Canada's 'thirdworldish' policies to stifle wireless competition?

Naguib Sawiris: planning to shake up Canada's wireless market

DTW’s recent article on international ambitions of India’s two major state-owned telecoms operators mentioned that one opportunity they are considering is the acquisition of a controlling stake in Zamtel, the incumbent fixed-line operator in Zambia. It remains to be seen if this joint bid from BSNL and MTNL will succeed and it does look as though some formidable players are also interested.

According to a recent Cellular News article, other interested parties include Telecel Globe (a subsidiary of Orascom Telecom), Telkom (South Africa’s incumbent fixed-line operator) and Russia’s increasingly expansionist Vimpelcom, all of which, the article states, officially began due diligence this week.

Interest in Zamtel is by no means the biggest recent news item about Orascom Telecom and might well have escaped the notice of North American readers whose attention has probably been drawn more readily to the challenges the Egyptian firm is facing in Canada.

Globalive Communications Corp. of Toronto was established in 1998, since which time it has offered competitive long distance plans. Ten years later, the company successfully made a purchase in Industry Canada's radio spectum auction, which paved the way for the creation of a challenger - Globalive Wireless - for the country's established mobile operators, including Telus Mobility, Rogers Wireless and Bell Mobility. The joint efforts of these three major carriers and regional players such as SaskTel have failed to drive national mobile penetration beyond 66.65% according to WCIS. This seems very low for a G8 country that ranks among the world's top ten trading nations. In an interview for Huawei's Communicate magazine earlier this year, Bell Mobility CTO Stephen Howe attributed this state of affairs to three factors: the relatively late licensing of digital wireless spectrum in Canada; Canada' s huge geographical area; the country's robust and unlimited-usage wireline networks.

Globalive Wireless, backed by Orascom Telecom and which had earlier this year announced its intention to launch services under the Wind brand familiar in Italy and Greece, has been led by CEO Ken Cambpell since October 2008. Cambell, whose former roles include a stint running the BITĖ Group, the Vodafone partner network in Lithuania and Latvia, would take issue with Stephen Howe's explanation for Canada's status as a wireless industry laggard. Speaking with Michael Bettiol of Boy Genius Report last month, Campbell lays the blame squarely with the country's wireless carriers:

"Here we’ve got a situation where we pay twice as much as they do in the US, our minutes of use are half of what they are in the US, and wireless penetration is at 65%. Clearly it is a market that is under-developed and where customers simply overpay. The other thing is that in Canada our customer saturation numbers are extremely low. We’ve got a very disenfranchised and very frustrated customer base that is really ripe and in need of competition. The other thing you should know is that this country is dominated by three carriers, but if you look regionally, it is typically two carriers that dominate regional markets. Canada is effectively an oligopoly and in many regions pretty much a duopoly. There is definitely an opportunity with consumers and the numbers speak for themselves."

If, as Michael Bettiol contests, Canadians have "long craved for a new wireless carrier to bust onto the scene and break up what is often described as the anti-competitive practices of [the] incumbents", there must surely be much excitement in the country about the market debut of Wind.

For now, however, any excitement must be deferred a while. Globalive Communications has been in a state of limbo since late last month, when the Canadian Radio-television and Telecommunications Commission ruled that the company is effectively under the control of its Egyptian-based financial backer (Orascom Telecom) and is therefore in breach of rules on foreign ownership and control.

Terence Corcoran of the National Post despairs of the resulting "wireless mess":

"Globalive Wireless has just pumped more than half a billion dollars into the Canadian economy. That includes paying Ottawa $442-million last year for the right to new wireless spectrum, cash now already spent by the federal government stimulating road work in Saskatchewan and writing giant cheques to constituents in Nova Scotia," writes Corcoran, who also notes that "Globalive has also invested another hundred million or more preparing a new Canadian wireless network".

"Having taken Globalive's money", Corcoran continues, "Canada is now telling the company the deal is off."

Corcoran argues that the large spectrum auction fees collected by the Canadian Government would have been far more modest had the participation of Orascom Telecom supremo Naguib Sawiris not been authorised in the first place. Corcoran says that Sawiris has every right to feel mightily aggrieved:

"Whether or not it's possible to sue Ottawa over this thirdworldish policy switch and bureaucratic camel-trading, complete with secret meetings and rule-bending approval processes, it certainly looks like Globalive and its owner, Mr. Sawiris, have a case of some kind, politically and morally, if not legally. Ottawa led Globalive into bidding for spectrum and a major role in the Canadian wireless market, and then it pulled the carpet out from under the company.

This wrangle is a fascinating one for me. In the course of my work, I have spent considerable time networking with telecoms executives from Europe, North America and the Middle East who make their living running operations in less developed countries. I have lost count of the number of times I've heard (doubtless justified) complaints about the complexities and pitfalls of doing business in such markets - regulatory agencies that can be erratic and less than even-handed; taxation policies which stifle growth and innovation; foreign ownership rules which can prove limiting. It is with interest, then, that I read of a company rooted in Egypt encountering in Canada some of the problems I usually hear attributed to much less affluent and developed societies.

