Africa making progress in Internet access

CAIRO (Reuters) - Improving Internet access in Africa is a fight on several fronts -- building undersea cables, setting up regional exchanges and bridging the last mile to homes and businesses -- but the continent is making progress.

For example, Africa's mobile industry is booming -- subscribers grew by 33 percent over the past year -- and carriers say they will invest $50 billion over five years to boost cellphone coverage.

But more than 300 million people in rural parts of Africa are not yet covered by any mobile phone network, let alone one that would support Internet access, and the continent has only 35 million fixed telephone lines for almost a billion people.

The huge potential this presents has attracted foreign buyers from Britain's Vodafone to France Telecom, and recently India's Bharti Airtel expressed interest in buying Africa's top telecoms company MTN.

Much is at stake, not only for newcomers to the continent who need to balance political risks and opportunities, but also for Africa's economic development.

While Western consumers may associate slow download speeds primarily with the time it takes for a YouTube video to start playing, for African companies, the amount and cost of bandwidth available directly affect their ability to do business.

"Call centers in Kenya, for example -- their access cost is 10 times greater than in India, simply because of the bandwidth costs," Gabriel Solomon of wireless industry group GSMA told Reuters at the ITU Telecom Africa conference in Cairo.

Many in the industry believe that wireless Internet access will be key. But for the substantial part of Africa's population that lives on less than $1 a day, owning even a low-cost phone, much less one capable of accessing the Web, is out of reach.

"While we are trying to close the gap in telephony, another gap is now being created in Internet... it's a real challenge," Hamadoun Toure, secretary-general of the International Telecommunication Union, told Reuters.

Industry executives say there are business cases for covering villages with mobile phone networks or bringing wireless broadband to urban and suburban areas.

For such communities, MTN Rwanda, for instance, has been successful in creating a "mobile pay phone".

A local individual owns the phone, sells call time and receives a share of the revenue, MTN Rwanda Chief Executive Andrew Rugege said. Some 9,500 Rwandans have found employment that way, supporting at least as many families.

STEEP COST

In downtown Cairo, the luxury Semiramis hotel offers its guests two hours of Internet access with a speed of 4 megabits per second for $24 -- blazingly fast by African standards even though it is only a fifth of what some European consumers have.

But new fibre-optic cables connecting Africa to Europe, the Middle East and Asia will boost bandwidth and drive down prices when they come on line over the next two years, said Eric Osiakwan, director of the African Internet Service Providers Association.

Almost a dozen cables have been announced for a total investment of $6.4 billion, he said. They offer the chance to cut comparatively steep costs of telephone and Internet connections via satellite.

Backers include telecoms companies such as UAE's Etisalat, financial investors such as Blackstone, the government of Kenya, as well as the World Bank and other development institutions.

"For many years, we have discussed submarine cables for Africa. Today ... some cables are there, others will be there in two to three years, and Africa will finally be connected to the rest of the world," said Vincenzo Nesci, head of Alcatel-Lucent's African and Middle-Eastern business.

Adding to the complexity and cost of communications in Africa, many of the continent's telephone networks are unconnected with each other, which means that traffic between countries often gets routed through Europe or the United States.

Osiakwan said a study had shown that regional email traffic being routed internationally alone cost Africa $500 million.

The number of Internet exchanges where providers can connect their networks and exchange traffic locally has already grown, but financing them remains an issue.

The whole of Africa still has only 17 such exchanges, the same number as Japan, data from Packet Clearing House shows.

(editing by Elizabeth Fullerton)