How WiFi connectivity and off-load solutions will complement traditional African connectivity

Wifrica Holdings offers WiFi connectivity and WiFi Offload solutions to MNOs, ISPs and tower companies on a revenue share basis. Their unique approach enables companies to expand their customer base and increase ARPU whilst drastically reducing capex and time to market. TowerXchange speaks to Wifrica’s Chief Commercial Officer, David Meganck, to find out more.

TowerXchange: How do you see the both the appetite and requirement for data in the African continent changing? What are the factors driving and hampering the growth in data usage?

The demand for data in Africa is, as in other continents, growing exponentially once it becomes available and is proven to help people get out of poverty.

One of the issues in Africa today is “network coverage”; as reported by the GSMA barely 35% of the African continent is actually covered in terms of data accessibility, which makes Africa the continent with the greatest data growth potential globally. One of the issues that is slowing the growth is the cost of owning and operating sites in Africa, which is one of the highest in world, and makes sites deployment expensive and ’selective’. Tower companies are of course filling that gap with “built to suit” solutions but these are usually for areas where minimal revenue is guaranteed; equally MNOs are not public service companies and are consequently focused on cell tower profitability.

So one of the clear burdens today is investment vs revenue and that is partly tied to the range of 3G and 4G solutions which are still limited and henceforth still expensive to deploy. They require a lot of sites, for large suburban or rural areas but especially for last mile applications where the expected revenues estimates are very low because of population scarcity and average household income. The fact that a large portion of MNO profitability in Africa still comes from Voice and SMS, and the fact that smartphone penetration in Africa is still low, are closely tied together, but that is now rapidly changing and will lead to an even bigger demand for data for which current networks are not ready.

It is undeniable that in many ways access to information is access to education, and the benefits of accessing data are actually changing people’s lives. 

The main driver for growth is simply the raw demand from the market across urban, suburban and rural areas that are well covered, partly covered or not covered at all, and everyone wants dependable and affordable internet access.

TowerXchange: How has data been traditionally been provided, where do you see the role for WiFi in the market versus fibre and cellular data and how do you see this evolving?

Data coverage across African homes and businesses is today mostly covered by mobile network operators with 3G or 4G/LTE solutions and by fibre solution providers (including ISPs) which are providing in-house/office broadband solutions, and of course by DSTV who is now also entering the data market through satellite. In fact the rise of the ISPs and Fibre Service Providers (FSPs) was largely made possible because of the MNO’s inability to provide stable and reliable broadband solutions for SME/Industry and the residential market, and in many ways a “missed opportunity” to capture more revenue per customer.

The issue is that in affluent urban areas the demand for data is growing much faster than expected, caused by the adoption of the likes of Netflix and Apple TV and YouTube which are all “network killers” based on the amount of network capacity they are occupying to the detriment of other users. All of the VOIP applications currently available are also contributing to the “data crunch” that every operator is now experiencing. I think we all agree that neither 3G or 4G were designed for such applications and consequently we can see a clear “Capacity Crunch” which is becoming bigger by the day. 

Ironically Africa is serviced by a large number of submarine fibre connections and per se enough capacity is available, it is, however, the communication medium (3G/4G) which is just not adapted for the current and future market demands for data.

The Wifrica solutions are not designed to replace traditional GSM or fibre solutions but rather to “complement” that equipment by offering “more data capacity” per tower at a significantly lower cost than traditional microwave solutions or DAS or VAS solutions. The result is that heavy data traffic is routed through the WiFi access points which in turn relieves the network by reducing latency and congestion caused by high data demand. The Wifrica solution has successfully been deployed in several Asian countries including China and has been shown to be a serious contender in the provision of data in the future.

TowerXchange: Do you see WiFi as something which competes with, complements or supports the MNO business model? How do MNOs view the WiFi space?

The African MNOs have undergone massive structural and operational changes in the past five years through the sale of their assets and the data price wars which have put strain on their margins. There is no business that can survive without growth, and seeing there is still a vast portion of Africa that is not connected, this is a massive addressable market to start with. But equally there are a very large number of mobile users that rely on their mobile data connection for their in-home/in-office data usage; it is obviously a solution to get connected but not a good one and is one of the major contributors to the poor data service most of us are experiencing in Africa. This can now easily be replaced by a Wifrica Broadband WiFi solution which will allow the MNOs to reach new customers, reach more customers, increase revenue per customer and in some cases, bundle home and office solutions based on data.

