Miscommunication:Telecoms Expansion Targets Quantity Not Quality

The Ethiopian telecoms monopoly, ethio telecoms, has increasingly become the bane of the lives of so many of the country's residents. Not only that, but poor speeds and unreliability service present obstacles to anyone trying to conduct business in the country. The government is ploughing large sums of money into the sector, but the target seems to be increasing quantity as opposed to improving quality, reports BEWKET ABEBE, FORTUNE STAFF WRITER.

Although ethio-telecom is in the midst of an expansion to increase the number of service beneficiaries, such as mobile subscribers, and to that effect investing a large amount of money in the sector, mobile communication has continued to be unreliable in several parts of Addis Abeba.

Last week, a passenger going by taxi from Kotebe to Megenagna, in Yeka district, saw a person he knew walking on the street. He wanted to talk to him and dialed his number, but was not able to connect. He was angry with ethio telecom’s recorded voice, which informs customers that they cannot connect and that they should try again later.

 “When is that later?” He asked indignantly. “Ethio telecom needs to tell us.”

The mobile connection problem is visibly worse in identified areas, the majority of which are where the network infrastructures is built by Nokia. People around the Jemo area in Lafto District complain about not being able to connect.

“What I cannot understand is why Ethiopia’s connection gets worse the more the world becomes modern and faster in connection,” says Beyene Haileleul, 52, a resident in the Kera area of Lafto District – another of the areas in Addis Abeba known for its poor connectivity.

The state-owned service provider has, nevertheless, continued investing. From 2005 up to 2007 alone, the government spent 40 million dollars to maintain the network infrastructure.

From the total amount of money allocated to make the Growth & Transformation Plan (GTP) realistic – which estimates a total of 75-79 billion dollars over five years in all sectors – about two billion dollars is allocated to the telecom sector.

Despite all these investments, customers like Beyene complain that the quality of the service has not witnessed as much change as they expected.

The average speed of Internet connectivity in Ethiopia is currently at the lowest of any other country across the globe. The connectivity in Ethiopia has dropped to as low as 5 kb per second, according to a report in 2012. This is a speed that the rest of the world was accessing in the 1990s. With 0.02pc, Ethiopia’s Internet penetration rate is also one of the lowest.

With 10-20pc downtime in Internet connectivity, this translates into lost opportunities, cost overruns and wasted-time for idle personnel. The telecom service has been rated as the lowest in numerous different reports. 

The government is currently investing 10pc of the entire country’s budget into the telecom sector.

In addition to the 1.5 billion dollar investment, Which ethio-telecom invested in the last six years, the country announced a vendor financing a year ago as part of the network expansion project. After a negotiation that lasted for over a year, the two giant Chinese telecom companies, Huwaei and ZTE, won the vendor with 1.6 billion dollars. This will last for the coming two years.

In the vendor agreement, which has lasted for over a year, ethio telecom was negotiating the price to reduce to one billion dollars at the outset and to 1.3 billion dollars thereafter. In the negotiation, ethio telecom has not been successful in decreasing the price of the vender agreement.

It took a considerable amount of time to reach a final agreement and disclose the winner.

“It was hectic,” said Debretsion G/Michael (PhD), Minister of Information & Communications Technology and deputy prime minister for the Economic & Finance Cluster.

The vendor agreement, which will last for the coming two years, surpasses the total investment by ethio telecom throughout the last six years. The amount the state-owned service provider as invested over the last six years, since the coming of Ericsson, is 1.5 billion dollars.

“Investing   even 400,000 billion dollars into a project is a big issue in countries like Ethiopia. but we are investing in billions ,” argues Abdurahim Ahmed, the corporate communications manager with ethio telecom  presents the investment as an excuse. “This has to be considered as a significant effort.”

To make the maintenance of the network easier, ethio telecom introduced a new system, dividing the country into 13 different telecom infrastructure zones.

The study to divide the infrastructure by zone was concluded before January, 2013. The zoning system, which was adopted from India, that divided the telecom infrastructure into 22 different zones, creates ‘telecom circles’, which are used to make a boundary between the networks, provided by various suppliers. In the division, Addis Abeba, whose current telecom infrastructure is mainly set by ZTE, is regarded as one centre and given to Huawei as per the allocation.  Huawei, which the management board of ethio telecom preferred after scrutinising the two giant Chinese competitors with the help of 17 different criteria, will work on the 4G technology, which has around 400,000 users in Addis Abeba.

Technicians of ethio telecom will be deployed to specific zones with two technicians from the two companies, according to the agreement signed between the two. This is so as to encourage technology transfer.

This is, however, unrealistic for a telecom technician at ethio-telecom. “We cannot go with them in all the places they work in,” the technician who preferred anonymity told Fortune.

 “Everything will be done as per the contract,” says Abdurahim. “There is no way that any of the companies will deviate from that.”

The companies, who signed the agreement five months ago, have now started the first phase of implementation-i.e  conducting the survey that is identifies the demography of the zones,  according to Abdurahim. ZTE, however, whom Fortune talked to about the survey, said it has not yet started the survey because it has not received permission from ethio telecom. 

The companies seem to be courageous to do so. “You will see the change within six months,” Celia Huang from Huawei told Fortune.

The new project, which seems to focus on quantity, is expected to raise the number of mobile subscribers to 50 million from its current total of 22 million. In terms of the number of mobile subscribers, the expectation is even more than the number expected in the country’s GTP. At the end of the GTP period, the number of mobile subscribers is expected to reach 40 million.

When it comes to quality, however, the United Nation’s International Telecommunication Union (ITU), which released its reporting on November 6, 2013, indicated that Ethiopia’s rank has shown a one rank drop from the previous year. Currently it is placed 151st in ICT development, out of 157 countries.

Since the time when telecom companies, like Ericson, started operations five years ago, the mobile coverage has reached 22 million.

The signing of the vendor and the coming of the companies alone cannot improve the country’s ranking in the digital economy, Mignot Kassa, a telecom engineer, argues.

Working aggressively on the maintenance of the existing infrastructure and on local applications is needed, he recommends.

Mignote further argues that the monopoly by ethio-telecom has compounded the problem.

According to a study conducted by the Addis Abeba University at the end of 2011, the government could have gained tenfold the current profit from tax had it allowed private companies to invest.

But privatising the telecoms and financial sectors does not seem to be an option for the Ethiopian government.

“We do not have any intention to privatise the telecoms sector,” Debretsion says.

Ethio telecom is currently the second largest state-owned company in the country next to Ethiopian Airlines (EAL).


Published on December 15, 2014 [ Vol 14 ,No 711]



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