Canada's 'thirdworldish' policies to stifle wireless competition?

Tanzania update: Lucky seven or lucky eight?

Tigo Tanzania - one of seven or one of eight cellcos on the market?
photo from the Daily Nation (Kenya)

A little while ago, I wrote a piece here about the mobile market in one East African country whose title included the phrase 'lucky seven'. The point of that was to ask whether what I took to be that country's seventh cellco - a CDMA network operator using the brand name Sasatel - would be able to make much of an impact.

A anonymous DevelopingTelecomsWatch reader has pointed out that in fact that country, Tanzania, was already home to seven licensed mobile operators prior to the maket debut of new-kid-in-town Sasatel. As the helpful reader pointed out, HiTS Telecom already appears to have a presence in the country, asserting that the company launched GSM services in the Dar es Salaam region last month and is building out its nationwide network over the next two years.

I must be getting old. How did I forget to mention the HiTS Telecom Tanzania operation? Not only have I exchanged correspondence with someone who works for that operation, but I also (briefly) met one of their people at a conference in Nairobi earlier this year. A definite senior moment, then, for DTW.

That said, the HiTS Telecom launch last month does seem to have gone ahead with relatively little fanfare and also seems to have been somewhat behind schedule - in June last year, the group's CEO spoke to CommsMEA and indicated that operations would begin in late 2008. Around the same time, according to the Citizen newspaper, Excellentcom Ltd (which trades as HiTS Tanzania), signed a USD 180 million contract with Chinese telecoms solutions vendor Huawei, whereby the latter would start "building Excellentcom's network to enable it to cover the whole country within 13 months." If the work was meant to start immediately, then HiTS Tanzania would have national coverage around now rather than in the two years from now mentioned by our anonymous reader.

HiTS Telecom clearly has a presence in Tanzania, then, and while perhaps I can't be forgiven for neglecting to mention that in an article profiling the country's mobile market, you can possibly see why I remain a bit unsure of the status of the operation. That said, I definitely should have used the term 'lucky eight' in the title of the article rather than 'lucky seven', though perhaps the former would only make sense for Chinese readers of DTW.

Again, input from readers who really know the Tanzanian scene would be gratefully received.

In other Tanzanian news, the country's oldest and largest fixed-line operator, TTCL, whose CDMA cellular service has a small and dwindling share of the mobile market, is set to be affected by the withdrawal of the Canadian company which signed a three-year deal to oversee the incumbent telcos operations in 2007, according to a TeleGeography article on Monday.

It seems that SaskTel International's three-year management contract covering the operation, maintenance and expansion of the incumbent’s network to improve its financial, commercial and technical performance was meant to run until July 2010. The TeleGeography article states that the Candian company's departure "raises fresh questions over why a series of privatisation plans for TTCL have derailed."

The article goes on to say that SaskTel has reportedly submitted a 45-day notice (ends 12 July) notifying its intention to pull out of the deal citing its inability to raise the funding necessary to transform the operator’s fortunes. It seems that SaskTel has failed to secure government guarantees for a USD 1.5 million loan for TTCL, needed for various projects.

Hopefully the above improves upon my (clearly imperfect) previous Tanzania round-up for any readers interested in the telecoms scene of that country.

Be lucky.

Tanzania update: Lucky seven or lucky eight?

Mobile operators - low TCO, smaller carbon footprint: the answer is blowing in the wind?

Wind/solar hybrid powered base station deployed by Avea: pic from Cellular News

By March this year, according to Informa Telecoms & Media, there existed over 4.1 billion mobile subscriptions globally. At the start of this decade, the number of global subs was just 482 million. Ten years earlier than that, there were fewer than 5 million subscriptions worldwide.

I feel proud to be associated with an industry that has grown so impressively, but am mindful of the challenges ahead as mobile operators seek to connect the next billion customers. These prospective subscribers are poor people with very restricted spending power. A popular argument put forward to explain factors responsible for keeping such people locked into poverty can be exemplified thus:

• The earning potential of a semi-skilled handyman living in a shanty town on the fringes of a large African city is hampered by his not being able to advertise how he might be contacted by anyone wanting his services. He spends more time walking the streets asking for work than he does working and getting paid.
• A farming community lives a largely subsistence lifestyle, growing crops to meet its own needs and selling the surplus to buy other vital goods and services. The farmers routinely fail to get the best price for this surplus because they have no way of finding out at which markets they they will find the highest levels of demand.
• A person living in a remote community needs to register a birth or death in the family. The state bureaucracies have no touchpoint in the community so completion of this routine paperwork involves taking time away from productive activities to travel to a bigger population centre.

All of these problems can be resolved through access to telephony and/or the Internet. The handyman can write his mobile number and details of the services he offers on signs, placing these at road junctions or other prominent locations. I saw a lot of this kind of hand-made advertising on my recent trip to Kenya. With (mobile?) Internet access - or even just by making a few calls - the farming community can review market information and send its produce to where the best price can be commanded. In a small, isolated community provided with some form of Internet access, e-government solutions may obviate the need for long, expensive, time-consuming journeys.

