Outlook for LTE in South Africa, Africa: Issues and opportunities

Following the first wave of commercial LTE deployments in South Africa in late 2012, decision makers are facing tough decisions in the boardroom about their response to the market, and how to position themselves for the future. The stakes are high as billions of Rands of Capex need to be spent to roll out more efficient access technologies in the next few years in an already mature telecoms market. LTE for both fixed and mobile LTE will be a key part of that investment. However LTE is not the total solution to an operator’s capacity issues. In order to handle rapidly rising mobile broadband traffic volumes in the most densely populated areas, approaches to offloading significant proportions of traffic from macrocell RANs (radio access networks) such as carrier Wi-Fi and small cells will also be required.

LTE presents many new game-changing opportunities for operators that previous generations of technology did not allow. A prime example is resource sharing which introduces the possibility of sharing at the active network level. This has not been lost on policy-makers, including those in South Africa. Some countries, with Kenya being the notable example, were quick to mandate an ‘open access LTE framework’ which, despite a promising start, has shown itself to be not without complications.

Against this background, BMI-T is conducting a new syndicated study focused on the outlook for LTE in South Africa with a secondary focus on Carrier Wi-Fi.

Focus areas and objectives

The research, analysis and report will provide a sharp focus on LTE as a commercial opportunity. The following points summarise the focus areas and objectives:

  • Usage and service models and strategies for LTE will be defined and developed. Predictions will be made for the uptake of these in South Africa measured against a global and pan-African backdrop, including upgrades and future-ready approaches that anticipate LTE-Advanced.
  • Through constructive dialogue with stakeholders and industry specialists BMI-T will unpack the pros and cons of open access concepts and examine them from multiple perspectives. BMI-T will explore alternative variations on the theme, including hybrid ownership and participation models.
  • Using scenario analysis, we will consider the driving forces leading both private and public sector players to support such models, and the underlying corporate and socio-political agendas behind them.
  • Calling on our extensive experience and data set, BMI-T will generate market forecasts for LTE by application and customer group, taking various deployment and uptake scenarios into account.
  • Techo-economic analysis will be performed on many aspects that LTE introduces including:
    - Review of the relative merits and relevance of LTE FDD and LTE TDD in the South African concept.
    - Review of the spectrum assignments and allocations in South Africa in context of the global deployments of LTE.
    - Opportunities for the development of local and/or regional specific LTE devices.
    - Outlook for VoLTE, its impact on GSM voice and possible impacts of OTT (over-the-top) voice.
    - Limitations of LTE and areas where LTE will reach a ceiling.
    - The role of off-load techniques such as Carrier Wi-Fi and impacts of new mobile network architectures such as small cell technology.

Contextual analysis

South Africa’s mobile industry is unique in its application of globally standardised technology and approach to market demands. The BMI-T approach will be rich in local context with the analysis tailored for the local environment. Aspects that matter to South Africa decision makers include:

  • Infrastructure sharing, partnerships, open access models etc.
  • Policy and regulatory issues impinging on wholesale telecoms activities.
  • Spectrum assignment and allocation.
  • Industry sustainability issues, in light of specific competitive dynamics.
  • Private sector positioning: opportunities and challenges for fixed line operators, ISPs, start-ups and OTT players.
  • Role of diverse players including OTT and their likely influence in the direction of LTE taking account how they can, and will, influence the public policy debate.

International influences

Although the analysis and report will focus on the local context, cognisance of international trends, norms and developments will certainly have a bearing on decisions made. Accordingly, the research, analysis and report will consider the evolution and outlook for LTE in developed and developing nations. Areas to be considered include:

  • Global and pan-African market trends and projections.
  • Underlying demand and uptake drivers.
  • Benefits and limits of regional and global spectrum harmonisation for LTE.
  • Impact of low cost access devices.
  • Investment rationale based on Capex/Opex and usage ratios.
  • Impact of competition in Africa between Europe-, Middle East-, India- and China-based companies.

Quantitative analysis and forecasts

BMI-T has proven skills in tech-economic and market modelling. For this research a new, custom market model will be built which will be informed by BMI-T’s intellectual property relating to the South Africa, regional and international voice & data markets. The model will inter alia consider the following factors:

Geographic segmentation

  • Backdrop analysis
    - Global forecasts
    - African country forecasts
  • Detailed forecast and market segmentation for South Africa

Traffic modelling

  • Estimation of traffic volumes

Network and customer segments

  • Fixed LTE – business vs. home
  • Mobile LTE – business vs. home
  • Wholesale vs. retail
    - underlying competitor analysis
  • VoLTE
    - where, when and how

Forecasts are provided by network type, application and customer group, taking various deployment and customer-uptake scenarios into account. This includes:

  • Both fixed and mobile LTE deployments, under alternative scenarios
  • Open Access models (and alternative infrastructure sharing and hybrid models) included in scenarios selected.
  • Fundamental demand and investment drivers in each sector.
  • Broad-brushstroke look at the cost side to test investment rationales, contrasting local against global trends and key ratios.

Research team

The team for this research includes Brian Neilson (BMI-T Research Director) and Tim Parle (Senior Telecoms Sector Specialist) plus our international associate Dr Martyn Roetter. This team has a combined 80 years’ worth of sector experience in Southern Africa and international telecom markets, including in-depth insight into techno-economic issues surrounding wireless technology, investment cases and telecoms policy. CVs are available on request.

Deliverables and format

The outcomes of the research and analysis will be documented in a narrative report rich with supporting graphics and tables.

A workshop (in Gauteng) forms an additional output, with supporting PowerPoint deliverable.

Further information

For further information and details on how to subscribe to this syndicated research please contact Anita Matthews on 011 540 8000 or anita@bmi-t.co.za.

For more information on BMI-T and our research and consulting services please visit www.bmi-t.co.za.