October 2006. At the end of 2009,
the waiting list was less than 20,000.
The current fixed coverage is based on two different standards and consists of the
PSTN network and a CDMA F-WLL network.
The PSTN Network
Around 600 cities benefit from fixed PSTN distribution. The current 920,000 customers are connected either through Cross Connection Cabinets (CCC) or through
Optical Network Units (ONU and MSAG) or direct zones.
The current architecture includes:
• 1,062 CCC, 295 ONU and 605 Direct Zones with an average capacity of 520
customers per zone
• Around 2,000 MSAGs (Multi Services Access Gateways) with POTS capability deployed by ZTE in Addis Ababa and 13 + 36 cities, but 850 have no
distribution network.
10
• 19 GPON equipments (Addis Ababa plus 13 cities) to provide services to
high usage customers
• 570 DSLAMs deployed or in the deployment process: 9 in Addis Ababa, 75
in medium and large cities (1 per city) and 486 in small cities.
The current capacity of the PSTN is around 1.1 million lines, with an occupation rate
of nearly 85%.
The Fixed CDMA Network
The F-WLL CDMA network consists of 12 BSC directly connected to the Fixed
Switch (no MSC) and 93 sites in 450 MHz offering voice and dial-up services in the
regions and 1 BSC and 16 sites in 800 MHz in Addis Ababa offering voice and 1X
RTT services.
The capacity (soft switch) is around 70,000 subscribers, but the current number of
customers is around 19,000 in the regions and 22,000 in Addis Ababa (including
around 8,000 subscribers to the 1X RTT service).
Other Access Infrastructures
ETC has deployed a Digital Data Network to offer data services through leased lines.
It consists of six points of presence (POPs) in Addis Ababa and 9 in the outer regions.
The corporation has also installed a network control centre at the Sululta Earth Station to conduct the operation of a VSAT network spread throughout the country
and powered by one Intelsat Indian Ocean satellite. The VSAT network is used to
provide connectivity to thousands of remote rural communities and provide Internet
and digital TV services, telemedicine as well as interactive distance learning access.
The distribution of fixed capacities per area is presented in the table below.
Table 3. Fixed regional capacities
Region
Addis Ababa
Tigray
Afar
PSTN
Capacities
F - WLL CDMA
%
Capacities
%
PSTN+CDMA
Capacities
%
460,577
39%
460,577
37%
65,525
6%
65,525
3%
16,052
1%
16,052
1%
Amhara
167,950
14%
167,950
7%
Oromia
268,341
23%
268,341
11%
Gambella
9,552
1%
9,552
0%
Benishangul Gumes
9,140
1%
9,140
0%
SNNP
105,161
9%
105,161
4%
Somali
24,254
2%
24,254
1%
Harari
18,020
2%
18,020
1%
Dire Dawa
26,117
2%
26,117
1%
1,170,689
100%
1,240,689
52%
Total
Source: ETC
70,000
6%
11
3.4.2 Mobile Infrastructure
Ethiopia was one of only six countries in the world with a mobile penetration of less
than 1% until 2006, when it finally broke this barrier. As the sole provider of mobile
telephony services in the country, ETC operates a GSM network under the brand
name Ethio-Mobile.
The mobile customer base has shown an increase of more than 75% per year since
2000 but the penetration rate remains low at around 8%. This rapid growth should
continue in spite of the poor quality of service.
In addition to the GSM service, ETC installed a Wideband CDMA (WCDMA) 3G
pilot project in 2007. Prepaid services were launched in Addis Ababa in January
2009 at 49 upgraded base station sites, offering data transmission speeds of up to
384kbps. It should be upgraded to offer HSPA services.
The mobile infrastructure includes a mobile CDMA network that has been upgraded
to offer EVDO services. The current mobile coverage is based on two different standards and consists of the GSM/UMTS network and a CDMA mobile network.
The GSM/UMTS Network
The GSM network architecture includes:
• 12 GSM MSC (Mobile service Switching Centres – 5 in Addis Ababa and 7
in the regions) and 2 Transit MSC (both in Addis Ababa)
• 16 MGW (Media Gateways) – 7 in Addis Ababa and 9 in the regions
• 45 BSC (Base Station Controllers) – 18 in Addis Ababa and the others in
the regions
• 1 RNC (Radio Network Controller) in Addis Ababa for the UMTS coverage
• Around 2,200 BTS (Base Transceiver Stations) plus 700 in the process of being deployed. This includes 400 BTS in Addis Ababa (including 50 UMTS/
WCDMA sites) and 2,500 in the regions.
After the completion of phase 3 of the network, the total number of BTS should
reach 3,500 and the capacity deployed will be 14 million subscribers. Phase 3 should
increase the capacity to 20 million subscribers. According to the technical assumptions of ETC, the network should cover 60% of the territory. The planned GSM
coverage is presented in the map below.
12
Figure 1. Planned GSM coverage
The CDMA Network
The mobile CDMA architecture includes:
• 2 MSC in Addis Ababa
• 7 MGW co-located with 7 BSC, 1 in Addis Ababa and 6 in the regions
• 161 Mobile 800MHz BTS (61 in Addis Ababa) and 600 Mobile 450-800
BTS in the regions
The total capacity of the CDMA network is 2.4 million subscribers and the network
should cover 90% of the territory. However, the current number of subscribers is
around 70,000, with 50,000 in Addis Ababa.
13
3.4.3
Transmission
The current transmission network is shown in the map below.
Figure 2. Existing transmission network
The domestic backbone network connects almost all regions of the country. It comprises one national centre and six district centres selected according to traffic density.
The district centres are interconnected by high-capacity FDM microwave links that
also carry a one colour TV broadcast channel. Some rural centres are served by open
wire carrier systems, HF or VHF/UHF radio.
By early 2004, the national transmission network consisted of 127 microwave links,
40 UHF links, 244 point-to-multipoint terminals, over 325 VSAT terminals (including five DOMSAT ground stations, the first of which had been installed in 1994), 152
point-to-point VHF links and 28 HF radio stations.
In 2004/05, ETC budgeted a record ETB 4.2 billion to be spent on developing its
backbone infrastructure, including 3,200km of optical fibres. In early 2005, Siemens was commissioned to supply fibre optic backbone technology worth around
USD 15.4 million by the middle of the year for ETC’s fixed and mobile network in
the north and centre of the country. The contract included approximately 1,700km
of fibre and Siemens’ transport network management system TNMS. The system
supports a transmission rate of 2.5GB/s. A similar contract, worth € 14 million, was
14
awarded to Alcatel in early 2005 for the eastern and southern parts of the country.
By mid-2007, around 4,500km of fibre had been deployed, including links to international fibre optic submarine cables via Sudan and Djibouti.
By the end of 2010, the national backbone will include:
• A legacy of 4,300km fibre optic network
• 2,700km fibre optic deployed in phase 1
• 3,700km fibre optic deployed in phase 2
Additionally, OPGW cables that can be installed on the aerial electricity network
will provide redundancy for international connections in particular.
3.4.4 International Connectivity
The Ethiopian network is linked to the rest of the world via more than 4,000 circuits,
including 2,100 satellite circuits, 1,800 submarine cables circuits and 177 microwave radio circuits.
Optical links to Sudan, Kenya and Djibouti with connections to SMW3 submarine
cable and soon EASSy cable provide a total international bandwidth capacity of
more than 2.4 Gbps.
Satellite circuits to Belgium, Canada, Italy, Japan, South Africa, Sweden, Tanzania,
the UK and the USA provide a total capacity of 26 Mbps.
Microwave links to Djibouti, Somalia and Soudan provide an additional capacity of
930 Mbps.
ETC has signed roaming agreements with 251 foreign telecom operators.
The international traffic from and to the various networks is handled through three
international transit switches as shown in the following diagram.
15
Figure 3. International connectivity schematic
The AXE 10 switch in Addis Ababa has an international capacity of 111 E1 (222 Mbps)
and the Bole Transit switch has an international capacity of 59 E1 (118 Mbps). The
architecture of the international gateway switching causes a bottleneck for international traffic.
3.5 Services and Customer Bases
3.5.1
Fixed voice services
Table 4. Fixed line evolution
Year
16
Number of subscribers
PSTN
F-WLL CDMA
Total
AAGR
Teledensity
Waiting List
2000
232,000
232,000
0.4%
155,000
2005
610,000
610,000
21%
0.8%
57,000
2006
725,000
725,000
19%
1.0%
35,000
2007
880,000
880,000
21%
1.1%
16,500
2008
897,000
897,000
2%
1.1%
19,000
2009
900,000
15,000
915,000
2%
1.1%
18,500
2010
919,700
41,000
960,700
5%
1.2%
Source: ETC
The number of subscribers is about 360,000 in Addis Ababa City, shared among
52,000 business subscribers, 22,000 government lines and 286,000 residential subscribers. The overall penetration rate is 12% of the population and the residential
penetration about 40% of all households.
In the regions there are 90,000 business lines, 50,000 government lines and around
460,000 residential lines. The overall penetration is less than 0.8% and the residential penetration around 2.5% of all households.
The fixed services include:
• Basic telecom facilities (voice and data connectivity) through VSAT and
Digital Radio Services to 15,000 - 18,000 rural communities that bring together nearly 80% of the population.
• Nearly 5,000 public phones.
The tariffs for fixed voice services are summarized in the table below.
Table 5. ETC fixed to fixed/fixed to CDMA WLL and vice versa calling charges
Service Type
Subscription fee (ETB)
Monthly Rent
(in ETB)
Usage Charge
(in ETB per
minute)
CDMA WLL
(Rutel)*
Wireline”
242.00
Residential
Free
8.00
Business
Free
17.00
With in a town
0.20
Between different towns of the same tariff zone
0.40
Between different tariff zones
1.20
Within a town
0.20
Between different towns of the same tariff zone
0.25
Between different tariff zones
1.00
7 to Djibouti & 10 for
the rest of the world
International Destinations
Source: ETC
3.5.2 Mobile voice services
Table 6. Mobile subscriber evolution
Year
GSM
CDMA
Total
AAGR
Teledensity
2000
22,000
22,000
0.01%
2005
411,000
411,000
79%
0.5%
2006
950,000
950,000
131%
1.3%
2007
1,850,000
1,850,000
95%
2.4%
2008
2,730,000
2,730,000
48%
3.2%
2009
3,390,000
3,390,000
24%
4.2%
2010
6,870,000
6,940,000
105%
8.7%
Source: ETC
70,000
17
Service offerings are very basic, including prepaid and post paid voice services,
SMS, voice mail and some basic value-added services such as call waiting, barring
and diversion. However, mobile data services were launched in mid-2009 and the
GSM customer base has about 6,000 3G subscribers while the mobile CDMA customer base has 8,000 EVDO subscribers (90% in Addis Ababa).
A number of services exist in theory but have not been launched commercially:
• WAP (Wireless Application Protocol)
• MMS (Multimedia Message Service)
• CRBT (Colour Ring Back Tone)
• FPH service (Free Number)
• VPMN (Virtual Private Mobile Network)
• Friendly Number service (Friends & Family groups)
Other services such as MCN (missed called notification), CTD (call time discount),
Tele voting and Credit Transfer are planned to be launched in the next few months.
Despite the huge increase in the mobile customer base during the last three years, in
sharp contrast to most other developing countries, the use of mobile phones has not
yet become widespread in Ethiopia.
The tariff plan per zone is quite complicated but overall, the cost of the mobile service is relatively affordable compared to other countries (calls within the same tariff
zone are charged at ETB 0.72 (around USD 0.05) per minute, while calls between
different tariff zones are charged at ETB 1.50 per minute). Tariffs for mobile voice
services are summarized in the tables below.
Table 7. Mobile GSM tariffs – post-paid access charge
Access Fee (ETB)
Customer Category
All type
Fee
VAT (15%)
356
53.4
Monthly Rent
25
Sub-Total
409.4
3.75
Stamp
Duty
Total Including
VAT
5
28.75
414.4
-
28.75
Source: ETC
Table 8. Mobile GSM tariffs – pre-paid access charge
Access Fee (ETB)
Fee
VAT (15%)
Sub-Total
120.95
18.15
139.1
Source: ETC
18
Stamp Duty
5
Default Airtime Fee (ETB)
Fee
VAT (15%)
Sub-Total
21.74
3.26
25
Table 9. Mobile GSM tariffs – mobile to mobile normal call rate (ETB/min)
Calling / Called Number Segments
0911,0912,0913, 0916,0917
0911, 0912, 0913, 0916, 0917
0.72
0914
0915
0918
1.50
1.50
1.50
0914
1.50
0.72
1.50
1.50
0915
1.50
1.50
0.72
1.50
0918
1.50
1.50
1.50
0.72
Source: ETC
Table 10. Mobile to fixed/fixed to mobile normal call rate (ETB/min)
Fixed Tel. Tariff
Zone/Mobile Number Segment
T4-T7,
T10, T11
T1, T3
T8, T9
International
call
T2
0911, 0912, 0913,
0916, 0917
0.72
1.50
1.50
1.50
0914
1.50
0.72
1.50
1.50
0915
1.50
1.50
0.72
1.50
0918
1.50
1.50
1.50
0.72
7.72 to Djibouti and 10.72
to the rest of the world
Source: ETC
Reduced Charges: For ETB 0.72 and ETB 1.50 normal charge calls, reduced charge will be ETB 0.30
and ETB 1.25 respectively for both Mobile-Mobile and Fixed-Mobile. 15 % VAT will be added to all
charges.
Peak Hour: 8am-8pm Mondays - Saturdays. Off Peak Hour: All other times & Public Holidays. Postpaid users are charged per 1-second base while prepaid customers are charged per 10-second base.
3.5.3 Internet/Data Services
The Ethiopian telecommunications network has made available a number of technical solutions and enough national and international capacities to provide Fixed and
Mobile Internet and Data services.
Despite a project relating to the issue of ISP licences to other companies, ETC’s
Ethionet has so far remained the only ISP in the country and the current market remains very limited.
Table 11. Development of Internet users and subscribers
Years
Number of
Internet Users
AAGR
Penetration
0.002%
Number of
Subscribers
AAGR
Teledensity
2000
10,000
2,500
0.001%
2005
164,000
75%
0.2%
17,600
48%
0.02%
2006
238,000
45%
0.3%
25,700
46%
0.03%
2007
291,000
22%
0.4%
31,400
22%
0.04%
2008
360,000
24%
0.5%
34,100
9%
0.04%
2009
450,000
25%
0.6%
50,000
47%
0.06%
2010
550,000
22%
0.7%
70,000
40%
0.09%
Source: ETC
19
Table 12. Estimated Internet subscriber distribution per access technology
Fixed subscribers
Region
Dial Up
Mobile subscribers
ADSL
CDMA 1X
WCDMA
CDMA EVDO
Addis Ababa
2,200
6,021
549
7,239
Tigray
158
354
36
21
8
3
Amhara
295
561
89
Oromia
337
707
Afar
122
Gambella
33
2
Benishangul Gumes
49
2
SNNP
126
117
17
Somali
76
126
92
Harari
42
Dire Dawa
Total
100,000
98
264
99
3,353
8,240
549
7,701
Source: ETC, Consultant estimates
Accurate figures for the number of subscribers are not easy to obtain. However, the
number of active subscribers should not exceed 70,000 of which:
• 70% have the benefit of only a dial-up connection through the PSTN and the
450 F-WLL networks with a speed lower than 56 kbit/sec
• Less than 15% (8,000 to 10,000) have the benefit a 1XCDMA Data access
with a speed lower than 70 kbit/sec.
• 5% (less than 3,500), mainly companies in Addis Ababa, have the benefit of
a broadband ADSL access with a speed ranging from 128 to 1024 kbit/sec
• 10%, mainly in Addis Ababa, have the benefit of a mobile EVDO access
with a speed of about 384 kbit/sec.
1,400 centres, including 684 high schools, 631 woredas (regional government bodies) and 49 agricultural institutions have universal access to broadband services
through VSAT.
The VSAT network is also used to provide a range of applications including videoconferencing, Internet/intranet access and VoIP solutions for a variety of government, banking and private enterprise customers.
