Internet in Swaziland: What Africa and the World Can Learn

1. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn Internet in Swaziland:What Africa & the World can learn Presented by: Mr Ali S RestingManaging DirectorReal Image (Pty) Ltd.

2. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • A walk down memory lane • Internet in Swaziland dates back to early 1995 • 2 main providers back then providing connectivity - Real Image, iAfrica • The University Of Swaziland were the initial custodians and managers of the .sz ccTLD • Analog leased-lines and dialup at of between 4.8kbps and 9.6kbps • At this time US Robotics was king • As an ISP we had a Compaq Rack with 64 analog modems connect to a Cisco 2511 router. • These were the days long before PRI’s & E1’s were available • The local telco had not yet started their ISP division

3. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • Internet Initiative For Africa • In 1998 Internet Initiative For Africa funded by UNDP started. • Aim to establish VSAT in a number of territories and number of Internet Cafes • A team was identified to travel to working locations (Ivory Coast, Ghana, The Gambia…etc). • Hadn’t realized that this would eventually lead to 3rd ISP. • Project was Initially called Swaziland Internet Gateway

4. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • Internet Initiative For Africa • Founding principals was to ensure equal objective access to its use and management. • An all inclusive steering committee was established • It was agreed that the Internet Gateway was a national asset • Internet Gateway was to wholesale service to ISP’s • Internet Gateway was housed at the Telco’s Premises to allow for ease of connection by all concerned. • UNDP and the stakeholders had not anticipated was that this gateway would eventually be hi-jacked (literally) to the singular benefit of the Telco!!! • And so a 3rd ISP was born - Swazi.NET

5. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • Internet Initiative For Africa • By the establishment of Internet division, SPTC started taking greater interest in ISP’s • The gateway should have been setup in a neutral environment and not co-located at the Telco premises. • UNDP and steering committee should have done more to limit abuse of facility to benefit of Telco. • Steering committee proved ineffective as members were never available • SPTC started managing the gateway to its own benefit.

6. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • Enter GSM – 1998 • In 1998 the first GSM provider MTN Swaziland was licensed and established. • A few years later MTN introduced GPRS/EDGE services and eventually 3G. • MTN was granted an exclusive license for 10 years. • It was hoped that by 2008 an independent regulator would have been setup to deal with license renewal application. • Deadline to establish regulator (by 2008) was not met • Of particular interest is that the fixed line penetration was about 40,000 or 4% when MTN was given the green light to operate.

7. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • Enter GSM – 1998 • As part of the license conditions, SPTC assumed a majority equity stake in MTN Swaziland • SPTC did very little in either expanding or rehabilitating the national fixed-line infrastructure, as they continued to earn great benefit in the dividend payouts • In the same period, and mainly due to limited infrastructure and technologies, fixed-line Internet growth was limited. • Resulted in more and more users taking up Mobile Internet services of MTN (even though exorbitantly priced)

8. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • ICT Policy – 2000 • By 2000 there was a realization that ICT’s would play a critical role in Swaziland, • Steps to draft ICT Policy were undertaken. • Moreover government was aware that they needed to start taking steps to deal with the eventual license renewal of MTN • Drafting process took over 12 years to finalize, leading to a major impasse between MTN and SPTC post 2008. • The draft document changed its identity through its lifetime • ICT Policy, then renamed Media & Information Communications Policy. • Was eventually split into 3 documents namely the NICI (National Information and Communications Infrastructure) Policy, the Electronic Communications Act 2013 and the Swaziland Communications Commission Act 2013.

9. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • ICT Policy – 2000 • As of July 2013, Swaziland now has a regulator • All authority previously vested with SPTC has now been transferred to the regulator. • It’s independence is still to be tested. • The regulator’s operational framework has already been drawn up • Licensing framework still pending. • The act provides for the is immediate unbundling of the local loop • Additional provisions include that of interconnection, where players that previously assumed a position of dominance will be forced to interconnect with other operators at reasonable market rates.

10. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • Satellite DVB-S Services – 2001 • Real Image partnered with Sentech to provide a high-speed asymmetrical connectivity solution • This solution because of the cost to speed ratio, was very popular • A lot of these new clients migrated from the Telco’s ISP. • You could get speeds of up to 1Mbit (receive-only). These were incredible speeds as many were used to 56k dial-up. • Telco was not very happy tried to define the solution as a VSAT solution so that they could force users to apply for a license. This was not very successful.

11. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • Satellite DVB-S Services – 2001 • Due to the limited content that was being offered by Swazi TV, most homes took up pay-per-view solutions that were offered by DSTV. • Most homes had satellite dishes, limiting the cost of deploying the solution. • The service was eventually withdrawn in 2008 by Sentech • In the same year (2008) ADSL broadband services became available. • With the continued high cost of 3G type services, and the limited footprint of any other last mile delivery medium, there’s still great opportunity for DVB-S/S2 type services in underserviced areas. • Swaziland due to its geo-location has a number of strong satellite footprints over her especially on the KU Band.

12. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • Swaziland Internet Exchange Point SZiXP– 2004 • In an effort to drive connectivity costs down (and keeping local traffic local) a process was undertaken to setup the SZiXP (Swaziland Internet Exchange Point). • In June 2004 Swaziland’s first IXP was setup. • Peering partners where Real Image, Posix and AfOL • As you will notice the local Telco was not part of the peering partners. Not unique to Swaziland…. • During the same period SISPA (Swaziland Internet Service Providers Association) was formed. Similar to ISPA • Responsibilities were to effect self-regulation, manage .sz ccTLD (which was eventually transferred from the University Of Swaziland), be a mouth piece for all registered ISP’s and provide a platform for all its members to share ideas and thoughts.

13. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • Swaziland Internet Exchange Point SZiXP– 2004 • Biggest stumbling blocks high cost of in-country connectivity i.e. leased-circuits. • So even though the IXP was established in 2004, it’s traffic profile has not changed by much. • A 64k p-t-p leased-line circuit (in country) currently costs R1,050 p/m and a 2Mbps p-t-p leased-line costs R16,000 p/m and a 10Mbps costs R54,000 p/m. • Lessons learnt - SZiXP should have had a more open peering policy & not limited it to commercially registered ISP’s. • Stakeholder engagement needs to include government, and by extension the Telco

14. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn Some Statistics starting 1997– 2014 (as referenced by ITU and a number of regional reports) Mobile Users - 1997 – n/a - 2007 - 250,000 - 2008 - 500,000 - 2009 - 732,000 - 2012 - 805,000 - 2014 - 895,000 Fixed Line 1997 - 20,000 2001 - 38,500 2009 - 44,000 2012 - 48,600 2014 - 55,000

15. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn Some Statistics starting 1997– 2014 Operational ISP’s 1997 - 2 - (AfOL, Real Image) 2001 - 5 - (AfOL, SwaziWeb, Posix, Swazi.net, Real Image) 2004 - 4 - (AfOL, Posix, Swazi.net, Real Image) 2013 - 3 - (Swazi.net, Posix, Real Image) Internet Users 2012 – 3,700 (Fixed line Internet) + 166,000 (Mobile Internet)

16. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • The End of MTN’s monopoly – 2008 • 2008 saw the end of the MTN exclusivity period, so market was open • Regulator was still not established • License renewed by government (without exclusivity). • SPTC introduced a licensing framework for ISP’s • Forced ISP’s to source connectivity strictly from the Telco • The license fee would be based on a percentage of their gross turn-over. • So the fall out of ISP’s and SPTC began.

17. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • The End of MTN’s monopoly – 2008 • ADSL broadband services became available. • ADSL speed flavours where 128/64k (R175 p/m), 256/64k (R512 p/m), 512/128k (R750 p/m), 1024/256k (R1,200 p/m) • MTN applied for 3G license which they were eventually granted at a fee (~R30million) • SPTC put up a lot of resistance but not successful • As MTN’s exclusivity was at an end, SPTC granted itself a license to provide “Fixed-Wireless” voice and data services using CDMA type technology. • SPTC did not publicize it’s plans and/or put it’s application/business plan forward for public scrutiny, something that would have been required of any other applicant.

18. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • The End of MTN’s monopoly – 2008 • However SPTC continued to hold major shareholding in MTN Swaziland. • JVA strictly prohibited SPTC from going into direct competition with MTN • SPTC had hoped to work around that provision by terming their solution as “Fixed-Wireless”. • Even though termed “Fixed-wireless”, the solution was fully mobile. • MTN sort relief from the courts • Ruling compelled SPTC to stop providing mobile voice and data services over their new NGN (Next Generation Network).

19. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • The End of MTN’s monopoly – 2008 • Months later, SPTC decided to launch a new product and called it a MiFi • By definition and also by function, MiFi is a portable broadband device that allows multiple end users and mobile devices to share a 3G or 4G mobile broadband Internet connection and create an ad-hoc network. • Again they tried to term this solution as a fixed-wireless data solution. • Again MTN sort relief from the courts and won the case again. • SPTC was compelled to physically turn-off all mobile components of • ZAR 30million levied against them for not complying with the initial judgment

20. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • The End of MTN’s monopoly – 2008 • The ZAR30million fine, same amount MTN was forced to pay for it’s 3G license. • And so as matters stand MTN still has a GSM and 3G license. SPTC has a fixed-line license. • SPTC spent close on E500million for the NGN. • Neither party is able to apply and/or be granted additional licenses until that matter of the JVA is resolved. • Government has no wish to off-load its shareholding in MTN. • And so enter the demise of SPTC… • At the time ruling SPTC had close ro 14,000 users (an impressive number for having only operated for a couple of years). • Situation has created general unease for investors into the communications space • Further diluted the consumers confidence in taking up new solutions in the market.

21. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • A welcome for the Regulator – 2013 • 31 July 2013, the Electronic Communications Bill was enacted and Swaziland Communications Commission (regulator) established. • We should see a major decrease in last mile service costs due to unbundling • Telco will need to be privatized and stop the cross subsidy from the voice services. • The privatization process needs to be finalized by 31 July 2016. • Divisions will include Internet, Voice & Postal. • Fixed-line infrastructure will become a national asset (similar to BOFiNET in Botswana. • SPTC to be license like any other operator

22. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • A welcome for the Regulator – 2013 • Misfortune for SPTC is pricing has never been cost of sales related • Post privatization they will struggle. • The dividend income from MTN far exceeds their operational income • If the relationship comes to end, SPTC will probably collapse or at least require major subvention from government • Aside from MTN, we a possible class action as what ISPA levied against Telkom. • Many document incidents of “abuse of dominance” • In summary the continual protection of incumbents by their respective governments will eventually lead to their demise. • The days and relevance of exclusivities has come to an end.

23. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • In more recent times – 2014 • Swaziland now boasts 310Mbps capacity • Internet penetration at 27%. • 20% is Mobile Internet users (3G from MTN) • ADSL speed profiles have since been improved to include 2048/1024k and 5120/1024k. • 10 April 2014 - A new IXP called the Mbabane-IXP (supported by AUC (African Union Commission) & ISOC (Internet Society). • IXP launched with the following founding peering partners: Real Image, Posix, MTN, SPTC. • Telco to install fibre backhaul (for free) to the IXP and all peering ISP partners will connect at 1Gbps….WOW!!! From 64k to 1Gbps. • Interesting case study to see what happens in 12 months time.

24. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn • In more recent times – 2014 • Other peer partners include financial institutions, university, government and other content providers. • It will be of interest to see what other local content services will be explored e.g IPTV… • Currently no ISP self-provisioning international • Telco’s limited investment in building/rehabilitating the fixed line network has resulted in ,ajor growth of Mobile Internet Users • Even though expensive (R1.00 p/meg versus R0.11 p/meg - fixed line ) users are looking to Mobile network. • Other competitive last-mile connectivity options e.g. Wifi etc… We will see in a major increase in the levels of Internet penetration.

25. Swaziland’s Leading Internet Provider Swaziland’s Leading Internet Provider Internet in Swaziland: What Africa and the World Can Learn Thank You!!!