TowerXchange: How does the underlying infrastructure (and associated opex and capex) for WiFi compare to other forms of data provision and how can this help fill a niche?

The cost of running a WiFi Data Offload solution is very economical as all equipment is fitted as standard with 5V POE, which means that sites can actually be run in hybrid format (solar/wind/batteries) and requires a lot less maintenance and therefore have a much lower opex. The footprint in terms of size and load factor (wind/weight) is also minimal making it easy and fast to deploy without making amendments to existing equipment on site.

We of course also rely on the existing fibre connections that are available, and if/when combined with our ULRW (Ultra long range WiFi) solutions we can still provide connectivity up to 150km from the last tower on the network; this proprietary solution can only be matched by a satellite connection.

TowerXchange: Please can you introduce your new venture, Wifrica and the work that you have been doing?

The company Wifrica is headquartered in Hong Kong and is a joint-venture between the Wifrica founders and its technical partner namely the company Huaxun, also known as China Communications Technology Ltd, listed on the Shenzhen stock exchange. Our mandate is to offer WiFi connectivity and WiFi Offload solutions to MNOs, ISPs and even tower companies on a revenue share basis, and this is a unique approach as this removes the capex requirement and of course reduces the “time to market” significantly, and allows us to build long-term partnerships with equally vested interests.

TowerXchange: Where do you see the biggest opportunities for the company – urban or rural areas?

Our mission is to reduce congestion and latency and that problem in Africa is across the network so we are definitely looking at regional and national deployments in order to make our network accessible to as many people as possible, so we will eventually cover urban, suburban, rural and offshore locations. Our initial deployments are mostly on a built to suit basis.

TowerXchange: We have seen lots of different business models being proposed for rural coverage with varying degrees of success. Why do you think some models have faltered and what helps to set Wifrica apart?

The biggest problem with technology in Africa is that most of it isn’t designed for Africa and that’s a major issue, the second problem we have seen is that many solutions that are proposed are great for some developing nations but also don’t meet Africa’s harsh terrain requirements. Last but not least, the operation and servicing of the equipment needs to be simple and intuitive, many solutions that are available often require a high degree of skill and expertise which just isn’t available in some parts of Africa. The Wifrica solution was designed for both urban and rural environments, has been deployed in some of the harshest environments in the world and is today being serviced in very remote locations by locally trained technicians, this provides a lot of operational autonomy, control over opex and therefore a much higher chance at succeeding in the telecom sphere, where investments need to be looked at on a long-term perspective.

TowerXchange: Can you share some of your deployment stories to date and the benefits they have brought?

We currently are running two separate projects in a major African country with well established spectrum holders; and we hope to reach about 200 deployed sites by the year end. The benefits are simple, we enable MNOs to provide broadband connectivity to people who are currently using a mobile hotspot for connectivity. These include a number of SMEs who were about to relocate simply because bringing FTTP was not feasible from a financial, logistical and long-term perspective since they are tenants; some of the other customers include remote rural and offshore customers who also were looking to a more dependable and economical alternative to their satellite communication solution. Last but not least we are now also deploying a project to connect a rural village that today is not covered by any operator, so the first calls these people will be making will be directly VOIP which just shows that there is no way to stop demand for connectivity and data.

TowerXchange: What’s next for the company? What is the size of the addressable market?

Based on our market studies and research we can see that our total solution has 3 main commercial components; (1) proximity – high density, high volume hotspot;  (2) Coverage – Point to Point and Multipoint, Broadband in office and in house solutions; and (3) Ultra Long Range Point to Point (30-150km); can meet most if not all of the requirements of the African market. Moreover the topography of coastal Africa and the lack of high buildings lends itself perfectly to our type of deployment. We are very confident that we will be successful in gradually introducing the solution to all the stakeholders on the telecom arena, bringing connectivity to those who want it, and those who need it, based on the principle that access to information is access to education.

Our strategy is to become Africa’s leading capacity provider in the next 5-10 years and we hope to reach every country on the continent.