An agreement to establish tele-medicine and tele-education centres was signed between the Ethiopian Information and Communication Technology Development
Agency (EICTDA) and Telecommunications Consultants India Limited (TCIL) in
early 2006. The Indian government has funded a project to link up African Union
(AU) countries with hospitals and universities in India via satellite. Following a successful pilot project in Ethiopia in 2007, the system was expanded to other countries
in East and West Africa.
20
ETC provide data services through leased lines (Digital Data Network) to address
the demand for Wide Area Networks from customers in the financial sector, government ministries and international organizations.
Several campuses at the Addis Ababa University are connected to a fibre optic network called AAUNet. Adama University operates a self-developed e-learning programme, the first of its kind in Ethiopia. Seven courses were offered at its launch
in October 2009, with plans to add more in the future. The platform is linked to the
e-Library system whereby students and lecturers can access journal databases from
the international scientific community as well as relevant eBooks. It is also planned
to export the programme to other universities in the country.
The tariffs of Internet and data services per type of access are summarized in the
following tables.
Table 13. Internet data – summarized tariffs. Dial-up Internet
Subscription
Fee (in ETB)
Monthly Fee
including rental
(in ETB)
101.74
Inclusive
Bundle
(Minute)
Above
Bundled
Rate
600 minutes
40.00
Charge/
minute
Application Time
Up to 1300
minutes
0.07
Off Peak Hours
0.10
Peak Hours
> 1300
minutes
0.07
Off Peak Hours
0.10
Peak Hours
Source: ETC
Peak Hours: 8am - 6pm from Mondays - Fridays; 15% VAT will be added on all charges
Table 14. Internet data – summarized tariffs. Fixed broadband Internet service
Charge (ETB)
Speed
Initial
payment
Monthly
payment
64 kbps
1,109
1,567
128 kbps
1,109
256 kbps
CPE ADSL
Subscription
1,042
Total
Monthly
payment
184
Subscription
Monthly
payment
2,151
1,751
2,350
2,151
2,534
1,109
3,521
2,151
3,705
384 kbps
1,109
4,402
2,151
4,586
512 kbps
1,109
5,282
2,151
5,466
768 kbps
1,109
6,603
2,151
6,787
1 Mbps
1,109
7,923
2,151
8,107
2 Mbps
1,109
10,563
2,151
10,747
Source: ETC
Note: 15% VAT will be added on all charges
21
Table 15. Subscription and usage charge for EVDO with full mobility
Subscription
Fee
Data Plan
Minimum Monthly
Usage charge (ETB)
Data plan 2 GB
Free
400
Data Plan unlimited
Free
3,521
Included
Bundle
Above bundle usage
charge (ETB/MB)
2 GB
0.4/MB
Unlimited
N/A
Source: ETC
Table 16. Digital Data Network (DDN)
For CPE type 27xxNTU
No.
Bandwidth
Subscription
(ETB)
Monthly Rental (ETB)
For CPE
Usage
Total
1
8kbps
6,923
110
126
236
2
16kbps
6,923
110
253
363
3
32kbps
6,923
110
506
616
4
64kbps
6,923
110
1,012
1,122
For CPE type 28xxNTU
Monthly Rental (ETB)
Bandwidth
Subscription
(ETB)
1
128kbps
9,385
141
2,024
2,165
2
256kbps
9,385
141
4,048
4,189
3
384kbps
9,385
141
6,072
6,213
4
512kbps
9,385
141
8,095
8,236
5
768kbps
9,385
141
12,143
12,284
6
1024kbps
9,385
141
16,191
16,332
No.
For CPE
Usage
Total
Source: ETC
3.5.4 Conclusion: strengths and weaknesses in Ethiopian
telecommunications
Strengths
Thanks to huge investments in telecommunications over the last ten years (around
USD 15 billion), the Ethiopian telecommunications sector has made available the
necessary technical resources to make up for lost time after years of under-investment.
• The National Operator benefits from a strong network infrastructure operating a number of up-to-date technologies having made available large switching capacities and a portfolio of potential services.
• Ethiopian fixed voice penetration (1.2%) is quite poor but in line with the
African average.
22
• The mobile penetration is still very low but has been growing rapidly since
2006.
• Ethiopian networks benefit from 10,000 km of national backbone (mainly
FO) and from a strong international connectivity (2.5 Gbps).
Weaknesses
Despite the available resources, a number of technical and organizational weaknesses can be identified in various areas.
1. Fixed voice services
• The legacy of PSTN secondary network is not suitable for international standards of Quality of Service;
• The Fixed network design (PSTN/CDMA) is not really optimized and suffers from overlapping;
• Due to a lack of demand forecasting at local levels in marketing, the access
capacities (last mile) and nearly half of the installed MSAG have no distribution networks.
2. Mobile services
• The mobile network design (GSM/CDMA) is complex and not optimized,
due notably to a lack of integration of the different roll-out projects;
• In order to respect the regulatory commitments in terms of coverage, the
roll-out is based on optimistic technical assumptions of radio propagation
(GSM BTS radius of 8 km and CDMA BTS radius of 20 km). Therefore the
coverage target of 60% of the territory results in a poor average quality of
service.
3. Internet services
• The broadband ADSL access capacity (and the dial-up QoS) is restricted by
the low quality of the secondary PSTN network;
• The CDMA 1X service is not suitable for professional use;
• Both EVDO and UMTS/HSPA capacities seem to be quite restricted;
• Despite a range of different technologies and commercial offers for Internet
and Data access, both the availability and quality of services are poor within
Ethiopia, in Addis Ababa and more so in the regions, and tariffs remain very
high.
4. National backbone and connectivity
• The 10,000 km of backbone provide good coverage of the territory but part
of the 4,300 km legacy backbone (about 500km) suffers from low quality (cable cuts) and insufficient redundancy (Eastern ring and International
links).
23
5. International connectivity
• Despite strong international capacities through FO cables, microwave and
satellite links, international traffic suffers from a serious bottleneck at the
two transit switches: both outgoing and incoming fixed and mobile voice international services are very poor (call efficiency and call drops). The broadband Internet speed is very low compared to the theoretical international
capacity.
3.6 International Benchmark
An international benchmark of Ethiopian telecommunications was carried out
against a sample of seven countries. The selected countries were:
• Four East and Central African countries with GDP per capita close to Ethiopia’s (except Nigeria):
o Kenya
o Tanzania
o Uganda
o Nigeria
• One West African country and one North African country:
o Ivory Coast
o Egypt
• One South-East Asian country:
o Vietnam.
The benchmark includes:
• Geographic and economic data;
• Detailed telecommunications data regarding:
o The usages and penetration rates per service
o The tariffs per service
o The prices of the services expressed in % of GNI per capita (basket
indicator from ITU)
• Various other indicators.
Key data are presented in Tables 17-19 below.
24
25
42%
Services (%)
Sources: World Bank; ITU; PNUD
Electric power consumption per capita (kWh)
40
4%
15%
Electrification rate (%)
33%
Gross enrolment ratio - Secondary 2008 (%)
Gross enrolment ratio - Tertiary 2008 (%)
36%
Literacy rate (adult > 15 y.o.) 2008 (%)
Average household size (#)
4.2
13%
Industry (%)
3. Socio-economy
44%
940
75,910
420
9.0%
33,920
3%
17%
Agriculture (%)
GDP - composition by sector
GDP per capita (PPP) (USD)
GDP (PPP) (USD million)
GDP (nominal) per capita (USD)
GDP real growth rate 2008 – 2009 (%)
GDP (nominal) (USD million)
2.Economy
Population annual growth rate (2003-2008) (%)
Rate of urbanization (%)
73
80.71
Population (million)
Population density (Inhbt/km²)
1,104
Surface area (1000 km²)
1. Geography & Demography
Ethiopia
151
14%
4%
58%
74%
4.0
54%
19%
27%
1,639
63,520
779
1.8%
30,210
3%
22%
67
38.77
580
Kenya
82
11%
2%
6%
72%
5.7
37%
17%
45%
1,353
57,500
522
4.5%
22,160
3%
26%
45
42.48
947
Tanzania
53
9%
6%
24%
74%
5.0
52%
26%
23%
1,332
42,180
495
4.0%
15,660
3%
13%
131
31.66
241
Uganda
178
73%
9%
36%
49%
5.8
49%
26%
25%
1,730
35,630
1,113
3.2%
22,910
2%
49%
64
20.59
322
Côte
d’Ivoire
Table 17. International benchmark. Geographic & economic data
137
46%
12%
31%
72%
5.5
27%
41%
33%
2,242
339,000
1,147
6.0%
173,400
2%
48%
164
151.21
924
Nigeria
1,465
98%
36%
81%
66%
5.8
49%
38%
13%
5,762
469,800
2,306
4.7%
188,000
2%
43%
81
81.53
1,001
Egypt
728
84%
12%
70%
94%
4.2
38%
40%
22%
2,787
240,292
1,072
6.2%
92,439
1%
28%
260
86.21
331
Viet
Nam
26
0.9
3.8%
6,870
9%
6,870
Fixed telephone sub-basket 2009 (USD)
Fixed Price basket 2009 (% GNI per cap)
Number of SIM cards (‘000s)
SIM cards penetration (%)
Multi SIM correction (%)
Estimated number of physical subscribers (‘000s)
1,637.7
2,644.7
New users at USD 15 for a handset (‘000s)
Sources: World Bank, ITU, Research ICT Africa, Consultant estimates
1,436.6
64.2
6.1
Average expected cost of a mobile handset (USD)
7%
Av. willingness & ability to pay for a mobile handset (USD)
9%
1
20%/60%
10%
6,940
Monthly expend. as share of individual income (%)
Estimated real penetration (%)
Number of mobile operators (#)
Population covered by cellular network (%)
Mobile Price basket 2009 (% GNI per cap)
Total estimated number of Mobile subscribers (‘000s)
70
69%
Urban share of residential fixed lines (%)
Estimated number of Mobile CDMA subscribers (‘000s)
6.3%
30%
1.69
664
1.7%
1.7%
38%
1.03
961
1.2%
5,663.5
4,165.5
2,862.5
26.7
17.1
17%
35%
4
83%
12%
10.1
16%
19,365
50%
-30%
13,555
54%
Kenya
Ethiopia
4. Telecommunications
Telecommunications revenue (% GDP)
ICT price basket value 2009 (% GNI per cap)
ICT Development Index (IDI) 2008
Fixed telephone lines in service (‘000s)
Fixed-line teledensity (%)
3,272.1
2,102.5
1,422.9
17.3
10.9
15%
27%
7
65%
28%
12.2
33%
17,470
41%
-35%
11,355
2.3%
54%
1.17
173
0.4%
Tanzania
1.5
1.5
15.0
5.7
11%
19%
6
100%
23%
9.9
28%
9,384
30%
-35%
6,099
100%
3.2%
50%
1.30
234
0.7%
Uganda
3,914.3
3,539.4
3,057.4
30.1
29.7
10%
42%
5
80%
14%
21.7
27%
13,346
65%
-35%
8,675
85%
Côte
d’Ivoire
5.5%
32%
1.45
282
1.4%
2,527.9
1,004.6
356.9
12.6
5.7
14%
31%
10
83%
11%
5.7
6%
73,099
48%
-35%
47,515
3.4%
39%
1.65
1,419
0.9%
Nigeria
Table 18. International benchmark. Telecommunications data: fixed and mobile
51%
3
95%
3%
3.0
2%
55,352
68%
-25%
41,514
3.7%
3%
2.70
10,313
12.6%
Egypt
67%
7
70%
4%
2.1
3%
88,566
103%
-35%
57,568
4.7%
9%
3.05
30,693
35.6%
Viet Nam
27
0.1
232
342
507
Broadband ADSL Monthly Fee – 256 kbps
Broadband ADSL Monthly Fee – 1,024 kbps
(Sources: World Bank, ITU; operators)
158
0,05/0,09
Mobile On Net Minute Peak Hour/min
0.63
Fixed Telephone International Call/min
134
0.08
Fixed Telephone National Call/min
Broadband ADSL Subscription
0.01
Fixed Telephone Local Call/min
15
0.50
Fixed Telephone Monthly Fee Residential
Fixed Telephone Subscription
6. Tariffs (excl. taxes, in USD)
107
0.2%
Proportion of households with computer (2008) (%)
Ranking on the ease of doing business (/183)
4,500
1%
Do you ever use the Internet? (%)
International Internet bandwidth/ user (2008) (bit/s)
9%
Do you know what the Internet is? (%)
Internet usage
2085%
54-120
30-84
18-60
36
0-36
0.06
-
0.17
0.01
23.98
-
95
6.3%
247
15%
32%
62%
0.02%
0.015%
Broadband (% penetration)
Broadband Price basket 2009 (% GNI per capita)
0.02%
0.00%
0.15%
8.3
0.14%
12
Internet subscribers (% penetration)
110
Narrowband (‘000s)
Broadband (‘000s)
8
10.3%
3,996
Kenya
Narrowband (% penetration)
122
0.7%
550
Ethiopia
Total Internet subscribers (‘000s)
Internet users (% penetration)
Internet users (‘000s))
5. Internet
58
37
24
-
0.03
0.29
0.12
0.06
2.64
11
131
2.5%
581
2%
9%
173%
1.6%
676
Tanzania
72
43
29
42
0.11
0.19
0.05
0.05
3.61
43
112
1.6%
148
2%
7%
555%
0.02%
0.08%
0.09%
6
24
30
10.1%
3,200
Uganda
144
71
34
32
25
0.14
0.25
0.10
0.09
11.96
17
168
1.4%
1,518
7%
17%
54%
0.05%
0.04%
0.09%
10
8
18
4.7%
968
Côte d’Ivoire
-
-
99
62
139
0.20
-
0.17
0.13
-
42
125
12.0%
65
13%
38%
109%
0.05%
0.54%
0.60%
82
823
905
29.1%
43,982
Nigeria
Table 19. International benchmark. Telecommunications data: Internet data and tariffs
35
22
15
-
0.03
0.63
0.03
0.01
97
106
13.1%
1,995
5%
1.32%
2.12%
3.45%
1,078
1,731
2,809
20.4%
16,636
Egypt
18
11
8
-
0.04
-
-
-
-
-
93
10.2%
2,403
21%
3.07%
3.01%
6.08%
2,649
2,592
5,241
27.8%
24,000
Viet Nam
3.6.1 Geographic and Economic Data
Compared to the selected sample, Ethiopia is characterized by:
• Its large surface area and population comparable to Egypt and Vietnam
(population);
• An average population density (but 3.5 times lower than Vietnam);
• A low rate of urbanization (but comparable to Kenya and Vietnam);
• The lowest GDP per capita among the sample (nominal & PPP), only comparable with Uganda and Tanzania but 2.5 times lower than in Vietnam and
5 times lower than in Egypt;
• The greater impact of agriculture and lower impact of industry in GDP;
• One of the lowest electrification rates among the sample (6 times lower than
in Egypt and Vietnam);
• The lowest rate of literacy (two to three times lower than most of the selected countries, especially Vietnam).
From an economic point of view (average income) and socio-economic point of
view (impact of the agricultural sector), Tanzania is the closest in comparison to
Ethiopia. However, Ethiopia’s economic growth rate since 2008 is comparable to
that of Vietnam.
In the future, in addition to the low income level, the main handicaps that the country
will be facing are likely to be:
• Its low urbanization rate and the importance of the agricultural sector,
• Its very low literacy rate and especially the low rate of school enrolment in
secondary and tertiary levels.
3.6.2 Telecommunications Data
The Ethiopian telecommunications sector today collects lower revenue compared to
GDP than in other countries. Due to the very low mobile penetration, this rate (1.7%)
is half that in Uganda, Nigeria and Egypt and three to four times lower than the rates
in Vietnam, Ivory Coast and Kenya.
All the indicators used by the ITU to measure telecommunications activity are far
lower in Ethiopia than in all the countries of the selected sample.
