by Ngonidzashe Kasamba
Whilst every other sector in Zimbabwe’s economy has been shrinking, the telecommunications sector continues to exhibit some of the highest growth rates in the economy. The first phase of the industry’s growth was fueled by the demand for voice, which was delivered via first generation GSM networks which later evolved into the 3G networks in recent years. The industry is however changing, with a new growth phase based on the demand for data. As more data communication applications are being developed and cheaper data-enabled devices are being produced, the demand for data in Zimbabwe has grown beyond expectations. Recent statistics by Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ), show that Zimbabwe has reached 40% Internet penetration compared to 0.4% in 2000, whilst in the same period, the country’s mobile penetration rate has grown from 2.5% to 103.5%. Whilst industry commentators have focused on the rapid take-up in voice, the growth in data has often been ignored. However every service provider – mobile, fixed and other – is focusing on data for new revenue growth. So what are the major drivers leading this change? What implications does this have for service providers? What opportunities might arise from this?
Drivers leading to growth in demand for data in Zimbabwe
Techzim reported in July 2013 that there were 1.1 million active Zimbabweans on Facebook and this number had increased by 62% four months prior to that. The rapid adoption in social media and community messaging including, but not limited to Facebook, WhatsApp, Skype, and Viber has driven first-time Internet usage in many markets as well as in Zimbabwe, and often this is on the mobile device. These free to download applications often compete with traditional revenue streams from mobile service providers, [like phone calls and text messaging] but these same service providers also want to drive data usage, thus often leaving them in a quandary on how to position themselves.
A leading driver of data usage is video applications. YouTube is clearly the leader in this sphere with over six billion hours of video watched every month by one billion unique users. Video on demand and IPTV services will further drive data demand. Netflix is rumoured to make its first launch in Africa in 2014.
Another factor-driving demand for data is the widespread availability of cheaper data-enabled devices as opposed to pricing of smartphones, tablets, and other Internet-devices five years ago. This has been aided, in part, by the parallel grey import market.
The cheapest Internet-enabled phones are now retailing at $50, this has lowered the barrier of entry of affordability to having an Internet-enabled device. Chinese and Indian manufacturers are seeking to lower this further to sub-$50 in 2014. Despite the recent competitive wars on data bundles by the leading telecoms companies, mobile internet access remains relatively expensive in Zimbabwe.
Globally, the growth in operating systems like iOS, Android, and associated apps promote cloud usage by encouraging data syncing across devices, frequent updates, and online data storage. Dropbox is one example of an everyday cloud application. Dropbox recently reported signing up 25 million users in the last 6 months of 2013. Whilst not country specific, it does indicate that the global community of data users is moving more and more to the cloud, and as the number of cloud adopters goes up, so does their data requirements. Pyramid Research predicts that in 2014, one in four people will have a personal cloud account and that such accounts will become strategic for customer ownership.
The Zimbabwean consumers’ exposure to the developed world in terms of data apps, pricing, and speed is changing local user expectations on data services. The Internet of Everything (IoE) is an emerging theme in the developed world where literally everything is connected to the Internet including television, fridge, car and any other household device such as toothbrush (yes, really!). The emergence of smart home devices like Nest and Smart TVs is the first in this new era of connected household devices that has already seen increased data demands on service providers. Wearable technologies emerged from the annual Consumer Electronics Show in Las Vegas this January as the technology trend to watch out for in 2014.
Implications and opportunities
This new demand will drive service provider strategies to meet this demand for data including the need to invest in increased data capacity on their networks, providing network redundancy, data security, and privacy systems as consumers want and demand more reliable, affordable, fast, and secure connections with 100% uptime. Zimbabwean service providers must now meet the new customer expectation. Not every service provider will have the financial means or capability to do so, which in turn could lead to consolidation in the market.
At only 40% penetration, Zimbabwe still has an untapped potential market of 60% of its 13 million population, yet to be connected to the Internet. This presents an opportunity to service providers to build relevant and affordable Internet packages which will enable them to reach the remaining 60% as well as to maintain the growth trend. As documented by the World Bank, for every 10% increase in broadband penetration, the underlying GDP could grow as much as 2.5%.
Ngonidzashe Katsamba is a passionate Telecoms marketer who holds Honours in Business studies from the University of Zimbabwe, an Advanced Diploma in Telecommunications and Digital networks engineering from City SND Guilds UK, a Professional Diploma in Marketing from CIM (UK) and is currently work towards Chartered Marketer status. Ngoni has been working in Zimbabwe’s Telecoms industry for the past 5 years and he has seen Zimbabwe’s Telecoms industry consumption from purely voice to a mixture of voice and data with data on the growth trend.