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Issue 7: Developing Countries - Ghana

Politics and Technology Converge: Case Studies on the Effects of Regulatory Reform on VSAT Adoption in Developing Countries

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C: COUNTRY CASE STUDIES - VSAT USAGE IN GHANA

Background

Access to communication technologies is a problem for many people in Ghana, especially for the poor.[4] For example, there were 1.82 telephones per 100 people in 2001. As in most developing countries, there is a long waiting list for new telephone services and waiting times could be up to a year. International Telecommunications Union (ITU) statistics show that in 2001, there were 235 Internet hosts in Ghana, and a computer density of 0.33.[5] In spite of these low numbers, there has been a phenomenal growth in Internet use since its genesis in Ghana.[6] Of course, its growth pattern is skewed towards the regional centers.

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A 1997 survey revealed that the Internet is used in Ghana for various purposes as illustrated below.[7] The findings showed that 38.4% of subscribers cited communication as the main reason for using the Internet. This was followed by the ability to access databases (32.9%) and research (16.6%).[8]

Given the fact that access to the Internet in Ghana is largely limited to cities, especially Accra, the capital city, the exchange of knowledge via the Internet is also confined to the cities. This limited access to information slows development in business, governance and education. There is no doubt that Ghana follows the pattern of other poor telecommunications infrastructure countries.

To drastically change this state of affairs to meet the growing demand for Internet access requires deployment of low cost communication technologies. It is in that regard that satellite technology becomes useful.

The construction of a satellite earth station at Kuntunse in the Eastern region of Ghana in 1981, and related communication reforms in the early 1990s marked a dramatic shift towards greater use of satellite communications technologies. Satellite earth stations and connecting equipment were installed by private and state entities dramatically increasing, voice, data and video services. Today, Ghana operates a fairly open communication industry, having privatized some institutions, and encouraging both domestic and foreign investors to participate in building communication businesses. This has resulted in the establishment of firms providing variety of voice, video and data services to meet the growing demand.

Satellite communication has emerged as a preferred means of Internet connectivity. This is evident in the fact that leading Internet Service Providers (ISPs) such as Network Computer Systems (NCS), Tin-Ifa and Busy Internet now use a satellite link to World Wide Web which bypasses the public switched telephone network. Busy Internet boasts that it is the fastest broadband service in Ghana. A look at Busy Internet operation will illustrate how VSAT as a form of satellite communication can help unleash the full potential of Ghana's communications industry through a combination of innovative technologies, good business practices and sensible regulatory policies.

Busy Internet VSAT Connectivity

Ghana's Busy Internet connects directly to the Internet backbone in the US through a C-band satellite using Very Small Aperture Terminal (VSAT). C-band like the L, Ku and Ka bands are satellite frequencies designated by the International Telecommunication Union for the distribution of voice, data and video communication signals. The C-band frequency spans between 4/6 GHz and is used to support telephony, broadcast, cable TV and other business communication services.[9] VSAT satellite space segment providers offer three types of satellite beams: spot, hemispheric and global. Spot beams are currently available in both Ku-Band (12-16 GHz) and C-band (4-6 GHz). Spot beams are generally high power, thus allowing smaller antenna dishes to be used at remote sites. Hemispheric and Global beams have a much larger footprint and weaker signal strength.[10] These frequencies are noted for their fairly good resistance to rain attenuation and suitability for the tropical climate of Ghana and parts of Africa that experience seasonal heavy rainfall.

Busy Internet is a joint venture between Ghanaian and American investors to create state of the art technology incubators across Africa. This laudable venture uses terrestrial infrastructure, satellite connectivity and rapid power services to generate new jobs, businesses, services and products related to IT across Africa.[11] Busy Internet subscribes to the Echoband IP Planet satellite communications platform to bring Internet services to its customers. Ecoband,[12] is an Israeli reseller of satellite communications services using a constellation of North American based satellites with footprints covering the whole of Africa. IP Planet is part of the Eurocom Group, Israel's largest privately held communications company.[13]

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Busy Internet building in Accra which also houses Ecoband Networks the resale agent of IP Planet. Source: http://busyinternet.com

The VSAT networks[14] offered by Ecoband guarantees ISPs bandwidth at speeds ranging from 64Kbps to 48Mbps, with the possibility of providing for "burst capacity" when necessary. [15] After three years of hosting Internet and other multimedia services as a local Internet Cafe, Busy Internet has expanded its role. It is now offering personalize Internet service direct to home and business premises.