• The IDI development Index compares developments in information and
communication technologies (ICT) in 154 countries. This Index combines
11 indicators into a single measure, related to ICT access, use and skills,
such as households with a computer, the number of Internet users and literacy levels.
o It is only 1.03 in Ethiopia when the average is 1.61 among the sample
countries (2.5 in Egypt and 2.6 in Vietnam)
28
• IDI access sub-index. Five indicators are included: fixed line and mobile cellular penetration, Internet bandwidth per user and proportion of households
with computers and Internet access.
o This index is only 1.23 in Ethiopia against 1.7 in the sample average
• IDI Internet use sub-index: it includes Internet user penetration, fixed broadband penetration and mobile broadband penetration.
o It is 0.01 in Ethiopia against 0.26 in the sample average (0.5 in Egypt
and 0.76 in Vietnam)
• IDI skills sub-index: it includes the adult literacy rate, secondary and tertiary
enrolment.
o 2.69 against 4.12 in the sample average (6.2 in Egypt and 5.8 in Vietnam).
Fixed Telephony
• With nearly 1 million subscribers, the fixed telephone density is 1.2% in
Ethiopia.
• The average rate among the sample is 6.7%, but in fact the average in the
Sub-Saharan African countries is only 0.9% with nearly 13% in Egypt and
36% in Vietnam.
• In the whole of sub-Saharan Africa, the fixed telephone density in 2010 was
1.6% and varied from 0.1% in Chad to 8.6% in South Africa. These rates
have barely changed over the last 10 years (the South African fixed teledensity actually decreased from 10.2% in 2004 to 8.6% in 2009). This represents
the main stumbling block to the wire line broadband access (ADSL) that will
have to be compensated by innovative solutions of wireless accesses, much
less costly on a large scale. However, the remaining problem is to deliver the
level of service reliability and bandwidth required by large companies and
institutions in line with their activity in terms of data transfer.
• Compared to the other African countries, the problem in Ethiopia is not so
much the number of fixed lines as the quality of these lines, especially in the
regions, and their capacity to provide ADSL access.
• In terms of prices, the nominal fixed telephone sub-basket in US Dollars
calculated by ITU (Monthly subscription plus 30 local calls, 15 peak and
15 off-peak) is the lowest of the sample: ten to twenty times lower than in
other African countries, three times lower than in Egypt and twice as low as
in Vietnam. Measured against GNI per capita, the Ethiopian fixed telephone
sub-basket (3.8%) is 5 to 6 times lower than in sub-Saharan countries in the
sample, and can be compared to the sub-basket in Egypt and Vietnam.
As in Vietnam, it clearly reflects the strategy of the Ethiopian Government
of promoting the development of the fixed service in the last twenty years.
29
Mobile Telephony
• Despite its huge development since 2006, the mobile market is still very
small in Ethiopia compared to the other developing countries in Africa and
particularly in Asia.
However, the current penetration rate of 8% in Ethiopia with only one operator should not be compared with the SIM card penetration rate (total
number of SIM cards compared to the population) but rather with the real
penetration rate. This is estimated by taking into account the effects of the
“multi-SIM phenomenon”: in most developing countries, a large number of
subscribers have more than one SIM card in order to take advantage of the
best tariffs of each operator for the On-Net traffic. The number of SIM cards
per subscriber is directly linked to the number of operators per country.
Even after correction, the 8% penetration rate remains much lower than in
the sub-Saharan African countries among the sample (20% to 40%), 6 times
lower than in Egypt and 8 times lower than in Vietnam.
• The official coverage of the territory, calculated using somewhat optimistic
assumptions of average radius per base station for both GSM and CDMA
networks, is 60% and is comparable to rates observed in the other countries
of the sample. However, as stated previously, this rate does not seem to
match international standards for quality of service (quality of signal).
• Considering that the mobile ITU sub-basket (25 outgoing calls + 30 SMS),
measured in nominal (USD) terms and as a percentage of GNI per capita, is
lower in Ethiopia than in the other sub-Saharan African countries, the mobile
market, until now hindered by the weakness of the offer, should continue to
grow rapidly over the next few years to reach the observed penetration rates
in these other countries. On the other hand, attaining the real penetration
rates of Egypt (50%) and Vietnam (70%) could be difficult since the relative
cost of the sub-basket compared to household income is three times lower in
these two countries than in Ethiopia.
The monthly expenditure on mobile telephony as a proportion of average
income is only 7% in Ethiopia compared to 10-17% in the other African
countries and reflects the still low usage of mobile telephony by the Ethiopian population.
• The last figures in the mobile table show a large gap between the average
willingness to pay for a mobile handset (6 USD) and the average market
price (64 USD). This gap (a factor of 10) is much larger than in the other
African countries of the sample (a factor of two). The current price of the
handset could be a serious curb on the mobile market increase.
30
Internet and Data Services
Achieving the correct benchmark with regard to the penetration of Internet services
is not easy since the definitions of “Internet users” and Internet subscribers’ “narrowband” and “broadband” are not clear and the figures are less reliable than for the
voice services.
• The estimated proportion of Internet users in Ethiopia is only 0.7% of the
population, while it is 2% in Tanzania, 5-30% in the other sub-Saharan African countries, 20% in Egypt and 28% in Vietnam.
This rate can be linked with both the poor quality and the high prices of Internet access in Ethiopia, but also to the illiteracy rate.
• The rate of narrowband subscribers from the official ETC figures remains
within the average of the African sample, with the exception of Nigeria,
but the rate of broadband subscribers (ADSL+EVDO) is two to three times
lower and 20 times lower than the rate in Vietnam.
The very low penetration of Internet access can also be compared to figures
relating to households equipped with a computer, i.e. 10 to 50 times lower
than in the other countries.
• On the other hand, it cannot be explained by a shortage of international
bandwidth since the average available bandwidth per user is twice as high
as in Vietnam and in Egypt and ten to thirty times higher than in the subSaharan African countries.
• Finally, the benchmark of the broadband sub-basket clearly reflects the impact of the very high prices of the broadband offer in Ethiopia: the basket
price is estimated by ITU at USD 490 in Ethiopia against USD 40-100 in
the other sub-Saharan African countries, USD 8 in Egypt and USD 45 in
Vietnam.
When adjusted for income, the difference is even more stark: the basket
price represents more than 2,000% of the GNI per capita in Ethiopia whereas it represents from 50-100% in four African countries (500% in Uganda),
5% in Egypt and 20% in Vietnam.
Even if the ITU Basket calculated in 2009 does not exactly reflect the current tariff plan in Ethiopia, it is representative of the recent strategy of ETC
to discourage demand in the face of the offer shortage.
31
3.6.3
Summary of the International Benchmark Analysis
The international benchmark analysis provides a clear abstract of the situation of the
telecommunications sector in Ethiopia in 2010:
• The development of the Ethiopian telecommunication sector suffers from
three main handicaps:
o Low household income level
o Low urbanization rate
o Low literacy rate
• Ethiopia benefits from quite a reasonable coverage and penetration for the
fixed telephone network compared to the African ratios (without taking into
account the possible weakness in terms of quality of service), but this does
not compare with the situation in Egypt and Vietnam.
• Ethiopia is at least 5 to 6 years behind in mobile market development: the
average penetration rate in the whole Africa was 12% in 2005 (ITU).
• Ethiopian households are not yet involved in the “Internet and computer
world” and the business sector expects a higher quality service than the current supply.
32
4 The Business Sector and Telecommunications
in Ethiopia
A survey was carried out among a sample of 98 companies in Addis Ababa and 11
other main cities through face to face interviews. The purpose was to collect data relating to the companies’ telecommunications equipment and the executives’ opinion
regarding the telecommunications services in Ethiopia and their impact on company
activities.
To prepare the survey sample, a summary of the business sector was prepared from
the statistics of the Central Statistical Agency of Ethiopia.
4.1 Summary of the Ethiopian Business Sector
No overall registration of the total number of companies is available. The figures
below are therefore not exhaustive but provide an estimate of the breakdown of the
companies by size and sector. All the figures are from CSA official publications.
The agricultural sector accounts for at least 44% of GDP and 85% of employment.
It is mainly oriented to subsistence agriculture and therefore self-employment. The
current analysis concerns only the urban business sector and employment that represents about 4.5 million people, 1 million in Addis Ababa.
4.1.1 Urban Employment
Out of a total number of 9.6 million urban inhabitants over 10 years old, the active
population represents 5.5 million people (57%) of which 4.5 (80%) are employed,
but only 50% (2.3 million) are paid employees whereas the other 50% are unpaid
workers. From the 2.2 million “unpaid workers”, 1.8 million declare themselves to
be self-employed and 0.3 million to be unpaid family workers.
Addis Ababa represents 30% of the total urban population of Ethiopia but only 23%
of the urban paid employment. According to the CSA data, only 26% of the paid
employees receive more than 1,000 Birr per month.
This is summarized in Table 20 below.
33
34
237,687
1,011,229
Machine operators
Basic Occupation
861,379
488,975
376,586
611,710
< 400
400 - 699
700 - 999
> 1000
2,338,650
813,759
Craft
336,450
1,170,260
Agriculture & Fishery
Shop sales workers
Source: CSA Report on Urban Employment Unemployment Survey – 2009
Per monthly
Amount (ETB)
Paid Employees
72%
1,062,772
264,127
40%
60%
1,473,577
Clerks
952,978
1,414,081
80%
4,547,266
568,530
43%
57%
5,715,857
Employed
Professionals
4,124,660
5,453,281
Active in
last 7 days
145,224
2,367,059
Addis Ababa
Non-Active
Active
Managers
9,577,941
Urban population
over ten years old
Per major occupation
All
Urban employment
Table 20. Urban employment
26%
16%
21%
37%
22%
5%
18%
7%
26%
6%
13%
3%
28%
410,805
20%
1,168,591
Unemployed
4.1.2 Estimated Number of Companies
The number of registered companies was estimated from three documents published
by the CSA:
• The report on the large and medium scale manufacturing and electricity industry survey (Dec. 2009);
• The report on the small scale manufacturing industries survey (April 2010);
• The report on the distributive trade and service survey (February 2003).
The figures for 2005 for the large, medium and small-scale industries surveys have
been updated to 2010 according to the observed growth rates 2003-2005. The figures for 2002 for the distributive trade and service survey have been updated with
an average annual growth rate of 10%, slightly lower than the GDP real growth rate
over the same period. The results, which have to be considered as estimates only, are
summarized in Tables 21-24.
Table 21. Summary of number of companies and employees 2010 in urban areas
Company size/type
No. of Establishments
Medium/Large industry
2,112
Small industry
No. of employees
0.3%
190,974
9.6%
54,206
8.3%
173,797
8.8%
Trade and services
596,289
91.4%
1,616,124
81.6%
Total
652,607
100.0%
1,980,895
100.0%
Table 22. Size distribution of companies
Number of companies
by size
< 10
employees
Large Industry
0
Small Industry
Trade & Services
Total
10 to 19
20 to 49
639
719
> 50
Total
754
2,112
0.3%
54,206
54,206
8.3%
585,268
9,134
1,644
244
596,291
91.4%
98%
1%
0.2%
652,609
100.0%
0.4%
Table 23. Distribution of employment by size of company
Number of employees
by company size
< 10
employees
10 to 19
20 to 49
Large Industry
0
8,913
21,501
160,560
190,974
9.6%
Small Industry
173,797
173,797
8.8%
1,328,519
137,007
123,310
27,287
1,616,124
81.6%
7%
7.3%
9.5%
1,980,894
100.0%
Trade & Services
Total
76%
> 50
Total
35
Table 24. Distribution of businesses by region
Number of companies
by region
Addis Ababa
Tigray
Afar
Medium & Large
Industry
Small
Industry
Trade &
Services
Total
1,058
12,429
136,729
150,216
23%
264
2,997
32,973
36,234
6%
11
520
5,715
6,245
1%
Amhara
190
9,068
99,754
109,012
17%
Oromiya
359
16,035
176,387
192,781
30%
Somalie
11
1,294
14,231
15,536
2%
Benishangul
SNNP
Gambella
4
1,060
11,659
12,723
2%
211
8,884
97,724
106,819
16%
4
650
7,151
7,805
1%
447
4,917
5,364
1%
Harari
Dire Dawa
Total
2,112
823
9,048
9,871
2%
54,206
596,289
652,607
100%
A total of 652,000 companies have been identified from the various documents
published by the CSA, but the total number of employees is only 2 million, to be
compared to the 2.3 million paid employees registered in the 2009 Report on urban
employment. Consequently the number of registered companies is probably underestimated by 10% to 20% and the real number should be around 750,000.
• The medium and large industrial sector represents only 2,100 companies,
i.e. 0.3% of the number of companies but nearly 10% of the employment
(average size: 90 employees). Half of them are located in Addis Ababa.
• Small scale industry represents 8% of the number of companies and of total
employment (average size: 3.2) and the trade and services sector represents
90% of companies and 80 % of employment (average size: 2.7). One quarter
(23%) are located in Addis Ababa, which is consistent with the employment
figures.
Finally, 98% of the companies have fewer than 10 employees and an average size
of 3 employees whereas the medium and large sized companies account for about
12,000 establishments.
4.2 Telecom Equipment, Opinions and Needs of the Business
Sector
The survey was carried out in July and August 2010 by face-to-face interview with
98 companies, undertaken by a team of surveyors from the PSD Hub. The results of
the interviews in Addis Ababa and in the other cities have been collated and analyzed
separately. The detailed results of the survey are presented in the tables in the Appendix and analyzed below.
36
Most of the interviewees were the general managers of the companies. The main
themes of the interview were:
• The current telecommunication equipment of the company;
• The use of various telecommunications services within the company;
• Satisfaction regarding the existing services (availability, quality and tariffs);
• The estimated impact of the telecommunication services weaknesses on
company activities and efficiency.
4.2.1 Survey Sample (Tables 29-35, pp 91-93)
97 interviews were carried out, 38 in Addis Ababa and 59 in eleven other cities.
• The Industrial sector represents 38% of the sample and the Trade sector 59%
(3% in the agricultural sector);
• 40% of the companies interviewed had an international activity in the Addis
Ababa sample against 20% in the regions;
• 25% of the companies in Addis Ababa are public but only 4% in the regions;
• 80% are independent companies;
• The average size of the companies interviewed in AA is 565 employees
against less than 100 in the regions. The average size of the total sample is
280 employees. Therefore, the survey is clearly focused on the large companies in Ethiopia.
• Management represents 5% of the total staff while the employees represent
70% and the labourers 25%.
• The companies interviewed in Addis Ababa had an average of six sites within Ethiopia whereas the companies in the regions had less than two.
• The Addis Ababa companies have 18% international customers and 44% international suppliers whereas the companies in the regions have 14% international customers and 11% international suppliers. 30 of the 39 companies
in AA and 20 of the 59 companies in the regions have international customers or suppliers. Finally, half of the companies interviewed have international customers and/or suppliers and are therefore concerned by international
telecommunications services.
According to the sample, the survey is mainly representative of the large companies
in Ethiopia in the industrial and trade & services sector in which about one quarter
have an international activity (international customers) or at least international relations with partners and suppliers.
37
4.2.2 Telecommunications Equipment (Table 36, p 94)
The executives interviewed were asked to give details of the telecommunication
equipment in their companies per service.
Voice Services
• Nearly 100% of the companies are equipped with fixed lines, ranging from
3 in the regions to 8 in Addis Ababa
• 46% (regions) to 70% (Addis Ababa) are equipped with 1 to two international lines
• About 70% provide from 10 (regions) to 18 (Addis Ababa) mobile phones
to some of the staff (1 mobile for 45 staff in Addis Ababa but 1 per 13 staff
in the regions)
• Half of the companies in Addis Ababa are equipped with a PABX but only
14% in the regions
• 16% of the companies in Addis Ababa have leased lines but none in the
regions
Internet & Data Services
• More than half of the companies in Addis Ababa are equipped with ADSL
access but only 14% in the regions
• 68% in Addis Ababa and 24% in the regions used a CDMA access
• 74% in Addis Ababa use (additionally) the dial-up access and 37% in the
regions
• 16% of the companies in Addis Ababa have leased lines (and 3% are
equipped with VSAT) but none in the regions
• One third of the companies in Addis Ababa have an Intranet system against
7% in the regions
The level of equipment of the companies in voice services seems reasonable but the
Internet and data penetration rate is quite low according to the average size of the
companies interviewed:
• Only half of the companies in AA (of which 80% have more than 100 employees) benefits from an ADSL access that provides the minimal bandwidth
and speed for a professional use and most of them have to use a dial-up or
CDMA access.
• Less than 1 out of 6 companies in the regions has broadband access while the
average size of the sample is near 100 employees.
