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Social Media Steals the Power from Telecoms Operators

14 November 2018

The non-stop growth of social media is threatening the future of African telecoms operators, with companies like Google now building their own networks instead of relying on the existing infrastructure, says Eckart Zollner, head of business development for JSE-listed ICT group Jasco.

He says American giants like Google and Facebook and less well-known but equally avaricious Asian players are expanding to become infrastructure providers themselves and pouring money and equipment into Africa. They view the continent as a vast underserviced market because more Africans are gaining access to the internet via smartphones, creating an attractive opportunity as these companies approach saturation point on home turf.

“At the moment the social media giants are mainly plugging some gaps in network coverage and capacity. But they pose a real threat to traditional telecoms operators, which supplies and designs telecoms equipment for many of Africa’s largest operators,” comments Zollner.

“There is a big shift in power away from the network operators to the over-the-top providers like Facebook, Linked-In and Google, who provide the content and own the end users,” Zollner explains. “These companies are busy building their own networks because they need to reach more customers and provide more capacity. They have much larger customer bases than any single operator, so the operators just become a means to an end for the content providers, and they’re the ones making money out of the consumers by selling services, subscriptions or advertising.”

Facebook for instance is building data centres and networks across Africa and Google is encouraging the production of fresh content in local languages. “Google is focusing on markets in East Africa where there is a good penetration of smartphones and customers who are computer literate. In Uganda for instance it has funded some big fibre projects in major metros,” Zollner says.

To avoid being pushed out of business, local operators must make sure their own infrastructure can handle the data demands of these global players. Otherwise, instead of merely filling in the gaps, the global players may roll out new networks to completely bypass the local operators.

“Content providers will try to work with the existing network operators, but a lot of those operators have old legacy infrastructure which may make it difficult. Google and Facebook don’t have that problem, so they can move very quickly with the latest technology infrastructure,” Zollner says. 

That will force African operators to invest heavily in the quality and capacity of their networks, so they can partner with these global giants. They also need to develop a clear strategy for building international relationships and working with these global giants.

Then they must also understand how the rise of social media is boosting the demand for bandwidth, and build networks with enough diversity, capacity and redundancy to provide constant uptime. Some operators have rolled out different technologies in the different countries where they have a footprint. “Now they are investing in unified technologies across those markets for the ability to transport traffic all over the world,” Zollner says.

As an example of how demand for bandwidth is going wild, Zollner cites the AfricaCom conference held in Cape Town recently. At one session, about 300 people filmed a presentation on their cellphones and all tried to post it on social media simultaneously. Imagine how many similar events take place in every city, in every country, every single minute, he says. 

Zollner also warns that this inherent need for African operators and equipment manufacturers to sharpen up is essential to fend off a new wave of colonialisation.

“It’s very easy for governments to be tempted by foreign direct investments and be lured into a modern colonisation. We need to be very careful as African countries that we don’t make wrong decisions and get into the wrong dependencies,” he says.

That is already happening in several fields, including technology and telecoms. Foreign players may promise valuable investments and welcome improvements in infrastructure, but there’s a risk that indigenous companies will be muscled out and governments will end up heavily indebted to foreign entities, Zollner warns. 

“We need to make decisions that improve our developing economies and improve the lives of the people and not get hijacked by vested interests to solve our problems. Technology firms are no exception - they have their own profit motives. We need to learn from people who don’t have vested interests or short-term profits in mind.”

African governments should draw on the advice of neutral and well-regarded non-profit organisations that focus on the high-tech sector, rather than accept investments that tie them into one company or technology, he believes.

“As Africans we have a lot to offer. We have huge intellectual property and well-educated, clever people, but we undersell ourselves and give things away too easily,” he says.