Communications services, then, look set to have a vital role in alleviating this poverty. This role has been quite neatly explained by The Next Billion Network, an initiative incubated at the MIT Media Lab. The phrase used in the this group's mission statement is about deploying innovative mobile technologies which help poor people in developing countries to "reduce friction in their local markets from the bottom up". The Next Billion Network's founders believe that these new waves of mobile subscribers will make their voices heard—and connect to the global information network. "This will unleash a wave of entrepreneurship, collaboration and wealth creation, turning the newly connected into a powerful force in the world economy," the founders say, adding that "the kind of world that emerges from this transformation will depend on our ability to recognize it as an opportunity."

For mobile operators to continue to act as a catalyst for developments of this kind, they will need to resolve a number of challenges around keeping the total cost of service ownership low for poorer people in developing countries. These challenges are many and varied. The one referred to in the title of this post is around powering mobile networks in locations lacking reliable electricity grid infrastructure.

In emerging markets, cost-conscious operators have long been concerned about the OPEX implied by running diesel-powered generators to power off-grid base stations. The fuel itself must be bought and operators must also take fuel transportation costs into account - significant costs when fuel must be supplied to remote areas with poor roads

Solar power and wind power look like good alternatives - the power sources themselves are free and inexhaustible. Added to that, CSR-conscious telcos can bask in positive press coverage of their reduced carbon footprint.

In September last year, however, I read that trials of these technologies have largely been quite disappointing. My former Informa Telecoms & Media colleague Matthew Reed, the editor of Middle East and Africa Wireless Analyst, reported disatisfaction on the part of the GSM Association with the trialing of base stations powered by the sun and wind. The GSMA's Development Fund Director Dawn Haig-Thomas said: "There have been a number of trials that have failed, and we've been digging into the reasons," adding that "we've seen trials where the geography hasn't been correctly considered – where solar panels and wind turbines have been placed in inappropriate places, or not in optimum places."

In addition, Matt Reed reports, "many sites are also missing electronic control devices that manage power fluctuations or alert systems that tell operators to switch on backup diesel generators, if the base station is low on power, perhaps because it has not been windy or sunny enough."

Further, Matt writes, a big reason for the lack of take-up of alternative energy sources is that although operating costs might be low, the solar panels and wind turbines have historically been too expensive. In addition, notes Matt, "lots of solar panels were needed to power a base station, which would force operators to buy more land on which to site them." Wind generators, until recently, he notes, "were only manufactured with massive turbines that were more appropriate for wind farms than for small base stations."

Matt observed, however, that better solutions are becoming available. A number of deployments of wind and solar powered base stations have been announced in the month's following Matt's article. I have to assume that these deployments involve solutions to the kinds of problems Matt raised.

The most recent one that I know about is the deployment by Turkish mobile operator Avea of what it claims is the first hybrid wind/solar powered base station in the country - manufactured by Scottish firm Proven Energy. A Cellular News piece on this story this week quotes Erol Barendregt, Director of Turkish reseller Girasolar Türkiye, which installed the equipment: "The hybrid solution is the best option because the sun and wind resources have opposite cycles and intensities during the day. Wind and solar power are understood to be among the best natural alternatives to fuel based electricity generation. By using both in a system that is designed to supplement each other you get a continuous and reliable power supply."

Major telco sector vendors want a piece of the action in this space. In October, Ericsson, for example, unveiled a wind-powered 'Tower Tube' base concept developed in partnership with Vertical Wind and Uppsala University in Sweden. According to a Global Mobile Daily article at the time, vertical rotor blades work silently, minimising the load on the tower during operation.

A more recent announcement by the Swedish vendor, made in February, concerns its involvement in the development of solar-powered base stations. A GMD article dated February 18 notes that the Orange-branded mobile operator in Guinea is to deploy 100 solar powered base stations across the African country, in partnership with Ericsson. The base stations, says the article, make use of Ericsson's energy-efficient hybrid diesel-battery solution and solar panels, which will replace one of a base station site's diesel generators with a bank of specially designed batteries capable of handling a large amount of charging and discharging.

Chinese vendor Huawei also has solar powered solutions on offer. GMD reported in September that the company had deployed Pakistan's first solar powered base station for Warid Telecom, thereby enabling the operator to extend its network reach into remote areas of the country with limited access to the electricity grid.

Sri Lanka's Dialog Telekom has opted for a mix of solar and wind-powered base stations in trials designed to investigate the uses of several forms of equipment from eight different vendors. This was reported by GMD in February.

So there seem to be a few renewable energy developments going on in emerging markets worldwide. I could not comment to what degree these recent deployments and trials have addressed the concerns raised last year by the GSMA.

Mobile operators - low TCO, smaller carbon footprint: the answer is blowing in the wind?