38
4.2.3 Telecommunications Usage (Tables 37-45, pp 95-97)
Personal Access to IT and Telecommunications Facilities
• Only 60% of the management of the companies in the sample are equipped
with a personal computer
• The rate ranges from 11% (regions) to 18% for the employees
• Only 23% (regions) to 32% (AA) of the management has a direct access to
Internet
• The rate is from 1% (regions) to 4% (AA) for the employees
• The use of computers is still low in the large and medium sized Ethiopian
companies
• The use of Internet is clearly not yet well-established in Ethiopian companies
Preferred Means of Communication
• The telephone remains the preferred means of communications, especially
in the regions
• The e-mail use is still very limited, especially with the Government Administration
Internet Use
• In Addis Ababa, only 8% of the people interviewed stated that they never
used Internet, but only one third use it frequently. The use of Internet grows
with the size of the company. The main reason for not using Internet is the
poor quality of the service.
• In the regions, more than 42% of the people interviewed never use Internet
while 29% use it frequently (proportionally to the size of the company). The
main reasons for not using Internet are the small number of connected partners and the poor quality of the service.
• E-mail remains the main purpose for Internet use, especially in the regions,
but a significant number of companies in AA state that they use it for marketing promotion.
Focus on E-mailing
• Around one third of the people interviewed in Addis Ababa never use the email service but 20% to 25% use it daily, particularly to communicate with
their customers and partners abroad.
• In the regions, nearly 50% of the people interviewed stated that they never
used the e-mail service.
39
Website
• 57% of the companies interviewed in Addis Ababa have a website, compared to 35% in the regions
• In Addis Ababa, two third of the companies with no website intend to implement one, compared to 52% in the regions.
Due mainly to a low access rate to computers (only 60% of the managers) and to
Internet (20% to 30% of the managers and 1% only of the employees), the telephone
remains the preferred means of communication in large Ethiopian companies. Less
than one third of the managers frequently use Internet, mostly because of the poor
quality of the connections.
Although according to business managers e-mail remains the main purpose for Internet use, this particular means of communication is frequently used by no more than
25% of the managers interviewed.
Throughout the whole country, less than 45% of the (large) companies have a website.
The use of Internet is clearly not yet well established in Ethiopian companies.
4.2.4 Satisfaction Regarding the Telecommunication Services (Tables
46-49, pp 98-99)
Availability of the Services
• Only 53% of the companies in Addis Ababa and 76% in the regions stated
that they had sufficient fixed lines, mainly because of the non-availability of
additional lines.
• 10% to 20% of all companies would like to have more mobile lines but are
dissuaded by the cost.
• Only 35% have enough Internet access in Addis Ababa, but most of the
65% insufficiently equipped companies are dissuaded by the cost. In the
regions, 42% are insufficiently equipped, experience non-availability or are
dissuaded by the cost.
Quality of Service
• 75% to 90% of the companies stated that they experience faulty lines and/or
call drops with their fixed lines.
• The mobile coverage in Addis Ababa is considered as sufficient by 70% of
the companies but only 50-60% consider the national and regional coverage
to be adequate. More than 90% complain about call drops.
40
• Two thirds of the companies consider the Internet and Data services as being
poorly adapted for their companies: the main complaint concerns the access
speed (50%), the service interruptions (30%) and the non-availability of the
service (20%).
Tariffs
• Fixed telephone tariffs are considered to be affordable by a majority except
for the international ones.
• Prices of domestic mobile calls are affordable but international prices are
judged to be high or very high.
• Both ADSL Installation fees and monthly fees are considered to be high or
very high by 80% to 90% of the people interviewed.
In terms of availability, the business sector suffers from a lack of fixed lines, especially in Addis Ababa whereas the supply of mobile lines is sufficient overall. The
main problem is the very serious shortage of broadband accesses, in Addis Ababa
and even more so in the regions.
Most companies complain of the low quality of fixed and mobile voice services,
especially in the regions, but above all the very poor quality of the Internet services
in terms of access speed and reliability.
Domestic voice tariffs are considered reasonable, those for international calls less so.
On the other hand, broadband tariffs are considered as prohibitive and discouraging
for the medium sized companies, especially in regions.
4.2.5 Overall Opinion of the Telecommunications Services (Tables 5051, p 100)
• Of the business people interviewed, only 11% in Addis Ababa and 22% in
the regions consider the telecommunications services to be sufficient overall
for their professional activity.
• In Addis Ababa, the main problems mentioned are:
o The quality of service of Internet access
o The availability of Internet access
o The lack of fixed lines
• In the regions, the main problems are:
o The mobile coverage
o The quality of service of Internet access
o The quality of service of fixed voice service
o The lack of fixed lines and Internet access
41
4.2.6 Impact on Business Activity (Tables 52-53, p 101)
• Only 9% of the people interviewed in Addis Ababa and in the regions consider the current telecommunications services suitable for their activity.
• Half of them in Addis Ababa consider that it penalizes their activity against
only 30% in the regions.
• An improvement of the services could help the companies to increase their
market.
• The requirements for service improvements are quite different between Addis Ababa and the regions:
o In Addis Ababa, it concerns mainly the availability and quality of
service of Internet access.
o In the regions, it concerns first the coverage and then the quality of
service of mobile voice services.
An open question was asked at the end of the interview: “have you any additional
comments regarding the expected evolution of the telecommunications services?”
The most frequently mentioned words have been sorted out by order of frequency:
• In Addis Ababa, the most frequently mentioned words are “quality” and
“Internet” which is consistent with the above mentioned wishes.
• In the regions, the most frequently mentioned words are “quality”, “tariffs”
but also “training”. Regional and smaller companies express a higher sensitivity to prices and perhaps a need for assistance for a better use of advanced
telecommunications services.
The overall view of the business sector concerning the current telecommunications
services is that it leaves much to be desired in terms of availability as well as in quality of services, and the harshest criticism in Addis Ababa focuses on the quality and
cost of broadband services, and in the regions on the mobile coverage.
Even though only 9% of the companies consider the current services suitable for
their business needs and half of them think that the weaknesses penalize their activities, they are not able to estimate quantitatively the negative impact in terms of
turnover, profitability or efficiency.
4.2.7 Additional Information from Other Surveys
In 2002 and between 2007 and 2010, the CSA carried out a number of surveys among
small and medium sized companies from both industrial and trade sectors in order
to identify the major problems encountered when starting an activity and during
operations. Telecommunication problems were not included in the questionnaires as
possible difficulties and were therefore not mentioned in the results of the surveys.
42
When starting, the major problems mentioned were:
• The lack of capital and credit facilities;
• The obstacles from government rules and regulations;
• The lack of supply of raw materials (industry);
• The lack of information.
During the operational period, the major problems mentioned were:
• The lack of working capital and credit facilities;
• The shortage of electricity and water (industry);
• The lack of raw materials and spare parts (industry);
• The harassment from government bodies;
• The lack of information.
Regarding the lack of information, the main issues mentioned concern:
• The lack of sufficient market information;
• The lack of information on appropriate machinery (industry) and where to
obtain it;
• The lack of information on where to follow the appropriate training.
4.2.8 Conclusions of the Survey among Companies
Although the survey focuses on quite a small sample and can therefore not be representative of the opinion of the whole of the Ethiopian business sector, it still provides
some very clear information and lessons about the medium and large sized companies’ concerns and expectations regarding the telecommunications services.
• Only half of the companies in Addis Ababa and 8% in the regions are
equipped with broadband and the IT and Internet use is still uncommon.
• The companies’ judgment is obviously very negative about the current availability and quality of each of the services: less than 10% consider it to be
suitable for their activity.
• For the companies of Addis Ababa, the main problems are:
o The shortage of fixed lines (50%)
o The very poor quality (and the cost) of broadband Internet and data
services
o For the companies in the regions, the main problems are:
o The poor coverage and quality of mobile services
o The poor quality of service of the fixed voice services
o The availability, quality and cost of Internet and Data services
43
In other surveys carried out by the CSA, the telecommunication problems were not
identified but the lack of information was part of the main difficulties mentioned by
the companies “when starting the activity” as well as during the operating period.
The analysis of the survey carried out among 98 large and medium-sized Ethiopian
companies clearly highlights the inadequacies of the current supply of telecommunications services; it is not adapted to the business activity and most probably penalizes its development in terms of communication within the companies and with the
customers, partners and suppliers, as well as in terms of collecting technical, commercial, legal and financial information and marketing promotion.
However, the data collected from the interviews does not enable us to estimate in
quantitative terms the negative impact of the telecommunication sector’s weaknesses on business activity.
A macro-economic analysis of this impact on GDP based on international ratios is
presented in Chapter 7.
44
5 Conclusions: Telecommunications Services and
Business Activity in Ethiopia
The present conclusions result from the three main elements of the methodology
used to carry out the survey:
• The review of the current status of the Ethiopian Telecommunications sector;
• An international benchmark;
• A survey among companies in Ethiopia.
The review of the current status of the Ethiopian telecommunications sector has
identified the main strengths and weaknesses of the sector:
• Strong network infrastructure, large switching capacities, various available
technologies offering a range of updated services, good, adequate international connectivity;
• Reasonably priced and developed fixed networks, in line with African standards;
• Fast growing mobile network.
But:
• The overlapping Fixed Networks are not well adjusted to the local demand
and the lack of access to capacities limits the ability to satisfy customer
needs;
• The quality of service is very poor for both fixed and mobile, national and
international voice services;
• Poor broadband ADSL and wireless Internet facilities that fail to meet corporate needs;
• The national backbone suffers from low quality of the legacy backbone and
insufficient redundancy;
• The international voice and data traffic suffers from serious congestion due
to a bottleneck in the international gateways that particularly affects the data
access speed.
The International benchmark clearly highlights the main Ethiopian characteristics
concerning the telecommunications sector’s recent and expected development:
• Ethiopia benefits from a reasonable coverage and penetration of the fixed
telephone network compared to the African ratios (without taking into account the possible weakness in terms of quality of service), but which is not
comparable with the ratios observed in Egypt and Vietnam.
45
• Ethiopia is at least 5 to 6 years behind in the mobile market development
and has not yet reached the observed average penetration rate for the whole
of Africa in 2005.
• Ethiopian households are not yet involved in the “Internet and computer
world” and the business sector’s needs cannot be satisfied by the current
supply.
• Compared to the household income (GNI per capita) the current tariffs of
voice services are in line with the African average, but broadband tariffs
are totally unrelated to the ability and willingness of users to pay for the
services.
• The main handicaps in relation to telecommunications and especially Internet development could be low urbanization, and more particularly literacy
rates, and the very low school enrolment levels in secondary and tertiary
levels.
The results of the survey carried out among 98 companies in Addis Ababa and in 11
other main cities provide a very clear image of the gap between the current supply of
telecommunications services and the companies’ requirements:
equipped with broadband and IT and Internet use is still uncommon;
• The interviewed companies express a very negative opinion on the current
availability and quality of the services;
• 90% consider that these services do not meet their business needs and requirements;
• Depending on their size and location, the companies particularly point out:
o The shortage of fixed lines;
o The insufficient coverage of the mobile network;
o The poor quality of the voice services;
o The very low quality (and high cost) of broadband Internet and data
services.
In addition, the difficulties experienced in obtaining market and technical information as well as training facilities are mentioned by a number of companies as major
problems in starting and doing business in Ethiopia.
Despite the ambitious investment put in place by the telecommunications sector over
the last few years and the huge growth of the mobile market, the current supply of
telecommunication services do not yet match business sector requirements.
However, the surveyed companies are not able to estimate accurately the negative
impact of telecommunications weaknesses on their efficiency and profitability. This
impact can only be estimated at a macro-economic level.
46
6 Opportunity Costs of Telecommunications
Service Weaknesses
The above chapter has clearly highlighted the weaknesses in Ethiopian telecommunications and particularly the delay in the mobile market development since 2000.
It should therefore be interesting to estimate the direct and indirect costs incurred
by both business and government as a result of the negative impact of the observed
weaknesses during the recent period.
The survey among companies has shown that the business sector suffers from a lack
of a reliable telecommunications services which leads to:
• Less efficiency in internal communications, especially within the multi-site
companies
• Less efficiency and reactivity in communications with national and above all
international partners
• Difficulties in collecting both technical and commercial information
• Difficulties in promoting the companies’ products and services on the national and above all the international market.
Some growing sectors such as tourism (tour-operators, hotels) are particularly penalized since most of the customers from Western countries are now used to collecting information and/or booking on-line. Therefore, the Ethiopian destination suffers
from international visibility compared to other African touristic countries such as
Kenya.
Moreover, the availability of a reliable Internet access within hotels is now one of the
main criteria of choice among business visitors and tourists.
On the national market, the development of e-commerce is made impossible by the
weaknesses of broadband access and the very low rate of connected households.
In Western countries (e.g. US, UK, France), the average annual growth rate of ecommerce has been 30% from 2005 to 2010, especially in the sectors of tourism,
textiles and IT/computers, but 60% (France) to 80% (UK) of the households are
Internet connected.
Therefore, it is obvious that Ethiopian business development will be held back by the
weaknesses of the telecommunications services.
However, it is not possible to estimate on a reliable basis the losses incurred by the
companies from the results of the interviews since none of the managers were able
to provide such quantitative information.
The estimation of the opportunity costs of the weaknesses of telecommunications
services must therefore be done at the macroeconomic level of GDP.
47
Making this estimation supposes the possibility of:
• Firstly, identifying the potential direct and indirect benefits of the ICT development and particularly the mobile development.
• Secondly, being able to evaluate these benefits.
• Thirdly, calculating the lost benefits over the recent period (2005 – 2010)
due to the weaknesses of telecommunications services.
6.1 Identifying the Direct and Indirect Benefits of ICT
A number of studies dedicated to this issue have been carried out over the last five
years by both public (World Bank, ITU) and private institutions in the sector of economic research.
A report published in 2009 by the IC4D (“2009 Information a Communications for
Development”) from the World Bank takes a closer look at mobile and broadband
connectivity and analyzes the development impact of high-speed Internet access in
developing countries:
The past 15 years have brought an unprecedented increase in access to telephone
services. The total number of mobile phones in the world exceeded the number of
fixed telephones in 2002. By the end of 2009 there were an estimated 5 billion mobile phones globally. No technology has ever spread faster around the world. Mobile
Networks now constitute the World’s largest distribution platform and create a major
development opportunity.
6.1.1 Identified Mobile Benefits
The mobile phone market is especially important for developing countries, where it
is growing most rapidly and where it is seen as a “leapfrogging” tool. Mobile communications have a particularly important impact in rural areas: an important use of
mobile phones in rural areas is to access market information.
• TradeNet, a Ghana-based trading platform, allows users to sign up for short
message service (SMS) alerts for commodities and markets of their choice
and receive instant alerts for offers to buy or sell when someone else on the
network has submitted an offer by mobile phone. Users can also request and
receive real-time prices for more than 80 commodities from 400 markets
across West Africa.
• In India, access to market information through mobile phones has allowed
fishermen to respond faster to market demand and has increased their profits;
• In Niger, it has reduced price disparities in grain markets.
Once legal frameworks are in place, banking and payment services provided through
mobile phones can bring many more people into the formal financial system. Mobile
banking services offered by Wizzit in South Africa, Safaricom (M-PESA) in Kenya,
48
and Globe Telecom and Smart in the Philippines are such examples. These services
allow mobile phone users to pay for purchases in stores and transfer funds, significantly reducing transaction costs.
Mobile phones can improve the effectiveness and reach of health programs that, in
many countries, are some of the largest public budgetary expenses. Improved information systems that track service delivery, establish accountability, and manage
patients for better health outcomes can result in major efficiency gains.
Mobile communications are evolving from simple voice services and text messaging
to more broadband width intelligent systems that enable a diverse range of applications in locations where conventional services are not available in developing countries. “Smart” wireless phones now allow users to browse the Internet, download
music, and access information services. This opportunity is especially exciting given
that the developing world missed out on much of the initial Web revolution because
it did not have adequate Internet infrastructure.
6.1.2 Identified Broadband Benefits
Similar analysis carried out with regard to broadband impact conclude that Broadband increases productivity and contributes to economic growth, that is why it deserves a central role in development strategies:
Broadband networks, both fixed and mobile, are necessary to deliver modern communication and information services that require high rates of data transmission.
