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Future of Africas iGDPProtect.Connect.Grow.Is Africa still a significant market? Africa is the 2nd largest continent, in both size and population.

More than 1-billion inhabitants and over 240,146,482 Internet users, a penetration rate of 21.3%.

Over 24Tbps of landed undersea capacity provided by multiple cable companies.

Multiple peering points are emerging (AXIS), neutral data centres are already available with several more under construction. Currently 41% of the African market is reachable via terrestrial fibre, and this number grows daily.

Why is content distribution still limited in the African market?

African interconnectionMarket Deregulation and interconnection polices:

Swaziland: cross border interconnection controlled by monopoly operator restricting accessA 64k p-t-p leased-line circuit (in country) currently costs $100 p/m and a 2Mbps p-t-p leased-line costs $1,600 p/m and a 10Mbps costs capacity $5,400 p/m. Nigeria: landing station controlled by MTN NigeriaCost per cross connect $1000.00, majority of operators forced to route via London offering services at 200ms latency, whereas from South Africa they can achieve 60ms latencyDjibouti: Landing station controlled by monopolyCross connection to general colocation at $10,000.00 per 1Gbps

These challenges result in limited growth for regional IXPs

African market deregulation is key to content growth and distribution. Currently physically majority of cross border connectivity requirements have been addressed however distribution is limited due to political (deregulation) and policy issues. Currently in country monopolies are controlling distribution through implementation of restrictive interconnection policies. Key examples of this include:Swaziland: Cross Border interconnection controlled by monopoly operator. Currently ISPs requiring to connect to South Africa to access peering and cable capacity are forced to purchase capacity from the monopoly:A 64k p-t-p leased-line circuit (in country) currently costs $100 p/m and a 2Mbps p-t-p leased-line costs $1,600 p/m and a 10Mbps costs capacity $5,400 p/m. Nigeria: Landing Station controlled by MTN Nigeria, cost per cross connect $1000.00 per cross connect therefore majority of operators are forced to route via London offering services at 200ms latency from South Africa which could be at 60ms latencyDjibouti: Landing station controlled by monopoly, cross connection to the general colocation is at $10,000.00 per 1Gbps Primary hubs in Africa include Kenya, Nigeria and South Africa of which all strategic market locations for implementation and growth of existing exchange points to that of regional exchange points. However due to cost of interconnection, growth of these areas are primarily limited to in country ASN and global content investment is limited due to costs and limited distribution.

4Growing Markets9 out of the 55 African countries have substantial ASN operators

2 Neutral Operating Data Centres South AfricaKenya

28 Active IXPs

Not all promoted data centres are neutral

Nigeria growth substantial due to market size huge potential for growth once interconnection polices resolved

Africas total inventory of terrestrial transmission networks reached >865 000km

Various policy and regulatory changes across Africa have seen a leap in the slow progression from Africas reliance on satellite connectivity to fibre-optic and even terrestrial wireless networks. As connectivity providers move further into the continent, the challenges that have defined Africas sluggish Internet growth are gradually being met. In many instances, cross border and cross continental internet traffic is still routed via the large exchanges in Europe, resulting in delayed delivery and increased costs for African users.In 2013, African Internet Service Providers are now presented with the ability to join multi-lateral peering exchanges where connection to major international carriers is possible. This not only allows them to offer African consumers access to high speed connections, but the connection is now at a dramatically reduced cost ultimately opening up connectivity to a much larger market and thus exposing business opportunities to a larger consumer market.

45South Africa: DeregulationDeregulated in 2008, ASN increase as license requirements change.

Operator landscape: Before 2008, only 7 infrastructure operators. Currently >30 infrastructure operators.

Operational carrier, cloud and vendor neutral data centre.

Operational regional Internet exchange: 7 neighbouring countries serviced, 150 members, 16Gbps traffic.

Content investment: Google, Akamai, Microsoft etc.

