African telecom operators are not expected to embark on large-scale LTE (Long Term Evolution) deployment until spectrum costs, policy and regulatory issues are sorted, analysts say.
Africa's largest mobile operators such as MTN, Glo and Safaricom are testing LTE, but rollout plans are unclear as they seek to maximize 3G capabilities already in place and recoup their investments.
LTE is expected to be mainly used in backhaul and intermediary lines to fiber, especially in remote areas. In addition, it is expected to benefit businesses as companies deploy enterprise solutions targeting small and medium-size companies in areas outside cities and in rural areas.
Some market segments are considered ready for LTE, while some industry insiders believe that it will take time for LTE to be enjoyed by the mass market.
"Certain segments of the African market are certainly ready to benefit," said Dobek Pater, senior telecoms analyst at Africa Analysis. "The question is -- can operators see a viable business case? LTE will be essentially a data network at first, a WiMax replacement, but able to perform (probably) better than WiMax; it will be used as a fast ADSL [Asymmetric Digital Subscriber Line] substitute and allow operators to use it as a means of delivering high-speed data services with QoS [quality of service] to the enterprise market."
For the companies seeking licenses and business opportunities, LTE has been cited as a way of attracting foreign direct investment, especially in BPO (business process outsourcing).
"LTE deployment will help to make viable broadband services more widely available, and that will benefit governments, enterprises, and should be supportive of foreign direct investment," said Nick Foggin, a senior adviser at RP Capital Advisors, who previously worked for France Telecom Orange.
While direct investment in Internet-based services is expected to attract more investment in rural areas that can provide inexpensive labor, operators have regulatory hurdles to tackle before making LTE widely available.
"The biggest constraint is lack of spectrum policy, without which we have no details on when the spectrum will be available; allocation criteria; the costs -- information that operators need to determine whether it will be commercially viable," said Nzioka Waita, Safaricom's director of legal, regulatory and external affairs.
Safaricom is already testing LTE in some parts of Nairobi but Waita says that spectrum policy will be important in determining whether Kenya allocates spectrum in blocs like Germany, which he says makes it commercially viable.
In many African countries there are no spectrum allocation policies, so operators are engaged with regulators on how cost and allocation should be done. In Kenya, there is a debate over allocations in the GSM (Global System for Mobile Communications) band when all four mobile operators have equal allocation, yet one of the operators has 78 percent of the market.
Currently, operators can use the GSM band to deploy LTE even though in countries like Kenya, 2.6GHz will be available when government services are moved to fiber-optic, providing more options for operators.
"There is more LTE spectrum available if regulatory authorities realize its importance," added Pater. "LTE is (and will be) available in a wider range of spectrum frequencies than WiMax, which means that operators will have a greater choice and opportunity to deploy where is suits them."
There have been arguments that by using the GSM band for LTE, operators may compromise quality, while some industry insiders feel there may be no quality interference if appropriate standards are developed, a process that is lacking in Africa.
"In principle, there should be no quality concerns deriving from the use of LTE in GSM bands, as long as appropriate rules are set by regulators and followed by operators and vendors," said Foggin in an e-mail interview. "In the E.U. for example, the European Commission has recently agreed [to] technical standards for the use of LTE devices at 900MHz and 1800MHz. These rules are designed to minimize the risk of interference, and were drawn up not only to cover the testing of LTE, but also the long-term coexistence of LTE with GSM and 3G."
Africa will be ready for LTE when terminal equipment becomes widely available and priced appropriately, Foggin concluded.