Enterprise file transfer, television, and high-speed Internet are examples of such
services. High-speed Internet connections provide ready access to a wide range of
services, such as voice, video, music, film, radio, games, and publishing. Broadband
networks enhance the efficiency and reach of existing services and provide spare
capacity for unknown future applications.
Indeed, broadband networks are the key to the ongoing transformation of the ICT
sector through the convergence of telecommunications, media, and computing.
Broadband has a considerable economic impact at all levels of individuals, firms,
and communities. Individuals increasingly use broadband to acquire knowledge and
skills to increase their employment opportunities. Where broadband has been introduced in rural areas of developing countries, villagers and farmers have gained better
access to crop market prices, training, and job opportunities.
Access to broadband supports the growth of firms by lowering costs and raising
productivity. A study involving business and technology decision-makers in 1,200
companies in six Latin American countries—Argentina, Brazil, Chile, Colombia,
Costa Rica, and Mexico—showed that broadband deployment was associated with
considerable improvements in business organization, including speed and timing of
business and process re-engineering, process automation, data processing, and diffusion of information within organizations.
49
Finally, the benefits of ICT can be sorted into three main categories:
1. Direct benefits: The Economic or Macro-Level Case
o GDP growth
o Job creation
o Productivity
o Tax revenue
o Value addition from mobile operators
2. Indirect benefit: The Social or Micro-Level Case
o Entrepreneurship and job search
o Reduction in information asymmetry
o Elimination of market inefficiencies
o Transport substitution
3. Intangible Benefits
o Disaster Relief
o Education & Health
o Social Capital and Social Cohesion
6.2 Evaluating the Direct and Indirect Benefits
It was not possible to carry out a detailed financial analysis of each category of
benefits within the framework of the study but only an overall valuation of the opportunity costs of the weaknesses of the telecommunications sector over the past five
years based on international ratios.
This valuation concerned the impact on GDP growth and tax revenue.
6.2.1 Impact of ICT Growth on GDP
The first thorough analysis (Waverman, Meshi, Fuss, 2005, The Impact of Telecoms
on Economic Growth in Developing Countries), after analyzing the impact of mobile
telephony on GDP between 1980 and 2003 in 92 developed and developing countries, concludes that in developing countries a 10% increase in mobile penetration of
the population positively impacts GDP growth by 0.6%.
50
More recent studies, such as those conducted by Deloitte in 2007 (GSMA & Deloitte,
2007, Global Mobile Tax Review 2006‐2007) or by Kathuria, Uppal and Mam about
India in 2009 (India: The Impact of Mobile Phones, Moving the Debate Forward,
January 2009), estimate that a 10% increase in mobile services penetration leads to
GDP growth of 1.2 ‐ 1.4%.
Therefore, a cautious bracket of 0.8% to 1.2% can be used to estimate the benefit of
a faster increase in the mobile market in Ethiopia, in line with the average African
growth rate for the period 2005 to 2010.
The figure below presents the observed evolution of the mobile market in Ethiopia
and in the whole of Africa and the gap between the two curves. The average African
penetration rate has been corrected to take the multi-SIM impact into account.
Figure 4. Ethiopian mobile penetration rate vs. African mobile penetration rate
40%
35%
Corrected
African mobile
penetration rate
30%
25%
20%
23%
15%
21%
Penetration rate
gap
16%
10%
5%
0%
24%
3%
4%
6%
7%
10%
9%
13%
Ethiopian mobile
penetration rate
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
Source: Operators, Consultant calculations
The tables on the facing page present:
• The observed evolution of the Ethiopian GDP in current USD from 2000
(source: World Bank);
• The calculation of the “additional” GDP that could have been provided by
a faster evolution in the mobile market according to the average African
market on three assumptions:
o 1.2 additional point of GDP per 10% increase of the penetration rate;
o 1.0 additional point of GDP per 10% increase of the penetration rate;
o 0.8 additional point of GDP per 10% increase of the penetration rate.
• The calculated evolution of the theoretical GDP according to these three
assumptions;
• The cumulative “additional GDP” from 2005 to 2010 in USD 2010.
By delaying the launch of mobile networks, and according to the assumed impact
of the mobile penetration rate of the economic growth, Ethiopia could have lost,
from 2005 and 2010, a cumulated amount equivalent to 2.2 to 3.3 billion USD 2010
(which represents about 10% of the estimated GDP 2010).
51
52
22
18
1.0%
0.8%
611
183
55
1.23
429
129
39
1.27
Margin (m$)
Corporate Income Tax (m$ @ 30%)
43
53
64
1.21
35
44
53
0.5%
0.6%
0.7%
6%
7,790
2002
78
1.21
64
214
714
15.2
3.9
0.0
3.9
69.1
2002
85
1.19
71
238
794
13.2
5.0
0.1
5.1
71.1
2003
Cumulative Additional Corporate Income Tax 2005 – 2010 expressed in USD 2010
68
17.4
20.0
ARPU ($)
Additional revenue (m$)
49
0.0
2.9
0.0
1.8
Observed customer base (m)
Additional customer base (m)
Deflation rate ($)
3.0
1.8
67.2
2001
Mobile assumed customer base (m)
2000
65.4
Corporate Income Tax (m$ 2010)
35
44
52
1.23
28
36
43
0.3%
0.4%
0.5%
4%
8,169
2001
57
72
86
1.19
48
60
72
0.6%
0.7%
0.8%
7%
8,556
2003
88
109
131
1.16
75
94
113
0.8%
0.9%
1.1%
9%
10,052
2004
109
136
163
1.12
97
121
146
0.8%
1.0%
1.2%
10%
12,305
2005
175
219
263
1.08
162
203
243
1.1%
1.3%
1.6%
13%
15,166
2006
99
1.16
86
285
951
11.5
6.9
0.2
7.1
73.2
2004
90
1.12
81
269
896
10.0
7.5
0.4
7.9
75.2
2005
106
1.08
98
326
1,087
8.7
10.4
1.0
11.3
77.1
2006
2007
106
1.05
101
336
1,121
7.6
12.3
1.9
14.1
260
325
390
443
554
665
1.01
439
549
658
121
1.01
120
399
1,332
6.6
16.7
2.7
19.5
661
826
991
1.02
648
810
972
1.9%
2.4%
2.9%
24%
33,920
2009
121
1.02
119
397
1,322
5.8
19.1
3.4
22.5
79.7
2009
1.7%
2.1%
2.6%
21%
25,585
2008
77.8
2008
1.05
247
309
371
1.3%
1.6%
1.9%
16%
19,165
75.8
2007
Table 26. Estimated impact of the mobile penetration rate on tax revenue
23
0.8%
34
28
1.0%
1.2%
27
1.27
0.2%
0.8%
1.2%
Population (million)
Year
Additional GDP: (million USD2010)
Deflation rate USD
Additional GDP (Million current USD)
0.3%
0.3%
1.2%
3%
Penetration rate gap
1.0%
8,180
Observed Ethiopian GDP (Current MUSD)
Additional % of GDP per 10% mobile
penetration
2000
Year
Table 25. Estimated impact of “additional GDP” linked to the mobile penetration rate
101
1.00
101
338
1,127
5.0
18.7
6.7
25.4
81.7
2010
576
720
864
1.00
576
720
864
1.8%
2.3%
2.8%
23%
31,269
2010
On the other hand the negative impact of the weaknesses in terms of broadband
connectivity has not yet been evaluated. Except for Tunisia, none of the African
countries has reached a broadband connection rate higher than 0.5% to 1%. Ethiopia
suffers clearly from a lack of access and a poorer quality of service than a number of
countries of West Africa (Senegal, Ivory Coast), Central Africa (Gabon, Cameroon,
Nigeria) and East Africa (Kenya, Uganda, Tanzania). However, the low penetration rates of broadband observed throughout the whole of Africa (3.6% for mobile
broadband and 0.2% for fixed broadband estimated by ITU for 2010) makes it difficult to apply the same method as for mobiles in order to evaluate the gap between
Ethiopia and the whole of Africa.
6.2.2 Tax Revenue
In addition, it is relatively easy to estimate the lost tax revenue for the government
over the same period that could have been provided by the additional mobile revenues if Ethiopia had followed the average African trend in terms of mobile penetration.
Based on very cautious assumptions of ARPU evolution and profit margins, the cumulative corporate income tax revenue should have reached the equivalent of USD
650 million between 2005 and 2010. Including other taxes (TOT, tax on employment, etc.), the amount could have reached USD 1 billion at current prices.
53
7 Proposed Short- and Medium-term Targets for
Telecommunications Services
The scope of this study did not include a demand survey of the telecom services that
should initially require a segmentation of the market and a thorough analysis of the
main demand factors per segment.
However, from the results of the International Benchmark and the surveys among
companies, it is possible to propose realistic targets to be achieved in the next 5 years
(by 2015) in order to:
• Bring Ethiopia up to the African median for mobile phone and Internet penetration, and
• Provide answers to the needs expressed by the companies
7.1 Bringing Ethiopia to the African Median
The Ethiopian fixed line penetration is more or less in line with the African average.
The gap that needs filling concerns mainly the mobile market, and the broadband
market.
7.1.1 Mobile Market Overall Target for 2015
Taking into account the multi-SIM factor, the average penetration rate in Africa is
about 30% to 35% in late 2010. The annual growth rate has slowed down over the
last three years and is now about 10% per year. Therefore it is probable that the average African penetration rate will reach 50% in 2015.
The huge increase in the number of mobile customers from 2005 (+ 75% per year)
has resulted from the accumulated delay and the level of expectation of the market,
but has led to a poor coverage and quality of service. It should be realistic to consider that ETC must first strengthen its technical and commercial GSM network and
reduce the annual growth rate of its customer base.
The average African GDP per capita was around USD 1,200 by the end of 2009
whereas it was only USD 420 in Ethiopia. Reaching the African median in just a
few years is perhaps unrealistic in a country where at least one third of the population suffers from severe poverty. Despite relatively affordable tariffs, the residential
demand will remain, in the short term, restrained by the price factor.
The proposed target for the increase of the mobile penetration is 10% lower than the
African median and assumes a 44% penetration rate corresponding to a total number
of 40 million subscribers in 2015 (i.e. 6 to 7 million new customers per year over
this period).
55
Table 27. Expected mobile market evolution
Year
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
African Expected Real
Penetration Rate
10%
15%
19%
25%
28%
31%
34%
38%
41%
45%
50%
Ethiopian Target
0.6%
1.3%
2.5%
3.6%
4.3%
8%
11%
16%
23%
32%
44%
Population forecast
(million)
81
83
85
87
89
92
(million)
6.6
9.5
13.7
19.6
28.2
40.4
44%
44%
44%
44%
43%
AAGR
7.1.2 Fixed and Broadband Market
Fixed Lines
The fixed penetration of 1.2% is within the African average. Residential voice services can mainly be satisfied by mobile or WLL services. Therefore the fixed infrastructure evolution will have to respond to:
• The corporate demand (including government departments and institutions)
for secured and switched (PABX) voice lines; and
• The need for fixed (high speed) broadband connections for corporate and
high-income level households.
In view of the low quality of service, the next few years should be used mainly for
line rehabilitation. However, an annual increase of around 5% in the total number of
lines is necessary to meet the local needs of the business sector, in Addis Ababa as
well as in the regions.
Broadband Market
Since the launch of the mobile catch-up programme, the main challenge for the telecommunication sector over the next few years will be responding to business needs
and promoting the private use of broadband Internet.
With less than 1% of users and with less than 10% of the population having some
knowledge of the Internet (Research ICT Africa), Ethiopia is not yet part of the Internet world and broadband penetration is still negligible. In this respect Ethiopia is
lagging behind the rest of Africa.
Table 28. Ethiopian Internet penetration vs. average African Internet penetration
Parameter
56
Africa 2010 (source:
ITU)
Ethiopia 2010
Estimated Internet Users in % of population
9.6%
0.7%
Fixed broadband subscriptions in % of population
0.2%
0.005%
Mobile broadband subscriptions in % of population
3.6%
0.010%
Total broadband penetration in % of population
3.8%
0.015%
Even with just the 2010 African median as a target, ETC would have to multiply
its ADSL customer base by a factor of 40, from less than 4,000 to 160,000 and to
multiply its mobile broadband customer base by 280, from 10,000 to 2.8 million. A
more detailed target can be estimated from the needs expressed by the business sector (see chapter 8).
7.2 Responding to the Needs Expressed by the Business
Sector
90% of the surveyed companies indicated their dissatisfaction with the current telecommunications services. Their complaints concerned both:
• The lack of equipment: more than 50% stated the lack of sufficient fixed
lines and Internet accesses (broadband), particularly in Addis Ababa; and
• The poor quality of service, specifically:
o National and International fixed voice calls;
o Mobile voice coverage and calls;
o Internet access speed and reliability.
As previously reported, the survey was carried out among companies of more than
10 employees, with an average size of 565 employees in Addis Ababa and 96 employees in the regions. Therefore it is not possible to apply the quantitative needs
expressed by these interviewed companies to the other possible 750,000 companies
in Ethiopia whose average size is only 3 employees.
However, from ETC commercial data, out of the 1,000,000 fixed lines, there are
only 150,000 business lines (not including the Government). At least 50,000 should
be used by the 12,000 medium and large sized companies and only 100,000 by the
700,000 small companies.
One of the challenges in the next few years will be to define a clear strategy:
• To respond to the basic telephone needs of the whole business sector;
• To be able to meet the business requirements of the large and medium sized
companies, already poorly equipped, in terms of Internet and broadband
data services; and
• To promote the use of the Internet and data services among the rest of the
business sector.
7.2.1
Responding to the Basic Telephone Needs of the Business Sector
While ETC claims that the waiting list for fixed lines is less than 15,000, 50% of the
surveyed companies reported a lack of a sufficient number of fixed lines, especially
in Addis Ababa. An evaluation of the real business demand will require a more thorough analysis of the market , but a rough estimate can be made as follows:
57
• Additional demand from the 12,000 medium and large sized companies:
50% x 12,000 x 2 extra lines = 12,000 fixed copper lines;
• Demand from the 650,000 to 750,000 small registered companies: barely
15% are currently equipped, especially in the regions, and to double this
penetration rate to 30% (mainly for broadband access) in 2015 will represent
an additional demand of around 150,000 copper lines.
Bearing in mind the cost of installation of new copper lines, a strategy of migration
for some residential subscribers (those not requiring ADSL access) from their copper lines to a WLL CDMA line could free copper lines to be dedicated to corporate
broadband needs.
7.2.2 Meeting the Business Requirements of Broadband Access for
Medium and Large Companies
No additional survey is needed to understand the urgent need for broadband wire
line (ADSL or FTTx) access for 5,000 to 10,000 small and medium sized companies.
Except for the specific data transfer needs for large companies, the aim is to offer a
reliable access of 1 to 2 Mbit/sec at an affordable price (100 to 200 USD per month
– and preferably less).
7.2.3 Promoting the Use of the Internet among the Rest of the Business Sector
Ethiopia is not yet fully part of the Internet or digital world. The reasons will be
analyzed in the last two chapters of this document.
It is clear that in developed countries, the use of the Internet (and, before that, the
use of personal computers) started in the business sector (and also, to a lesser extent,
the educational sector) before coming into the residential sector. It took about 20
years for the use of personal computers to spread from companies (1980 – 1985) to
households and the popularization of Internet use (2000 – 2005). This popularization
resulted from the convergence of increasing quality of service (speed) and decreasing prices.
The current Ethiopian situation shows no resemblance to this example, but the main
financial factor is the cost of international bandwidth. Thanks to the increasing capacity through submarine cables, the average international bandwidth price has rapidly decreased and is about USD 350 to 400 per Mbit/sec, i.e. about 12 to 40 USD
per residential/business broadband customer. This cost should make it possible to
adjust the final monthly price to the market ability to pay.
It will be the responsibility of the telecommunications operators to analyze the business market in depth and to prepare customized technical and commercial offers to
each of the segments.
A reasonable medium-term target (2015) might be to provide broadband connection
to 20% to 25% of the companies (150,000 to 200,000), through a range of offers
from 256 Kbit/sec to 1Mbit/sec and in a price range from under 50 USD to 150 USD
per month.