Consolidation underway: Vodafone/NeotelBCX/TelkomOver 500 registered service providers with 80 operational e.g. LIR stats

End User ASN growth aggressive

South African market was preparing for deregulation which was finally achieved in 2008. Previously only 7 operators where legally allowed to lay infrastructure of which now after deregulation South Africa see over 30 operators investing in fibre infrastructure and multiple wireless operators emerging to support rural areas. Operational Regional exchange in place servicing over 7 neighbouring countries with large investments made by global content players such as Google, Akamai, Microsoft etc. Access to 5 operational cable operators.

56Interconnects & the Marketplace

7Kenya: Capacity is key

Deregulated in 1999

Seacom lands 2011 ASN requests increase.

3 major infrastructure infrastructure operators.

Operational carrier neutral data centre investment by Liquid creates competition

Operational regional Internet exchange: KIXP, 27 members, 1Gbps

Content investment: Google

End User ASN growth aggressive

Seacom lands in Kenya 2011 opening up capacity to trade with Europe and Southern Africa. KIXP starts attracting large content players in 2013.

78Nigeria: Cable diversity

Deregulated in 2011

Glo-1 landed in 2009 and others in 2010, 2012 and 2013 breaking the monopoly MTS closed its operations due to failure to pay interconnection charges to Nitel. M-Tel subsequently emerged as Nitels mobile service provider.Operating Exchange, http://ixp.net.ng/ - 2Gbps, 38 members

No neutral data centre

Access to cable landing station restricted

Content investment: none at this stage weary of the wild west?

The arrival of a second international submarine fibre-optic cable (Glo-1) in 2009 and a more in 2010, 2012 and 2013 has broken the monopoly of Nitels notorious SAT-3/WASC cable and is revolutionising the countrys underdeveloped Internet and broadband sector by reducing the cost of international bandwidth by up to 90%. 8iGDP comparison in deregulated markets

Open markets create more opportunity for infrastructure and content investmentiGDP >10% in developed marketsAfrican markets have potential for x3 growth

Investment Requirements:

Open, unrestricted marketplace:Cross border assets to be utilised;Colocation and exchange point assets to be utilised;

Government supportive role not policy makers. Established, open, sustainable IXP availability Global policies and practices important.iGDP less than 10% in major hubs therefore providing 300% growth opportunities. However interconnection issues still need to be resolved in order to open up this opportunity As an example: Telecommunications is one of the fastest growing sectors of the South African economy, driven by rapid growth in mobile telephony and broadband connectivity. With a network that is 99.9% digital and includes the latest in fixed-line, terrestrial fibre, wireless and satellite communication, the country has the most developed telecoms network in Africa.In 2009, South Africa ranked 34th in the world in terms of fixed-line telephony, with over 4.3-million fixed-line connections. South Africa is one of the fastest growing mobile communications markets in the world. As of 2012, there were over 59-million active sim cards in South Africa, ranking the country 26th in terms of subscriber numbers.

In South Africa even though consolidation has began and the retail/wholesale split between the monopoly network Telkom has occurred we continuously seeing ongoing investment into exchange points and newer services such as NNI (Carrier Ethernet Services)10

Most reliable infrastructure in Africa% income lost in sales by the power provider. This has a direct impact on the total economic growth within a country. South Africa and Namibia lowest.1011What is the future of Africas iGDP?

How to quanitify the African opporunity:Comes from the size of the market over a billion peopleMobile is king the penetration is taking into account that there will be 350 million smartphone users by 2025 due to lack of and ability to maintain terrestrial infrastructure. Which has a direct impact on the internet penetration which results in the extensive growth in iGDP in Africa. The fact that this opportunity exists means that the enitre community should work together to overcome challenges and to guide policy.

Predictions for 2025: internet users are set to grow to >600 million, smart phones to >350 million, internet penetration with hit the 50% mark and the contribution to Africas GDP from Internet related technologies will exceed: US$300 billion1112

Thank you


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