Commercialisation of access to the long-awaited Africa Coast to Europe (ACE) fibre-optic cable, expected in early 2015, is expected to propel Gabon’s IT sector forward in the next year. The state has set ambitious goals for the sector, including the construction of a nationwide fibre-optic backbone, the creation of a network of IT parks, and the development of a range of social applications in e-government and e-learning. Gabon aims to transition to a digital economy by 2016, supported by $68m in public and private investment in national infrastructure planned in 2013-14.
Growth Drivers
The public sector continues to be the primary digital consumer, but demand for internet connectivity, IT hardware and services is growing rapidly. A more dynamic private sector is taking shape in anticipation of the ACE launch, which will quadruple Gabon’s connectivity to 4.9 Gbps, providing the necessary base for the development of a digital economy.
For now, the market continues to be held back by limited broadband capacity, so 2014 will be focused on efforts to commercialise access to the ACE cable and to expand IT infrastructure both in Gabon and the broader sub-region to meet rising demand.
Internet Usage
The Gabonese market has shown a rapid uptake of internet technology in the past decade. The number of internet users grew by 25% in 2013, following a 76% spike in 2012 related to falling prices in both mobile and fixed internet service. The overall internet penetration rate more than doubled in the past two years, from 19% in 2011 to 41% in 2013.
The country’s limited fibre-optic connectivity and comparatively high access prices meant that mobile internet leap-frogged the fixed internet market, despite its reliance on slower 2.75G EDGE technology. By 2013 year-end the mobile segment accounted for 94% of the country’s total 620,211 internet users, according to data from the Regulatory Agency for Electronic Communications and Postal Services (Autorité de Régulation des Communications Électroniques et des Postes, ARCEP). The number of mobile internet subscribers jumped 80% in 2012 to reach 461,461 users as operators slashed their prices in anticipation of the impending launch of 3G and increased competition. Mobile internet users climbed by another 26.3% in 2013 to reach 582,964. The mobile market should continue to grow in 2014 on the back of 3G services. Gabon Telecom’s fixed internet service accounted for another 9896 customers, or 2% of total internet users in 2013. According to ARCEP, this is down considerably from nearly 26,000 fixed-line users in 2012 as mobile technologies gained the upper hand.
Gabon Telecom has cut its fixed-line internet prices twice since August 2012, which could help to generate more fixed-line customers once the ACE cable is opened to all operators. The monthly cost of a 512-Kbps ADSL connection has fallen from CFA29,500 (€44) to CFA15,000 (€23) as of April 2013.
Key Players
Given the predominance of mobile internet, the country’s four telecoms providers are classed as the top internet service providers (ISPs). Airtel Gabon led the market with 61.72% of all internet subscribers (382,781) as of the last quarter of 2013, followed by Gabon Telecom Mobile, formerly Libertis, with 23.25% (144,210). Moov (Atlantique Telecom Gabon) and Azur (Usan Gabon) followed with 8.52% and 0.5% of users, respectively.
The market is rounded out by another six ISPs of varying size: IG Telecom, Solsi, IPI9, Digicom, Boost Africa Wifly and GBM. These ISPs accounted for 27,361 customers in 2013, or 4% of all users. While ISPs still represent a modest market segment, their share has grown 10-fold from just 2390 users in 2011, less than 1% of the total internet market. They also accounted for 3% of the turnover from the total telecoms sector in 2013. Turnover rose 22% year-on-year (y-o-y) to reach CFA8.17bn (€12.3m), a much faster rate than the overall mobile telephony market, which grew 6% y-o-y.
Given the investment required in cable connectivity, infrastructure and equipment, most ISPs focus on corporate and government clients. Many have chosen to develop their networks through very small aperture terminal (VSAT) and, to a lesser extent, WiMAX technology, given the limited cable bandwidth. Reliance on satellite connections allows ISPs to more easily expand their coverage outside of urban areas and to have more direct control over their pricing.
However, ISPs are expected to focus more on the retail market as the new ACE cable and the launch of 3G push down internet prices. “Greater broadband connectivity through the ACE will drive prices down and open up an entirely new market for digital services: the general public. Internet access will go from being a luxury product to a realisable tool for sector growth, and on a larger scale, economic development,” Alain Ba Oumar, president and CEO of ISP IG Telecom, told OBG.
National Bandwidth
Insufficient broadband connectivity has been the primary obstacle to the development of the IT sector. Gabon’s first connection to a submarine fibre-optic cable, the SAT3/WASC, was completed in 2002 and offers capacity of 1.2 Gbps. As the legacy telecoms operator, Gabon Telecom was granted a monopoly of SAT3 access, and remains the only provider of fixed-line internet services for the time being. Operators had the option to negotiate cable access via Gabon Telecom, but few chose to do so given the high prices; as a result, the cable’s capacity was under-utilised. The monopoly was fully dissolved in late 2012, but rather than working to boost SAT3 access in the meantime, most operators are awaiting the activation of the new ACE cable.