Reaching this target is a major issue for business development and reduction of the
digital divide in Ethiopia. It will mean increasing IT use and especially computer
use within companies, a level that is still low in medium and large companies, with
35-80% of managers but only 5-20% of other employees having access to a personal
computer.
It has to be remembered that the development of Internet use within the business
sector will lead to the growth of Internet use within the household, but also that, in
terms of marketing, this growth will be a necessary condition for the development
of e-business activities. Therefore, promoting Internet use within the business sector
and within households have to be considered as two complementary elements of the
same strategy.
7.3 Summarized Targets for the Telecommunications Sector
According to both international benchmark results and company expectations, the
main targets assigned to the telecommunications sector between 2010 and 2015
could be:
In the Short Term (2011)
• To urgently solve the problem of international congestion of fixed, mobile
and broadband traffic that penalizes the customers (mainly the business sector) as well as the operator (lost revenues).
• To increase the coverage and the quality of service of mobile telephony (increase and re-deployment of the BTS), and to continue to expand the customer base but without degradation of the quality of service.
• To increase the quality of service of the 4,000 existing fixed broadband connections (ADSL) and make available some 5,000 new accesses.
• To define a strategy to manage the corporate demand for fixed (copper) lines
and ADSL access and to promote the use of broadband Internet.
In the Medium Term (2015)
• To re-dimension the mobile network to manage 40 million subscribers by
2015.
• To increase the fixed line PSTN network by 25% to 30% (+300,000 lines) in
order to meet the business and residential demand for ADSL access.
• To develop a range of medium-speed (128 kbps to 256 kbps) and high-speed
(512 kbps to 2 Mbps) broadband offers through both fixed and mobile access
in order to reach a 20% to 25% business penetration, i.e. 150,000 to 200,000
customers.
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• Since the increase of Internet business use will boost Internet interest in
households, the target of 2.5% to 5% of urban households connected to
broadband would mean about 75,000 to 150,000 additional customers.
• The broadband development will be directly linked to the price strategy of
the operator(s).
Finally, a reasonable 2015 target per service could be:
• 40 million mobile subscribers;
• 1,200,000 to 1,300,000 fixed lines including at least 400,000 business lines
in Addis Ababa and in the regions;
• 15,000 high speed fixed (ADSL/FTTx) broadband customers (80% business);
• 225,000 to 350,000 medium speed customers, including two-thirds business
customers.
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8 Required Investment
An estimation of the investment cost of a 2010-2015 programme such as the one
presented above would require carrying out a detailed technical and financial study
which is beyond the remit of this survey. Some indicative estimates can be made,
however, based on international experience.
The approximate ratio of 140 USD per mobile subscriber observed in various West
African countries indicates the cost of 40 million mobile subscribers at 5.6 billion
USD, but ETC has already invested 15 billion USD over the last ten years in its various networks and has an ongoing investment programme with ZTE of 1.5 billion
USD that probably includes a large part of the proposed targets.
The first target of increasing the mobile coverage and quality of service should
at least necessitate the doubling of the number of sites (coverage) and increasing
the number of TRXs in proportion to the customer base. With an average cost of
USD 130,000 per site, the radio network programme alone would require investment
of USD 500-750 million.
The second major investment will be to rehabilitate existing copper lines and build
new ones suitable for ADSL requirements. It is very difficult to estimate the cost of
building 250,000 new lines but it is likely to be at least 100 million USD, not including the rehabilitation of existing lines. Finally, it has been mentioned previously that
part of the national backbone (500 km) has to be replaced.
Therefore, in addition to the current ongoing project, an investment programme from
2011 to 2015 focusing on reaching the above targets would be around USD one billion.
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9 Business and Social Benefits from
Improvement of Telecommunications Services
The economic and social benefits of mobile development have been analyzed in
chapter 7.
A number of studies were published in 2009 with regard to the impact of broadband
on economic growth and social development. Most highlighted the impact of broadband on labour efficiency and cost-saving in many sectors such as health, education,
energy, transport and distribution.
Nearly all studies suggest that positive returns can be expected from investment in
broadband infrastructure. For example:
• An analysis for the European Commission estimates that broadband can create more than two million jobs in Europe by 2015, and an increase in GDP
of at least € 636 billion.
• A study in Brazil reported that broadband added up to 1.4% to the employment growth rate.
• In China1, every 10% increase in broadband penetration is seen as contributing an additional 2.5% to GDP growth.
• In Thailand2, where in 2010 only some 3% of all households have broadband
and 12% of all individuals, it has been forecast that broadband could add
nearly one per cent to the country’s GDP growth rate.
• A study3 in 24 Latin American and Caribbean countries concluded that a
1% rise in broadband penetration yields a 0.017 point rise in GDP growth.
Broadband growth between 2007 and 2008 (prorated average of 37%) contributed between USD 6.7 billion and USD 14.3 billion, including direct and
indirect effects.
Moreover, the preliminary results of a quantitative analysis being conducted by the
Organization for Economic Co-operation and Development (OECD)4 suggest that
the expansion of broadband significantly affects labour productivity. According to
this analysis, broadband prices seem to be an important driving factor in lower-income OECD countries, where cheaper broadband tends to be correlated with higher
growth rates in labour productivity. For OECD countries, raising broadband penetration rates by 1 percentage point in 2009 (e.g. 24.3% instead of 23.3%) results in a
labour productivity growth rate that is higher by 0.02 percentage points. Broadband
penetration rates higher by 5 percentage points translate into a rise in the labour productivity growth rate of 0.07 percentage points.
Broadband in China: Accelerate Development to Serve the Public (2009), Value Partners
Broadband Thailand 2015 (2010), Center for Ethics of Science and Technology, Digital Divide Institute, Thailand
3
The Impact of Taxation on the Development of the Mobile Broadband Sector (2009), Telecom Advisory Services LLC
4
Broadband penetration and labour productivity growth — some preliminary findings (2010), OECD
1
2
63
A 2009 study by management consultants, Booz & Company5 found that “10% higher broadband penetration in a specific year is correlated with 1.5% greater labour
productivity growth over the following five years.” The Booz & Company report
also suggests that “countries in the top third of broadband penetration have exhibited
2% higher GDP growth than countries in the bottom third.” Another management
consultancy, McKinsey & Company6, estimates that “a 10% increase in broadband
household penetration delivers a boost to a country’s GDP that ranges from 0.1
per cent to 1.4 per cent.”
For developing countries in the low- and middle-income bracket, broadband is a key
driver of economic growth and, according to a study by the World Bank7, provides a
boost of 1.38 additional percentage points to GDP growth for every 10% increase in
broadband penetration — higher than any other telecommunication service.
In developed countries, cost-savings of 0.5 per cent to 1.5 per cent in each of the
four key sectors (health, education, energy and transport) could justify the cost of
building a national point-to-point “fibre to the home” (FTTH) network in most of the
OECD countries.
This model is not automatically applicable to developing countries. However, as a
general purpose platform for innovation and investment, broadband networks can
help to:
• Control and use energy more efficiently;
• Manage healthcare in poor, ageing or isolated populations;
• Deliver the best possible education to future generations;
• Take better care of environment; and
• Streamline transport networks.
Broadband networks must therefore be regarded as vital elements of national infrastructure – similar to transport, energy and water networks, but with an even more
powerful and far-reaching impact.
Since Africa and, particularly, Ethiopia are not ready for large-scale broadband development, it is quite difficult to measure the short- and medium-term financial impact of the increase in the number of business subscribers. On the other hand, half of
the interviewed companies think that better broadband services would increase their
profitability and improve their commercial activities, although they are not able to
measure this impact.
However, given the size of the country and the cost of national and international
transportation, the educational and health challenges faced, and government targets
for economic growth and industrial development, it is clear that the development of
a strong broadband network and a rapid increase in the use of Internet and data services within Ethiopian companies should be a national priority.
5
6
64
7
Booz & Company: Digital Highways: The Role of Governments in 21st Century Infrastructure
McKinsey & Company “Mobile Broadband for the Masses”
What Role Should Governments Play in Broadband Development? (2009), The World Bank/InfoDev
10Main Constraints to the Improvement of
Telecommunications Services
Two different categories of constraints can slow the growth of the telecommunications services in Ethiopia:
• The Internal constraints of the sector/operator;
• The “external” constraints, i.e. the constraints of the market.
10.1Internal Constraints of the Sector/Operator
As stated previously, ETC has made available a strong infrastructure. However, the
supply of services has suffered from:
• an insufficiently defined strategy, led more by the negotiations with vendors
than by the market requirements;
• an unclear positioning of the services per technology; and
• most probably a poor knowledge of market needs by segment and geographical location.
The government has recently decided on a complete reorganization of the national
operator through a management contract signed with France Telecom. This reorganization would be carried out to respond on the one hand to the requirements of government strategy, particularly in terms of increasing the penetration and the coverage
of services, especially in urban areas, and on the other hand to respond to market
requirements and constraints.
Therefore, the main internal constraints for the new operator will be:
• To acquire as soon as possible a good, detailed knowledge of the market in
order to be able to define a clear strategy based on market segmentation and
on an analysis of the customers’ willingness and ability to pay;
• To combine the government target and guidelines taking into account market requests and profitability constraints.
The last “internal” constraint of the Ethiopian telecommunications sector is obviously the current monopoly situation of ETC as sole operator of fixed, mobile and
Internet services. According to the observed evolution from 1995 in both developed
and developing countries, the opening of the market has in all cases led to a faster increase in the supply of services and market penetration due to a decrease in end-user
tariffs. On the other hand, the experience shows that a sound government strategy
and strong, independent regulation are absolutely necessary to protect the interests
of the state and the national resources (frequencies), to guarantee the interests of the
investors through fair competition and to ensure consumer benefits. These points are
developed in the recommendations presented in chapter 11.
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10.2Market Constraints
The market constraints are linked to the African, and Ethiopian, specificities in terms
of density and rate of urbanization, household income and illiteracy rate and, with
regard to the business sector, the work organization.
10.2.1 Low Rate of Urbanization
Although it is growing, at 17%, the urbanization rate in Ethiopia is one of the lowest in Africa. The cost (per subscriber) of rural telecommunications can be up to ten
times higher than for an urban system. The overall penetration target of every service
has to take into account this very important factor.
10.2.2 Low Household Income
The huge development of mobile telephony throughout the world and especially in
the developing countries has sometimes led us to forget the constraints of income
and its impact on consumer behaviour.
In most developing countries, where the mobile market has been liberalized for
years, this constraint has generated the multi-SIM phenomenon that reduces the real
penetration rate. It has also led to a rapid decrease in the Average Revenue Per User
(ARPU) from 20-25 USD in early 2000 to 4-8 USD in 2010. The ARPU reduction
has naturally had a huge impact on the operators’ profitability and led them to adjust
their strategies. It also has an impact on the households that spend much more of
their income (10% to 15%) on mobile telephony than in developed countries.
Whatever the tariff evolution, it is probable that the rate of increase of mobile penetration in developing countries will progressively slow down when reaching the
limits of extreme poverty. This constraint has to be heeded to avoid unrealistic expectations. In Ethiopia, it concerns probably 30% to 35% of the population. It should
also be born in mind that the household income constraint has an even greater impact
on Internet demand since prices are much higher and the need less “basic”.
10.2.3 Illiteracy
Experience shows that illiteracy has had no impact on mobile demand, since “the
need to talk” is a basic need and operators have adjusted their procedures (e.g. recharging) to account for this.
It could much more seriously affect the demand for Internet access, since illiteracy
not only makes internet use more difficult, but also reduces interest. This constraint
is important in Ethiopia, which suffers from a very low literacy rate linked to the
low urbanization rate and the importance of the agricultural sector. It will affect the
development of Internet use in Ethiopia as the school enrolment rate is quite low
and increased literacy levels will take time (although the government’s plans in this
regard are noted).
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10.2.4 Work Organization
The company survey has shown that the use of IT and the basic use of computers is
quite low, even among a sample of medium and large sized companies.
As stated previously, the Internet entered general use in developed countries approximately 20 years after the first personal computer. In addition, the fall in agricultural
and industrial employment and increasing automation led to widespread computer
use in most sectors. Therefore, around 50% to 75% of the active population under 50
years of age had some acquaintance with computer use when the Internet appeared,
first in the work place and then at home thanks to the decrease in the price of computers and Internet access.
In contrast to this situation, among the sample of companies interviewed, computers were only used by 50% of the managers and 10% of the employees. Since the
managers represent about 5-10% of the total staff, the total percentage of Internet
users does not exceed (7.5% x 50%) + (92.5% x 10%) = 13% of the total staff. Based
on the total number of company employees (350,000) in structures of more than 10,
this implies that the total number of computer users could be nearly 50,000 in this
category of companies.
Assuming that the rate of computer users does not exceed 5% to 10% in companies
of fewer than 10 employees, the total number of users could range from 75,000 to
150,000 in this sector.
Combining these figures gives a (very approximate) estimate for the total number
of people using a computer for business purposes in the range 150,000 to 200,000.
This estimate has to be treated with some caution as it is based on some fairly broad
assumptions but it nevertheless can be considered to give an indication of the order
of magnitude of business computer use.
The development of Internet and data communications services will thus require an
increase in the IT sector and in computer penetration amongst small companies.
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11Conclusions and Recommendations
11.1 Conclusions
Despite continual expansion in the fixed network since the 1970s, Ethiopia missed
the first step in the start of mobile telephony at the end of the 1990s. Launched in
1999, the first GSM 900 network grew slowly until the prepaid service was introduced in 2002. Ethiopia was one of the last African countries where the number of
mobile phones exceeded the number of fixed lines, in 2006. Ethiopia is also the only
remaining country in Africa to allow its national operator to hold a monopoly on all
telecom services including fixed, mobile, Internet and data communications.
• Thanks to a large and continuous investment programme from 2001, at the
end of 2010 the national operator enjoys a strong network infrastructure
operating a number of up-to-date technologies, having made available large
switching capacities and a portfolio of potential services:
• Ethiopian fixed voice penetration (1.2%) is quite poor but in line with the
African average;
• Mobile penetration is still very low (8.5%) but has been developing rapidly
since 2006;
• Ethiopian networks have the benefit of a 10,000 km national backbone
(mainly FO) and strong international connectivity (2.5 Gbps).
• Despite the available resources, a number of technical and organizational
weaknesses can be identified:
• The PSTN secondary network legacy is not suitable for international standards of Quality of Service(QoS), whereas the Fixed (PSTN/CDMA) network design is not really optimized and suffers from overlapping.
• The mobile network (GSM/CDMA) design is complex and not optimized
and the official coverage of 60% of the territory results in a poor average
quality of service.
• The broadband ADSL access capacity (and the dial-up QoS) is restricted by
the low quality of the secondary PSTN network, the CDMA 1X service is
not suitable for professional use and both EVDO and UMTS/HSPA capacities seem to be quite restricted.
• Despite the use of a range of technologies and commercial offers for Internet
and data access, both the availability and quality of the service fall short of
market requirements in Addis Ababa and especially in the regions, and the
tariffs remain extremely high.
• International traffic suffers from a serious bottleneck on the two transit
switches as both fixed and mobile voice international services are poor and
the broadband Internet speed is very low compared to the theoretical international capacity.
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• The business sector includes an estimated number of 650,000 to 750,000
companies, of which about 150,000 to 180,000 are in Addis Ababa and only
12,000 to 15,000 have more than 10 employees.
• The survey among 98 medium and large Ethiopian companies has confirmed
the weaknesses in the supply of telecommunication services that clearly do
not meet the needs of the business sector.
equipped with broadband, and IT and Internet use is still uncommon. 90%
of the companies consider that the telecommunications services are not
adapted to their activity. The main complaints concern:
o The lack of fixed lines and the poor quality of the fixed voice services;
o The insufficient coverage and quality of mobile services;
o The lack and poor quality of Internet and data services, especially in
relation to the very high prices.
o The business sector suffers from the weaknesses of telecommunications services in terms of internal and external communications, access to technical and commercial information, marketing promotion
and international visibility.
• The direct negative impact on the business sector is impossible to calculate
on a reliable basis but the global impact on GDP growth can be estimated,
based on international studies, at a cumulative loss of USD 2.2 to 3.3 billion for the period 2005-2010 and an induced tax loss for the Government
of USD 1 billion.