According to Mark Davis, the CEO of Busy Internet, September 2003 marked the beginning of the installation of VSAT satellite dishes for businesses. Davis indicated that

"One of the things we have realized is that people do respect Busy Internet, they like the brand… To capitalize on that we can move into other kinds of businesses&helli[;We are doing it very cautiously&helli[;it will be very small and much focused. It will be high quality service for a limited number of customers. And that is how we are moving on with these new licenses and new technologies and trying to grow our revenue base and our services."[16]

Prior to September 2003, Busy Internet's traditional services to Ghanaians had been its 100 PC Cyber Café and 24 hour digital copy centre. The provision of ISP services direct to the premises of customers is a diversification of its operations. The company charged ¢5000.00 (US $0.58) for 30 minutes browsing or use of a computer terminal at the cafe center, the estimated charge for its new Internet services to be delivered to the premises of customers is yet to be determined.

The greatest challenge facing most ISPs and especially the cyber cafes is regulation in terms of licensing and annual fees charged by the NCA (National Communication Authority), the regulatory agency in Ghana.

Davis indicated that the NCA has difficulty understanding:

"the implications of certain technologies and how to regulate them. For example a VSAT will cost you $8,000 or $4,000, and unfortunately that is the only way you can get connectivity in the rural areas in Ghana. No small cyber café can afford this&helli[; [and the cost of] a big license fee. They will have to understand that, and I am sure they will be sympathetic. These satellite dishes are no longer $30,000 and restricted to big corporations."[17]

Concerns of VSAT Operators

VSAT operators in Ghana feel constrained by the licensing and government fees required of them. From the satellite operators point of view, local regulators and those who make policy are not sensitive to the amount of money that must be invested to make these technologies available. Add-on fees and charges could be reduced. Alexander Sulzberger of Ecoband explained the problem in this case. He said

"reaching the remote areas and smaller regional capitals by satellite is still a big hurdle. We have a license fee for VSAT communications that is quite expensive. We pay roughly about $10,000 to $12,000 in the first year to apply for and obtain our license and then we have an annual site fee of about $4,000 which is prohibitively expensive, if you add these to the cost of VSAT equipment, installation fee, and the bandwidth charges."[18]

According to Sulzberger, a small link for a rural community communications center requires equipment costing between $5,000 and $10,000, and then there are service charges of about $500.

Kwasi Boateng[19] indicated that:

  1. VSAT operators in Ghana would like to see the NCA and the Ministry of Communications differentiating between big, medium and small size operators. Given that the traffic capacity of satellite dishes vary depending on their bandwidth, the licenses, and annual fees charged on them could be made to reflect such differences. Government imposed costs are a major draw back in the attempt to provide Internet services to Ghanaian and other African communities.
  2. The deployment of such services requires a huge capital investment in equipment and in installation. Attention needs to be focused on providing incentives to those entities and individuals willing to commit their resources to bringing new media and communications services to the country. The discussion on incentives has mostly been focused on tax incentives, but other forms of incentives could be considered. For instance, creating Designated Market Areas (DMA) for service providers to assure them of a fair share of the market and allowing Internet service providers to offer VoIP (Voice over Internet Protocol which could help diversify their streams of revenue.
  3. The NCA and the Ministry of Communication need to decide on VoIP. Voice over Internet is an attractive option for Internet users because of the lower cost. VoIP is a potential incentive for VSAT operators, who are currently limited to data service. Having government offices better understand the capabilities of VSAT satellite communications for economic and social developments is crucial to the expansion of communication infrastructure throughout Africa.

NCA and Regulatory Challenges

The regulatory environment of the communications industry in Ghana has played a significant role in the establishment of communications service providers like Busy Internet, Ecoband, NCS and Tin-Ifa. Describing the Internet industry in Ghana, Echoband CEO Alexander Sulzberger pointed out that,

"Ghana is in a unique position if you look at the surrounding West African countries. In Ghana it was from the beginning the private sector that developed the Internet business [and] not so much the government owned Telecom as it is in the Francophone countries where the PTT is the biggest ISP."[20]

From this statement, it is evident that private initiatives and regulatory reforms have driven the development of the Internet industry.

