Connecting the unconnected has become increasingly important to governments as a key component in accelerating digital access in Africa. MNOs are at the forefront of this objective, seeing a push by regulators to achieve national coverage goals.
However, the economics of providing rural coverage is extremely challenging for MNOs, especially because of the towerco lease model which is based on fixed long-term contracts. To fill this growing niche, Africa has seen the rise of several network-as-a-service (NaaS) towercos that have stepped in and offer a passive and active connectivity service.
As discussed in September’s TowerXchange Meetup Africa, rural NaaS towercos are playing a crucial role in the expansion of digital infrastructure, particularly in underserved rural areas.
By offering turnkey solutions that cover both passive and active components of the network, NaaS towercos are filling critical gaps that MNOs have been unable or unwilling to address. However, their success hinges on significant investment, careful planning, technological resilience, and regulatory reforms.
A full turnkey solution for connectivity gaps
NaaS offers a comprehensive turnkey solution with five key components, according to iSAT CEO Rakesh Kukreja; passive infrastructure, backhaul, active equipment, power, and operations and maintenance (O&M). At a discussion that took place at TowerXchange Meetup Africa in Nairobi, Kukreja explained that NaaS is not just about serving rural areas, but also about addressing the white spots in suburban regions and expanding coverage to industrial and agricultural areas.
The model can help fill in localised gaps that are often financially unviable for MNOs and towercos to invest in. Speakers emphasised that NaaS is not the disruptive model that many towercos see it as but designed to collaborate with the existing telecom ecosystem.
This collaborative approach is essential, given that even large telecom equipment manufacturers like Nokia are being integrated into these solutions. The NaaS model ensures that not only direct partnerships but also indirect collaborations are fostered, all with the goal of enhancing coverage and capacity for the future.
Navigating investor expectations and regulatory complexities
Operating networks right at the edge is commercially challenging, and both active and passive services make the model very capital intensive. “Going beyond the passive into active services requires significant investment, which is the key to success” said Francis Letourneau, CEO of NuRAN.
The rural telecom business requires long-term financial commitments, but there is already strong willingness from some investors to support these ventures driven by MNO demand for NaaS services. “We don’t have large overheads, so the MNOs are able to deliver strong gross margins and return on investment,” said Letourneau.
Despite attractive prospects for growth, Africa’s regulatory environment presents a significant barrier to growth. Francis pointed out that current regulatory frameworks, particularly around obtaining licenses and regulatory approvals, are slowing the pace of deployment and deterring investment.
Current regulation also treats NaaS towercos like traditional tower companies, which is inappropriate given the differences in business models. While towercos primarily focus on passive infrastructure, NaaS involves active equipment and end-to-end management of the network. This disconnect has led to regulatory inefficiencies and complications in acquiring licenses and approvals.
This will require not only the creation of new regulatory frameworks but also collaboration between NaaS companies and government agencies to lobby for the necessary changes. Without these reforms, the potential of NaaS to revolutionise rural connectivity will remain unrealised.
Development Finance Institutions (DFIs) and impact funds are leading the deployment of capital into the sector, but regulatory issues need to be addressed to unlock further capital, particularly from the private sector. This burden is particularly frustrating given that MNOs have largely avoided rural investments, making NaaS towercos vital to meeting government rural connectivity strategies.
Morenikeji Aniye, CEO of Hotspot Networks, delved into the importance of planning and understanding investor expectations. In the complex landscape of African telecoms, where rural deployments are difficult, rushing to market can lead to failure.
According to Aniye, it is essential for NaaS towercos to “connect the dots” in the deployment process and work towards creating a self-sustaining ecosystem that minimises risks. This often means seeking subsidies to support initial rollouts, as the cost structure for rural networks can be prohibitive without external support.
Technical Resilience: The Foundation of Rural Networks
The technological challenges of rural network deployment are significant. “We operate in a low-touch environment, where you cannot go to the site every day, week or month, so sites have to be set up to be resilient” explained Andrew Beard, CEO of Vanu.
Unlike urban areas where equipment can be easily serviced, rural sites may not be visited for weeks or even months at a time. This requires the network to be low-maintenance, with power, radio, and backhaul systems that are built to last and operate with minimal human intervention.
Technology plays a critical role here, utilising a range of remote monitoring systems and predictive maintenance tools to enhance visibility and make sure that site visits can be kept to a minimum without compromising on uptime.
Optimisation is also key to reducing opex and ensuring that networks remain profitable with slim margins. “In urban areas there is a high level of tuning, like a Ferrari – expensive but fast. In the rural space we need to use technology to optimise performance characteristics to deliver lower opex” said Beard.
Technology is the enabler of this transformation, allowing NaaS towercos to optimise performance and reduce the costs of operating in remote areas. Investors also understand this and need to see resilience built into the system.
The cooperation of NaaS and non-terrestrial networks
Speakers touched on the convergence between NaaS and non-terrestrial networks (NTNs). Companies like Starlink, Amazon’s Project Kuiper and Lynk see huge opportunities in meeting MNO coverage needs by deploying satellite constellations for direct-to-device connectivity.
However, while NaaS does have the potential to fill many rural connectivity gaps, it is not a one-size-fits-all solution. “Collaboration with non-terrestrial networks is going to come. We see it as a complementary technology which can help in certain examples where the NaaS model isn’t as effective,” said Beard.
“Between the two we will see a complementary set of solutions to provide better quality holistic services to operators”.
The integration of NTNs with NaaS underscores the importance of flexibility in Africa’s digital infrastructure development. The goal is to use the strengths of each technology to deliver better quality services across the continent, particularly in hard-to-reach areas.
The future of Africa’s digital infrastructure lies in the ability of NaaS towercos to collaborate with existing players, integrate new technologies like NTNs, and navigate the complex regulatory and investment landscape. With the right support and frameworks in place, NaaS has the potential to transform connectivity across Africa, empowering millions of people and driving economic growth in the process.