• Despite the shortcomings in coverage and quality of service, the Ethiopian
telecommunications sector is making up lost time with regard to mobile
voice services.
• All international studies highlight the positive impact of broadband connectivity on economic growth and business development in developing countries.
The Ethiopian telecommunications sector cannot repeat past errors and has to successfully face its new challenge: to provide government, business and the social
sector with the required national and international connectivity which will enable
the country to meet its commitments in terms of economic and social development.
• The period 2011-2015 will be crucial and should enable the national operator to:
• Improve the quality of existing services to reach international standards;
• Expand the fixed network capacity by 25-30% (up to 1.2 to 1.3 million lines)
particularly in response to business demands;
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• Expand the mobile network capacity to about 40 million subscribers (45%
penetration);
• Develop a range of broadband, fixed and mobile services at suitable prices,
adjusted to the needs and capacities of each of the business and residential
segments with a target of 15,000 high-speed fixed accesses and 225,000
to 350,000 medium-speed fixed and mobile broadband customers including
150,000 to 200,000 business customers.
11.2 Recommendations
After a ten-year expansion phase of the various networks making available the required infrastructure throughout the country, the next five years should definitely
be “market oriented”. Based on the optimization of the existing capacities and
equipments, a strategy should be defined which will gradually meet the needs of the
different market segments in order of priority.
According to the characteristics and constraints of the Ethiopian market (size of the
rural sector, level of income, structure of the business sector, working organization)
this strategy will have to include a mix of technical requirements and pricing policy.
• The operator needs an in-depth knowledge of the quantitative and qualitative characteristics of the market in order to adjust as accurately as possible
the telecommunication services to the expectations of the market.
• Businesses must be able to define their needs as precisely as possible to the
telecom operator in order to obtain the maximum benefit from the telecommunications services and to be able to adapt their working process to better
use of information technologies.
• The Government needs to remove all obstacles that could limit the penetration of Information Technologies among the Ethiopian population and needs
to implement solutions to boost the IT and broadband market.
The main recommendations are as follows:
11.2.1 Operator(s) Must Adjust the Telecommunication Services to
Market Expectations
The telecommunication operator(s) will have to carry out an exhaustive demand
survey at a local level in order to:
• define a detailed segmentation of the market according to multiple criteria:
o Geographical location at the lowest level in urban (district) and rural
(villages) areas
o Status (business, residential, government bodies, social institutions)
o Telecom needs (type of service, quality level)
o Ability to pay
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• Estimate and forecast the potential demand from each segment;
• Plan the deployment of new capacities/services according to the government
strategy and its own commercial and financial expectations and constraints.
At the same time, the telecommunication operator(s) will have to:
• Implement the required commercial infrastructure (sales force, customer
care) to address each of the customer segments;
• Define the SLA (Service Level Agreements) for each service/segment;
• Implement the corresponding control tools;
• Prepare the information/communication plan and tools for each segment.
11.2.2 Businesses Must Express Their Needs and Adjust Their Working
Process
The business operators will have to be able to assist the telecom operator in defining quantitatively and qualitatively the needs of each category of companies
(sector, size, location).
The survey has highlighted the lack of complete, accurate and up-to-date data
regarding the number and geographical location of companies in Addis Ababa
and the regions.
It could be the role of the Chambers of Commerce, in partnership with government institutions (ministries, CSA, etc.) to bring together the existing data in
order to help the telecom operator to carry out the business demand survey.
The survey has shown the low use of IT and computers within Ethiopian companies.
In order to promote the development of IT and Internet and data use within the
business sector, the Chambers of Commerce could organize information campaigns and training sessions adapted to certain prioritized sectors of activity.
11.2.3 Government must remove obstacles and implement solutions to
boost the IT and broadband market
Short Term
The main means that can be used by the Government to facilitate the penetration of
telecommunication services, and especially broadband services, among the Ethiopian population and the business sector are, in the short term, the tax regime, the
education system and the development of e-Government applications and, in the
medium-term, the regulation of the telecommunications market.
The easiest immediate means is fiscal adjustment in order to decrease the cost
of personal devices in telecommunications (handsets and CPE) and personal
computers.
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• The taxes on cellular telephones include the import duties (10%) and VAT
(15%). Numerous surveys show that the cost of cellular handsets represents
the first barrier to mobile penetration among the low income population. To
reach the ambitious target of penetration of over 20% the removal of this
barrier is essential; import duty could be removed and even possibly, as
decided in Kenya last June, mobile handsets could be exempted from VAT.
A similar approach could also be taken for the various types of broadband
CPE (modems, USB).
• There is currently no import duty on computers. The only means of decreasing the price would be to apply a lower VAT rate or to exempt personal computers from VAT. Whilst changes to the VAT regime may be problematic,
the removal of import duty would have a minimal impact on government
revenue as many of the handsets are imported illegally at present and hence
generate no revenue at all for the government.
Through the education system, in partnership with universities and schools, the
Government could promote specialized training sessions in Information Technologies, especially intermediate level training based on the real needs of companies in IT system administration.
Through the implementation of e-Government applications to address first the
business sector (information, regulation, registration and tax processes on-line)
and secondly households (registration, taxes, etc.), the Government could promote greater use of IT.
11.2.4 Medium Term
In the medium-term, with a pragmatic approach, the Government should create
conditions to encourage a reduction in the price of services, especially in the broadband sector, either by liberalizing the activity within the public sector (as in Vietnam) or through Public-Private Partnerships.
In developed countries as well as in developing countries, the liberalization of the
telecommunications sector has in all cases led to a rapid growth of penetration rates
thanks to an increase in the supply of services and a fall in prices.
In developing countries, the number of mobile phone subscriptions has overtaken
the number of fixed lines only a few years after the launching of mobile telephony
for two reasons:
• First, wireless technology can be deployed more quickly than a fixed telephone system because it requires less upfront investment in infrastructure.
This translates to lower prices and hence stronger customer demand.
• Second, liberalization of fixed-line markets, which were often dominated
by state-owned monopolies, started later, while mobile phone markets were
generally opened to one or more new entrants from the start. In 2007 only
10% of developing countries had maintained a monopoly in the mobile sector whereas the proportion was still 40% in fixed and international long dis73
tance telephony. In developed countries, the percentage of countries with
monopolies was 10% in the mobile sector and 12% in the fixed and international long distance sector8.
The introduction of competition in the mobile telephony market has often led to
an immediate growth in voice services. Countries that have taken decisive steps to
establish independent regulators and foster competition have seen notable improvements in sector performance.
In some cases, the announcement of a plan to issue a new licence has been effective
in triggering growth, encouraging the existing mobile phone operator to improve service, reduce prices and increase market penetration even before the new entrant has
started operations. The following figure shows the evolution of mobile penetration
in six developing countries before and after the introduction of competition (year 0).
Figure 5. Mobile telephony penetration before and after the introduction of
competition
70%
60%
Afghanistan
50%
Belarus
40%
Honduras
30%
Kenya
20%
Tonga
10%
Tunisia
0%
y-3y
-2
y-1y
0y
1y
2y
3
Source: ITU, World Telecommunication/ICT Indicators Database
Various models of liberalization have been used in the last 15 years in developing
countries in Africa and Asia:
• Total liberalization through the partial or total privatization of the incumbent
operator and the award of new fixed/mobile/Internet/neutral licences (Kenya, Ivory Coast, Senegal, Morocco, Egypt).
• Partial liberalization with emphasis on the private sector: the Government
keeps control of the incumbent operator with/without a monopoly on fixed
telephony and awards mobile and Internet licences (Algeria, Cameroon, Benin).
• Liberalization with limited participation of the private sector through Private-Public Partnership (Vietnam, China).
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8
World Bank – 2009 Information and Communications for Development
At the end of 2010, most developing countries have liberalized the mobile sector and
the main issues concern:
• Fair access to international connectivity.
• The granting in 2011 in many countries of Africa of 3G licences or neutral
licences.
• Fair access for ISPs to national and international bandwidth in order to promote affordable access to broadband for both companies and households.
In November 2010, the Minister of Communications of Ghana called on the National
Communications Authority (NCA) to stop what he called Vodafone Ghana’s practice
of ‘killing off’ rival internet service providers (ISPs). The minister accused Vodafone
of acting both as wholesaler and retailer by selling bandwidth to ISPs while it runs its
own chain of retail internet cafes, which are more efficient than those of the ISPs and
thus effectively harms their businesses. The Minister said that a number of ISPs had
filed official complaints with him and, having agreed that their concerns were valid,
he asked the NCA to investigate the matter and if necessary, bring Vodafone to book.
Therefore, whatever the model, the key factor is not so much operator ownership but
more the development of a competitive environment and the efficiency and independence of the regulation policy in order to:
• Promote the delivery of services to the whole country, especially remote
areas, through reasonable but ambitious specifications.
• Guarantee fair competition between the incumbent and the new entrants
(e.g. full access to international capacities) and between large and small operators (e.g. asymmetric interconnection fees).
• Facilitate a decrease in end-user tariffs (e.g. moderate licence fees, encouragement of infrastructure sharing, interconnection rate control).
• Guarantee the profitability of operators and encourage private investment
(e.g. tax moderation and fiscal environment stability).
The Ethiopian Government has already launched a reorganization of the national
operator through a management contract signed with an international operator that
should increase the capacity of the operator to respond to the most urgent needs of
the market.
However, in view of the quantitative targets to be reached in 2015 and later, the size
of the Ethiopian market and the total investment to be carried out in the mediumterm in both voice and data networks development, it would be better if the Government opened the sector to other investors and operators through Public-Private
Partnerships according to a well-defined long term strategy.
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This strategy could include some or all of the following elements:
• Opening up the national operator to equity participation from private national investors and/or an international operator.
• Granting at least one GSM/3G or neutral licence through a transparent bidding process.
• Defining fair rules, under the control of the regulator, for access to national
and above all international bandwidth in order to facilitate the development
of the ISP market and affordable broadband offers to address the various
segments of the market.
The improvement of the telecommunications sector and services will be a critical
step in Ethiopian economic and social development and will only be successful if
it can simultaneously benefit the State, investors and end-users (companies and the
population at large).
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12Glossary of Terms
ADSL: Asymmetric Digital Subscriber Line
ADSL is one form of the Digital Subscriber Line technology, a data communications
technology that enables faster data transmission over copper telephone lines than a
conventional voice band modem can provide. It does this by utilizing frequencies
that are not used by a voice telephone call.
Broadband
Broadband in telecommunications refers to a signalling method that includes or
handles a relatively wide range (or band) of frequencies, which may be divided into
channels or frequency bins. Broadband is always a relative term, understood according to its context. The wider (or broader) the bandwidth of a channel, the greater the
information-carrying capacity. A still broader band is required to carry music without
losing the high audio frequencies required for realistic sound reproduction. In data
communications a digital modem will transmit a data rate of 56 kilobits per seconds
(kbit/s) over a 4 kilohertz wide telephone line (narrowband or voice band). However
when that same line is converted to a non-loaded twisted-pair wire (no telephone
filters), it becomes hundreds of kilohertz wide (broadband) and can carry several
megabits per second (ADSL).
CDMA: Code Division Multiple Access
CDMA is a scheme, used as a modulation technique, in which multiple channels are
independently coded for transmission over a single wideband channel. CDMA is a
channel access method used by various radio communication technologies. It should
not be confused with the mobile phone standards called cdmaOne and CDMA2000
(which are often referred to as simply CDMA), which use CDMA as an underlying
channel access method.
FTTx: Fibre To The…(ex: FTTH: Fibre To The Home, FTTO: Fibre To
The Office).
FTTx is a generic term for any broadband network architecture that uses optical fibre
to replace all or part of the usual metal local loop used for last mile telecommunications. The generic term originated as a generalization of several configurations of
fibre deployment (FTTN, FTTC, FTTB, FTTH...), all starting by FTT but differentiated by the last letter, which is substituted by an x in the generalization.
GDP: Gross Domestic Product
The gross domestic product is the amount of goods and services produced in a year,
in a country. It is the market value of all final goods and services made within the
borders of a country in a year. It is often positively correlated with the standard of
living.
77
GNI: Gross National Income
Gross national income (GNI) comprises the total value produced within a country
(i.e. its gross domestic product), together with its income received from other countries (notably interest and dividends), less similar payments made to other countries.
The GNI consists of: the personal consumption expenditures, the gross private investment, the government consumption expenditures, the net income from assets
abroad (net income receipts), and the gross exports of goods and services, after deducting two components: the gross imports of goods and services, and the indirect
business taxes.
GSM: Global System for Mobiles
GSM is the most popular standard for mobile telephony systems in the world. The
GSM Association estimates that 80% of the global mobile market uses the standard.
GSM is used by over 1.5 billion people across more than 212 countries and territories. This ubiquity means that subscribers can use their phones throughout the world,
enabled by international roaming arrangements between mobile network operators.
GSM differs from its predecessor technologies in that both signalling and speech
channels are digital, and thus GSM is considered a second generation (2G) mobile
phone system. The GSM standard has been an advantage to both consumers, who
may benefit from the ability to roam and switch carriers without replacing phones,
and to network operators, who can choose equipment from many GSM equipment
vendors.
PSTN: Public Switched Telephone Network
PSTN is the network of the world’s public circuit-switched telephone networks. It
consists of telephone lines, fibre optic cables, microwave transmission links, cellular
networks, communications satellites, and undersea telephone cables all inter-connected by switching centres which allows any telephone in the world to communicate with any other. Originally a network of fixed-line analogue telephone systems,
the PSTN is now almost entirely digital in its core and includes mobile as well as
fixed telephones.
UMTS: Universal Mobile Phone Service
UMTS is one of the third-generation (3G) mobile telecommunications technologies,
which is also being developed into a 4G technology. UMTS is used to provide mobile broadband services.
VAS: Value Added Services
A Value Added Service is a popular telecommunications industry term for non-core
services or, in short, all services beyond standard voice calls and fax transmissions.
Value-added services add value to the standard service offering, spurring the subscriber to use their phone more and allowing the operator to drive up their ARPU.
For mobile phones, while technologies like SMS, MMS and GPRS are usually
considered value-added services, a distinction may also be made between standard
(peer-to-peer) content and premium-charged content.
VSAT: Very Small Aperture Terminal
A Very Small Aperture Terminal (VSAT), is a two-way satellite ground station or a
stabilized maritime VSAT antenna with a dish antenna that is smaller than 3 metres.
The majority of VSAT antennas range from 75 cm to 1.2 m. Data rates typically
range from 56 kbps to 4 Mbps. VSATs are most commonly used to transmit narrowband data (point of sale transactions such as credit card, polling or RFID data, or
SCADA), or broadband data (for the provision of Satellite Internet access to remote
locations, VoIP or video). VSATs are also used for transportable, on-the-move (utilizing phased array antennas) or mobile maritime communications.
WLL: Wireless Local Loop
Wireless local loop (WLL), is a term for the use of a wireless communications link as
the “last mile/first mile” connection for delivering standard telephone services and/
or broadband Internet to telecommunications customers.
79
13References
(1)
2009 Information and Communications for Development (World Bank
Group)
(2)
A Platform for Progress (Paul Budde, 2010)
(3)
African Statistical Yearbook 2010 (Africa Development Bank Group)
(4)
Aker, J., 2008. Does Digital Divide or Provide? ·e Impact of Mobile Phones
on Grain Markets in Niger, BREAD.
(5)
Booz & Company “Digital Highways: The Role of Governments in 21st
Century Infrastructure (2009)
(6)
Ernst & Young, 2009. Enquête sur le Développement des Télécommunications, Ernst & Young – Global Telecommunications Center, juin 2009.
(7)
Frost & Sullivan, 2006. Social Impact of Mobile Telephony in Latin America
(8)
McKinsey & Company “Mobile Broadband for the Masses” (2009)
(9)
Measuring the Information Society, 2010 (ITU)
(10)
OCDE, 2009. Perspectives Économiques en Afrique, rapport OCDE 2009.