The political and economic changes that took place in Ghana between 1992 and 1996 have helped create a communications industry driven by private investment initiatives. It has become easier for communications firms to register and operate as service providers in Ghana and there are claims that obtaining a VSAT license in Ghana is now a simpler process than in many other African countries. Consequently, satellite communications networks have been able to provide alternatives to the congested POTS networks operated by the former PTT, Ghana Telecom, and Westel, its competitor after the reform. Multichoice (TV and video), and Spacefon (voice) are two of the successful private firms using satellite platforms to deliver Pay-TV and mobile services to Ghanaian customers.

According to Kwasi Boateng, communications development in Ghana has reached the point where further regulatory reform is needed to ensure expansion of the industry. It has become evident that terrestrial networks cannot be the sole source for communication services. Satellite and wireless connectivity must complement existing telecommunication networks. The bandwidths of T1 (1.54 Mb/s) lines are rapidly becoming insufficient to meet the demand and T1 lines do not go everywhere. Although Ghana Telecom is a partner to the SAT 3[21] fiber optic cable project in Africa, Ghana currently lacks the nationwide cable infrastructure to deliver Internet and other networked services to home and businesses premises. Bernard Forson Jnr, the deputy director general of NCA, had this to say on the issue,

"If roads are being built, why cables can't be put under the roads? Railroads are being built, why cannot railroads have cables under the railroad? Buildings are being built, why cannot they [be required to follow] certain communications codes and have positions on top&helli[;for ports for data communications services? The whole building could be mandated or coded to have a certain amount of infrastructure running through it so we can start building local exchange entities. You can have one building well set, the land belongs to government, and the building belongs to private sector, mandate [d] by law to allow collocation. That will allow multiple players to come in and compete on the service site."[22] Building effective communications networks in Ghana requires planning and regulatory guidelines. Forson's statement is a testimony to this fact.

For new technologies to bring economic growth, the regulatory mechanism will have to be streamlined in Ghana. According to Boateng, a big constraint for ISPs is the existence of rules that prevent VSAT operators from providing value added services like VoIP. He emphasized that to enable industry players to plan, negotiate and implement business strategies, the NCA should take the lead in addressing the following issues.

  1. The creation of Designated Market Areas (DMAs). Ghana is still considered one big market even though communications businesses are concentrated in cities like Accra, Kumasi and Takoradi. Service providers focus their attention on these cities, and new players all seek to break into these urban markets. Dividing Ghana up into DMAs will give the licensing agency a way to encourage service providers to select areas of operations where competition is less. Should the Ghanaian market be divided into sectors, the regulatory agency could offer incentives to VSAT operators and others to deploy in the underserved and rural communities.
  2. The NCA should work to promote "dynamic competition" as opposed to "static competition" within the industry.[23] Dynamic competition allows competing technologies and new products to challenge the old ones and, if they are really better to replace them.
  3. Understanding this reality will enable operators using VSAT and other satellite technologies to compete effectively with protected former telecommunications monopoly operator.
  4. Together with the Ministry of Communication, the NCA should define Ghana Telecom's status either as an ordinary operator or as a common carrier. The role of other telecommunications entities in Ghana should be categorized so as to determine their obligations roles as content and service providers.
  5. Guidelines related to standardization, interconnections, arbitration and negotiations should be drafted and made public. Such rules eliminate much of the bureaucracy and the unfavorable business relations that exist between the big and smaller operators.

Notable Applications of VSAT in Ghana

GS Telecom with offices in Accra, Lagos, Port Harcort, Abuja, Maputo and Dar es Salaam, and engineers in the United Kingdom, South Africa, Cameroon and Zimbabwe[24] has installed a VSAT system for Ashanti Gold Fields to provide telephone and data connectivity to its mines at Damang and Tarkwa. The VSATs at Tarkwa (Gold Fields Tarkwa), Damang (Abosso Goldfields Ltd) and Accra are all connected to GS Telecom's Internet hub at Teleglobe in Montreal. The VSAT hub in Accra includes an Andrew 3.7M antenna, Paradise Datacom P300 modems, Codan transceiver and Alcatel Bandwidth Manager.

Another important case is a $10m investment deploying a VSAT-based telephone network around the country by the Ghana National Petroleum Corporation (GNPC), the African Communications Group and Western Wireless (Cambridge Mass, US). The satellite contractor in charge was Israel-based Gilat with the GNPC having a 20-year exclusivity license.

Ghana | China | India | Brazil | Israel | Lessons for Africa

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