Gabon is one of 19 African countries connected to the ACE submarine fibre-optic cable, which will stretch 17,000 km from France to South Africa. The ACE quadrupled national bandwidth from 1.2 Gbps to 4.9 Gbps, at last offering the capacity necessary to support higher demand for 3G and IT services and facilitate the development of the private sector. Cable landing points were completed in Libreville and Port-Gentil in December 2012, and efforts since then have focused on establishing the terrestrial fibre-optic network.
Managing Infrastructure
While policymaking remains in the hands of the Ministry of the Digital Economy, Communications and Postal Services, a new public agency was created in January 2011 to oversee the country’s digital transition. The National Agency for Digital Infrastructure and Frequencies (Agence Nationale des Infrastructures Numériques et des Fréquences, ANINF) manages the planning, installation and application of all digital projects, including telecommunications, audiovisual and IT. ANINF was established by executive decree and placed directly under the control of the presidency, an indicator of the priority given to digital infrastructure.
ANINF worked with Korea Telecom Networks to lay an initial 43-km of fibre-optic connections in Libreville, part of a project to link all government administrative buildings to the ACE. Cable access will be open to all telecoms and internet service providers, which will be responsible for drawing the cable from the landing points to their clients. At the time of publication, only the public administration was connected to the ACE, but one private telecoms operator, Airtel, had begun testing the first ACE connections for its private clients in Libreville on an informal basis, according to ANIF.
Commercialising Access
Once completed, ANINF will cede all public IT infrastructure to a second agency, the Société de Patrimoine des Infrastructures Numériques (SPIN), created in June 2012. SPIN will be responsible for overseeing the maintenance and operation of these networks by private contractors.
The initial hook-ups to the ACE cable in Libreville and Port-Gentil are ready to go, but the tariffs and conditions for access have not yet been established. A series of public tenders launched in the first half of 2014 promise to drive the project forward. SPIN issued a tender in the second quarter of 2014 to select the private company that will manage, maintain and commercialise access to the ACE cable. At the time of publication, no results had been communicated, but sector authorities expect access will be available before the end of 2014. Faster data transfers, reliable broadband connections, and health and education applications have enormous potential for economic and social development in Gabon. However, none of this will be possible without the new fibre-optic connection. The two-year delay in commercialising ACE access is hardly encouraging, but the structure that emerges looks set to be responsive, efficient and private-sector driven.
Fibre-optic Backbone
With the initial cable landings completed, the state is now turning to the extension of fibre-optic cable nationwide. Ultimately, Gabon aims to continue the submarine extension from PortGentil to Gamba, Mayumba and Pointe-Noire in the Republic of the Congo; on land, the cable will be extended from Libreville to Franceville, a population centre in the south-east, and from there on to a connection point on the Congolese border.
A $58m loan facility confirmed by the World Bank in April 2012 will support the terrestrial expansion of the fibre-optic links. The loan is part of the €157m Central African Backbone Programme (CAB), which receives support from the World Bank and the African Development Bank. The CAB project aims to promote the use of advanced technologies throughout the region and will ultimately link Cameroon, the Central African Republic, Chad, the Republic of the Congo and Equatorial Guinea to the ACE cable.
The World Bank loan facility also provides for the creation of an internet exchange point (IXP) in Gabon, which allows traffic between different ISP networks in the country to be exchanged locally, rather than by passing through foreign exchange points. This will help to increase service efficiency and further reduce internet prices, and could open the door for Gabon to serve as a regional internet hub in the future. All of Gabon’s ISPs signed onto the project in January 2014, and the IXP is expected to be operational before the end of 2014.
Regional Connection
ANINF has issued a tender for the next key step in the project’s completion, the Libreville-Franceville connection, and construction is estimated to begin by early 2015. The connection will largely follow the east-west Transgabonais railroad, and it will serve as the country’s main fibre-optic artery. From here, authorities are planning to build ACE cable connectors to all nine provincial capitals. ANINF issued tenders in May 2014 to conduct feasibility studies for the remainder of the national fibre-optic network.
Looking further afield, Gabon signed a memorandum of understanding with the Republic of the Congo in February 2014 to create the cross-border connection. A tender has been launched to select the firm that will carry out the construction of frontier connection and the Congolese section of the backbone.
Ultimately, the Congolese section will extend from a coastal landing in Pointe-Noire to Mbinda on the Gabonese border, and then follow the Congolese railway into the north. Work is estimated to begin in 2014, with a target launch date in 2016.
Technology Mix
Despite an impending market shift to fibre-optic connections and 3G technology in urban areas, satellite and WiMAX technology remain the most cost-effective means of IT connection outside of urban centres given the difficult terrain (see Telecoms overview). WiMAX technology, which allows for signals to be broadcast for up to 48 km, requiring fewer base stations than Wi-Fi technology, has been instrumental in providing reliable internet connections for provincial administrations. However, it has largely been used as a placeholder for 3G/4G technology and will begin to be phased out in the coming years as these services are rolled out across the country.