(11)
The role of mobile phones in sustainable rural poverty reduction, 2008 (WB
Group, ICT Policy Division)
(12)
Towards Evidence-based Policy in Africa: ICT Access and Usage in 17 African Countries (Research ICT Africa@The Edge Institute, 2009)
(13)
Waverman, L., Meschi, M., Fuss, M., 2005. e Impact of Telecoms on Economic Growth in Developing Countries, in Vodafone Policy Paper Series,
Africa: .e Impact of Mobile Phones, Vodafone Group.
81
83
Trade and
Services
Industry
Agriculture
Sector
Trade and
Services
Industry
Agriculture
Sector
35
59%
No. of companies
Total
Sub-sector
% of the sample
36%
% of the sample
Total
Sub-sector
21
5%
% of the sample
No. of companies
3
No. of companies
Total
58%
% of the sample
Sub-sector
23
Total
Sub-sector
No. of companies
39%
% of the sample
Total
Sub-sector
14
3%
% of the sample
No. of companies
1
Total
No. of companies
Sub-sector
Survey Sample
8%
5%
2
Hotels &
Restaurants
Retail
trade
3
29%
11
Other
Manufacturing
0%
0
Textile
11%
4
Transport &
Communications
0%
0
Electricity &
Water
6.8%
4
Wholesale
1.7%
1
Textile
5.1%
3.0
Crop
10.2%
6
Retail trade
10.2%
6
Other
Manufacturing
20.3%
12
1.7%
1
5.1%
Transport &
Communications
0.0%
3
Construction
Hotels &
Restaurants
0
Electricity &
Water
8%
3
0.0%
0
Financial &
Insurance
18.6%
11
8%
3
Education
& Health
3%
1
Other
Industry
Other
Industry
Financial &
Insurance
5%
2
Construction
Table 30. Sectoral distribution of companies in regions
8%
3
Wholesale
3%
1
Mining
3%
1
Crop
Table 29. Sectoral distribution of companies in Addis Abab
Appendix. Company Survey Results
11.9%
7
Education
& Health
0%
0
Real
Estate
8.5%
5
Real
Estate
11%
4
Other
services
84
2. Public/Private
8.6%
2. Part of National group
14.3%
1. Public
25.7%
1. Independent
80.0%
386
565
39
Labourers
Total staff
Number of companies
8
75
15
63
2. Public/Private
3.4%
2. Part of National group
17.2%
1. Public
3.4%
1. Independent
79.3%
4
66
39
96
59
Employees
Labourers
Total staff
Number of companies
22
9
3
6
1.4
Less than 21
3.4%
6.8%
Average staff
2. Mainly Import
1. Mainly Export
Management staff
Company size (staff)
Structure
Legal Status
Activity
392
Employees
7
15
48
14
33
4
21 to 99
3.4%
3. Part of International Group
93.2%
3. Private
8.5%
3. Both
31
720
443
483
38
100 and more
5.7%
3. Part of International Group
65.7%
3. Private
8.6%
3. Both
Table 32. Company activity, status, structure and size – regions
32
1 to 99
31.4%
2.9%
Average staff
2. Mainly Import
1. Mainly Export
Management staff
Company size (staff)
Structure
Legal Status
Activity
Table 31. Company activity, status, structure and size – Addis Ababa
22
216
85
149
7
100 and more
81.4%
4. Domestic only
57.1%
4. Domestic only
85
Adama
6
Gondar
5
No. with 100%
Dessie
4
6
Wolaita
29.2%
% National
34%
0
% National
18%
0
Mainly consumers
20.8%
% Local
48%
1
% Local
38%
4
18
10
% Local
55%
11
% Local
45%
12
3
% National
30%
1
% National
44%
6
25.4%
14
18.6%
Mainly consumers
No. of main partners/suppliers abroad
No. with 100%
No. with 100%
1 site
41
Mainly companies
1.6
Hawassa
6
5
Bahir Dar
% International
18%
3
% International
44%
8
2 sites
13
Both
50.0%
More than 2 sites
18
Dire Dawa
6
% International
14%
3
% International
11%
1
More than 1 site
18 (average: 2.8 sites)
Both
55.9%
Table 35. Organization and commercial relationships – regions
1 site
7
Mainly companies
6
No. of main partners/suppliers
Suppliers/Partners
Customers location
Average number of sites
Number of companies with:
Customers
Jimma
5
6
Shashemene
Table 34. Organization and commercial relationships – Addis Ababa
3
7
No. with 100%
No. of main partners/suppliers
No. of main partners/suppliers abroad
Suppliers/Partners
Customers location
Average number of sites
Number of companies with:
Customers
Location (city)
Adigrat
Mekelle
Table 33. Regional distribution of company sample
86
1.8
2
18
67
45
50%
16%
Average number of International fixed lines
Average number of Fax lines
Average number of Mobile lines
Employees/Fixed line
Employees/mobile % of companies equipped with PABX
% of companies equipped with Lease Lines
53%
% of companies equipped with ADSL
886
32%
ADSL % of companies equipped with an Intranet
453
CDMA
54
Dial - Up
68%
% of companies equipped with CDMA
Available bandwidth 74%
% of companies equipped with Dial - Up
8
Average number of Fixed lines
Internet / Data Access 68%
% of companies equipped with Mobile lines (paid by company)
3%
84%
% of companies equipped with VSAT
71%
% of companies equipped with Fixed lines
% of companies equipped with Fax lines
100%
Voice % of companies equipped with International fixed lines
Total
Telecommunications equipment
13%
63%
100%
25%
10
19
11
1
1
4
63%
63%
63%
100%
Staff 1 - 99
Addis Ababa
66%
69%
66%
55%
51
72
20
2
2
10
69%
90%
72%
100%
Staff > 99
Table 36. Telecommunications equipment
7%
128
150
51
8%
24%
37%
0%
0%
14%
13
31
10
2
1
3
71%
51%
46%
97%
Total
5%
14%
24%
0%
4
6
3.3
1.0
1.0
1.7
71%
24%
29%
95%
Staff < 21
7%
27%
40%
7%
10
19
7.2
1.1
1.3
2.8
67%
47%
47%
93%
Staff 21 - 99
Regions
14%
33%
48%
33%
15
47
18.3
1.8
1.5
4.6
81%
81%
62%
100%
Staff > 99
87
1.9%
51%
15%
78%
21%
83%
Staff 1 - 99
Addis Ababa
4.1%
31%
4%
70%
17%
57%
Staff > 99
7%
88%
88%
85%
71%
Preferred communication mean with customers
Preferred communication mean with partners
Preferred communication mean with Govt Administration
Telephone
Preferred communication mean within the company
2%
2%
3%
3%
Fax
0%
7%
5%
0%
e-mail
12%
7%
27%
17%
7%
0%
0%
2%
1.6%
23%
9%
79%
3%
35%
31%
10%
3%
3%
Courier
Courier
0.6%
20%
34%
83%
11%
47%
42%
41%
42%
34%
Other
0.7%
21%
14%
88%
7%
3%
4%
69%
Staff > 99
Other
7%
20%
Staff 21 - 99
Regions
Staff < 21
e-mail
Table 39. Preferred means of communication – regions
5%
15%
15%
Preferred communication mean with partners
Preferred communication mean with Govt Administration
5%
10%
46%
27%
Fax
Preferred communication mean within the company
Telephone
Preferred communication mean with customers
Preferred means of communication
1.0%
23%
14%
86%
4%
59%
Total
Table 38. Preferred means of communication – Addis Ababa
4.0%
% employees with access to Internet
Preferred means of communication
4%
71%
% management with access to Fixed voice service
32%
18%
% employees equipped with a personal computer
% management with access to Internet
63%
% management equipped with a personal computer
% employees with access to Fixed voice service
Total
Table 37. Personal access to IT and telecommunications facilities
Personal access to IT & Telecommunications facilities
Telecommunications usage
88
Main purpose of Internet use
Why do you never use Internet & Data solutions?
Frequency of use of Internet and data transfer
Frequency of Internet use
Main purpose of Internet use
Why do you never use Internet & Data solutions?
Frequency of use of Internet and data transfer
Frequency of Internet use
7%
19%
40%
Searching
Commercial Info
10%
e - mailing
68%
12%
Searching
Technical info
19%
Marketing
Campaign
24%
5%
27%
40%
33%
67%
42%
32%
43%
Staff > 99
0%
8%
Never
29%
Marketing
Campaign
No need
27%
Staff 21 - 99
19%
20%
Rarely
19%
Searching
Technical info
Partners not connected
14%
Staff < 21
Sometimes
9%
Searching
Commercial Info
Poor Quality
29%
Total
Frequently
Table 41. Internet use – regions
49%
e - mailing
20%
20%
7%
60%
17%
38%
8%
Never
No need
24%
13%
10%
Rarely
Partners not connected
52%
Staff > 99
13%
14%
Sometimes
Poor Quality
38%
32%
Staff 1 - 99
Total
Frequently
Table 40. Internet use – Addis Ababa
Table 42. Focus on e-mailing – Addis Ababa
e - mailing use
Daily
Frequently
Sometimes
Never
Within the company
22%
16%
24%
38%
With clients within Ethiopia
18%
11%
37%
34%
With clients abroad
24%
8%
40%
28%
With partners/suppliers within Ethiopia
11%
17%
34%
37%
With partners/suppliers abroad
26%
34%
31%
9%
Table 43. Focus on e-mailing – regions
e - mailing use Daily
Within the company Never
9%
9%
66%
7%
14%
21%
59%
22%
4%
30%
43%
3%
10%
38%
48%
30%
10%
10%
50%
With partners/suppliers within Ethiopia
With partners/suppliers abroad
Sometimes
16%
With clients within Ethiopia
With clients abroad Frequently
Table 44. Web site – Addis Ababa
Is your company equipped
with a website?
Yes
No
Total
57%
43%
Staff 1 - 99
38%
63%
Staff > 99
61%
39%
Not useful
Difficult to implement
Never thought
14%
19%
67%
Yes
Yes perhaps
No
76%
18%
6%
Why not?
Do you intend to
implement a website
Table 45. Web site – regions
Is your company equipped
with a website?
Yes
No
Total
35%
65%
Staff < 21
29%
71%
Staff 21 - 99
25%
75%
Staff > 99
Why not?
Do you intend to
implement a website
40%
60%
Not useful
Difficult to implement
Never thought
9%
9%
83%
Yes
Yes perhaps
No
52%
35%
13%
89
Satisfaction with current telecommunication services
Table 46. Availability of the services – Addis Ababa
Fixed lines
Have you enough fixed lines?
Yes
No
Addis Ababa
53%
47%
Other cities
33%
67%
Not available/
on waiting list
Too
expensive
Other
64%
18%
18%
Yes
No
Addis Ababa
79%
21%
Other cities
44%
56%
Not available/
on waiting list
Too
expensive
Other
0%
71%
29%
Yes
No
Addis Ababa
35%
65%
Other cities
20%
80%
Not available/
on waiting list
Too
expensive
Other
25%
46%
29%
Why haven’t you more?
Mobile lines
Have you enough mobile lines
Internet access
Have you enough
Internet access facilities?
Table 47. Availability of the services – regions
Fixed lines
Have you enough fixed lines?
Main city
Other cities
Too
expensive
Other
52%
13%
35%
Yes
No
Main city
91%
7%
Other cities
81%
19%
Not available/
on waiting list
Too
expensive
Other
0%
42%
58%
Yes
No
Main city
58%
42%
Other cities
50%
50%
Not available/
on waiting list
Too
expensive
Other
40%
53%
7%
Internet access
90
24%
42%
76%
58%
Mobile lines
Have you enough
Internet access facilities?
No
Not available/
on waiting list
Have you enough mobile lines
Yes
Table 48. Quality of service
Do you suffer from:
Addis Ababa
Regions
Frequently
Sometimes
Never
Frequently
Sometimes
Never
Fixed telephone faulty
lines?
46%
43%
11%
28%
56%
16%
Fixed telephone call
drops?
43%
32%
24%
20%
56%
24%
Is the mobile coverage
sufficient?
Yes
No
Yes
No
Mobile coverage local
71%
29%
59%
41%
Mobile coverage national
61%
39%
48%
52%
Frequently
Sometimes
Never
Frequently
Sometimes
Never
Mobile call drops? Do you suffer from:
38%
53%
9%
44%
52%
4%
Are the Internet/Data
facilities convenient for
your company?
Yes
No
Yes
No
30%
70%
38%
62%
Availability
Service
interruption
Speed
Availability
Service
interruption
Speed
12%
31%
48%
21%
26%
52%
What are the main problems?
Table 49. Tariffs
How do you consider
these tariffs?
Addis Ababa
Affordable
Expensive
Regions
Very
expensive
Affordable
Expensive
Very
expensive
Fixed line:
Subscription fee
78%
16%
5%
69%
27%
4%
Monthly fee
68%
30%
3%
64%
35%
2%
Local minute
61%
39%
0%
53%
39%
8%
National minute
45%
47%
8%
42%
44%
14%
0%
21%
79%
22%
28%
50%
SIM card
50%
42%
8%
44%
45%
11%
Post-paid monthly fee
26%
61%
13%
33%
55%
13%
Local minute
47%
37%
16%
48%
44%
8%
National minute
26%
53%
21%
14%
61%
25%
8%
14%
78%
13%
35%
52%
Dial-up monthly fee
71%
23%
6%
57%
39%
4%
Dial-up minute
57%
29%
14%
68%
28%
4%
ADSL Installation fee
13%
42%
46%
18%
36%
45%
4%
46%
50%
17%
28%
56%
39%
48%
13%
47%
41%
12%
International minute
Mobile:
International minute
Internet:
ADSL monthly fee
CDMA Internet access
91
Table 50. Global opinion about the telecommunications services – Addis Ababa
Are the current telecommunications services
globally?
Sufficient
Insufficient
Very
insufficient
11%
76%
13%
What are the main weaknesses?
First and second choice
Fixed voice service availability (lack of available
lines)
52%
Fixed voice national service quality (faulty lines/call
drops)
32%
Fixed voice international service quality (call drops)
29%
Insufficient Mobile coverage
45%
Internet access availability within Addis Ababa
61%
Internet access availability in other cities than Addis
Ababa
39%
Internet access quality within Addis Ababa (interruptions, speed..)
74%
Internet access quality in other cities (interruptions,
speed..)
27%
Table 51. Global opinion about the telecommunications services – regions
Are the current telecommunications services
globally?
What are the main weaknesses?
92
Sufficient
Insufficient
Very
insufficient
15%
51%
32%
Fixed voice service availability (lack of available
lines)
44%
Fixed voice national service quality (faulty lines/
call drops)
58%
Fixed voice international service quality (call
drops)
19%
Insufficient Mobile coverage
70%
Internet access availability in your city
13%
Internet access availability in other cities
47%
Internet access quality in your city (interruptions,
speed..)
13%
Internet access quality in other cities (interruptions,
speed..)
67%
Table 52. Impact on doing business
With which of the following sentences do you agree?
Addis Ababa
Regions
The current telecommunications services are convenient for
our activity
9%
8%
The current telecommunications services are insufficient for
our activity but don’t really penalize it
40%
59%
The current telecommunications services are insufficient for
our activity and penalizes it
40%
31%
Shortness of telecommunications services is one of the main
problem for our business development
11%
2%
Has the telecom service’s weakness a negative impact on
your business?
Yes
No
Yes
No
82%
18%
53%
47%
What could be the positive impact of better telecommunications services?
Increase the profitability of your current products and
services
13%
24%
Increase your market (find new customers)
43%
58%
Improve your supplying/production processes
15%
9%
Develop new products/services
What are your main wishes in terms of telecommunications services improvement?
To increase the geographic coverage of fixed lines
14%
9%
13%
22%
To increase the quality of service of fixed lines
13%
30%
To increase the geographic coverage of mobile network
39%
55%
To increase the quality of service of mobile
39%
66%
To increase the availability of broadband access
47%
20%
To increase the quality of broadband access
47%
16%
Table 53. Frequency of key words in comments on expected developments
Key word
Addis Ababa
Regions
Coverage
9%
17%
Quality
28%
47%
Tariffs
6%
28%
Mobile
13%
6%
Internet
28%
11%
Maintenance
6%
11%
Training
2%
21%
Technology
2%
15%
Privatization
6%
17%
93
94

The Impact of Telecommunications Services on Doing Business in

Transcription

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