VSAT technology allows ISPs to offer their customers a guaranteed connection speed, whereas the quality of cable connections is contingent upon cable maintenance. The nature of Gabon’s main economic activities – particularly mining, forestry and oil operations in isolated areas – will continue to create demand for private VSAT networks, the bread and butter of Gabon’s larger ISPs, in the near term.
Gilbert Nzola Nzé, director-general at the Ministry of the Digital Economy, confirmed, “In the short term, VSAT technology remains the most reliable means of obtaining fast, secure internet connections for companies and institutions alike. In the long term, use of VSAT technology will decrease considerably as the fibre-optic network expands and 3G/4G services become more accessible, but it will always remain an important means of internet access in Gabon, particularly for groups operating in areas where fixed-line technology is unavailable or impractical.”
Regulatory Context
As Gabon transitions to a digital economy, lawmakers will need to work quickly to adapt the regulatory and legislative context. The Ministry of the Digital Economy submitted four draft laws to parliament in 2012 covering the protection of personal information, electronic transactions, cyber-crime and cryptology, but they have yet to be ratified.
According to ministry officials, the next key priorities will be to draft legislation regulating cloud computing, e-health and e-education applications, and industrial property. The development of digital services has outpaced the shaping of the regulatory context, and greater clarity on sector regulation will be critical to attract private investment into the growing sector. The number of software, IT training and services firms is growing as businesses work to adapt to the digital age. However, much ground remains to be covered. “Although there is room for improvement, headline growth has helped boost activity in terms of consulting and support services in the IT and telecoms sector, and there is still scope for further expansion,” Noureddine Bedoui, director-general of BS Gabon, told OBG.
Developing localised online content remains a focal point for a number of media outlets in Gabon as well, who are looking to piggyback on the rising consumption levels of middle- and higher-income segments. According to David Ella Mintsa, director-general of Gabon Television, “Gabon’s emerging middle class is increasingly looking for new platforms for media and engagement, and developing those platforms should be an integral part of the Emerging Gabon strategy.”
IT Parks
In the long term, the Ministry of the Digital Economy plans to develop a nationwide network of IT parks in key population centres, in an effort to attract foreign investment and stimulate private sector development. The flagship zone, Mandji Island Cyber City, will be part of the future industrial zone near the economic and demographic hub of Port-Gentil. The project is still in the conceptual phase, but the ministry ultimately aims to install six more IT parks in Libreville, Franceville, Boué, Oyem, Lambaréné and Mouila. The parks are set to be structured as special economic zones, offering incentives such as a 10-year tax holiday followed by a preferential 10% income tax rate, as well as unrestricted financial transfers and a single window registration platform for ICT companies. Eventually, the parks are intended to house data centres necessary to support Cloud Gabon, a key platform for the digital economy.
Digital Television
The Gabonese government is working to accelerate the transition to digital television, to meet the international deadline of June 2015 for the end of analog transmission, and to free up the spectrum necessary to support the development of 3G/4G service. “The national transition to digital television is a top government priority in 2014 as this ‘digital dividend’ is critical to the successful introduction of 3G and 4G service in Gabon,” said Nzola Nzé.
Satellite television already has a strong presence in Gabon. Two foreign satellite operators, CanalSat and SatCon, are present in the market and provide access to a broad spectrum of domestic and international content, while local company TNT Africa offers digital terrestrial television (DTTV). DTTV is capable of transmitting 8-10 channels on a single frequency, which lowers operating costs and maximises the available data capacity compared to analog. An estimated 300,000 subscribers made the switch to DTTV by mid-2012. However, this still leaves a percentage of the population outside of the digital system, and the state may need to cover the remaining materials cost in order to close the divide by 2015. Triple-play offerings are also being rolled out. IG Telecom launched the region’s first bundled satellite television, internet and radio service, TripleNet, in 2013 in partnership with Canal+. According to IG Telecom, the service could reach between 3000 and 4000 clients in Gabon in the next three years and, in the long-term, up to 20,000 potential customers in Francophone Central Africa.
Health & Education
Once established, Gabon’s digital economy will have many important implications for social and economic development. For example, ANINF is overseeing the construction of 50 digital classrooms around Libreville to offer teacher training. The government also aims to create health councils in each of Gabon’s 51 health districts, which will digitally record local data in order to gain a clearer picture of the disease burden and shortcomings in the health care sector. Gabon has also announced plans to implement tele-medicine programmes using Samsung’s Digital Village initiative. The Digital Village platform includes a stationary tele-medicine centre.
OUTLOOK: The effort to establish a digital economy is beginning with the public sector. Key ministries are preparing to move services online and the majority of administrative buildings are now connected by the Gabon Administrative Network, creating strong demand for suppliers of ICT hardware and service companies. In later stages, the country’s digital platforms will help to connect rural populations, expand access to social services and stimulate the private sector. The sector is in a holding pattern until access to the ACE cable is commercialised, but the progress made so far to extend the fibre-optic network and ensure a level playing field for ICT companies is preparing the sector for growth.
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