Infrastructure News

Dumping of cheap, fake or obsolete telecommunication equipment in Africa

07 January, 2013

Source: ICT Africa Team

Dumping of cheap, fake or obsolete products in Africa is an age old nightmare that transcends a wide range of industries. The African textile industry is under threat of extinction due to the influx of cheaper textile goods from overseas. Large volumes of malaria tablets sold in Africa are counterfeits which accelerate the spread of the disease by causing drug resistance and threaten the fight against the dreaded disease. In information technologies, some organizations have been known to spend huge sums of money maintaining obsolete IT equipment dumped from overseas. This ends up defeating the whole purpose of keeping the cost of IT equipment down as the cost of replacement and maintenance ends up exceeding the cost of buying more modern equipment in the first place. The list of affected industries is endless.

The African telecommunication industry is no exception to dumping of obsolete equipment but it is bound to take a more serious hit than most of the industries. For the past decade or so, Africa has seen an unprecedented growth in her ICT industry that brings the promise of significantly reducing the digital divide between Africa and the rest of the world. By the end of 2012, at least 12 submarine cables were serving the African continent representing more than 20Tb/s of network design capacity. That is a level of design capacity capable of carrying more than 30 Billion simultaneous telephone conversations!

On the other end of the network, the access end, there has been an phenomenal deployment of mobile networks that have seen the growth of mobile subscriptions from about 25 Million in 2000 to over 700 Million in 2012 [Informa Telecoms and Media] . But without terrestrial fibre optic networks that link the submarine cables to mobile access networks, the costly submarine cables will be severely underutilised and remain mere white elephants. Moreover, the African dream of having all countries interconnected with high capacity networks can only be realised when terrestrial long haul networks are deployed throughout the African continent. This is why every country in Africa is racing to deploy terrestrial fibre optic backbone networks that will interconnect communities, neighbouring countries and the rest of the world via submarine landing points throughout the shores of the African continent. But connecting the African continent with terrestrial long haul fibre optic networks comes at a hefty price. The continent is massive and is 10 times the size of India, a country with a comparable population of about one billion people. Africa therefore requires significantly more fibre cable and equipment to connect her sparsely distributed communities than India and most of the world. We can therefore forgive African operators for being too price sensitive and for seeking the lowest priced network equipment and services to lower the cost of deploying their networks.

Unfortunately, by being too price sensitive, African operators are vulnerable to dumping of substandard equipment and services. Unscrupulous vendors have particularly taken advantage of the acute lack of expertise and lack of understanding of the intricate requirements of modern telecommunications networks by many African operators and telecommunication infrastructure companies to sell them obsolete equipment. While the telecommunication industry elsewhere in the world is contemplating more advanced equipment and optical cable to address the increase in the ever insatiable bandwidth, some African operators are being duped into purchasing inferior and obsolete products that were intended for yesterday’s networks. In developed parts of the world and several African countries (such as South Africa and Angola), operators are starting to deploy 40 GB/s and/or 100 GB/s in their terrestrial long haul networks. This is more than 600 times the typical transmission rates of the STM-1s of the 1990s. Some operators are even looking ahead at requirements for 400 GB/s and 1Tb/s whose standards are already being developed. The average African operator is deploying 10 GB/s in the long haul network but given the developments of the last decade in Africa, it is conceivable that more African operators will have to migrate to 40 Gb/s or 100Gb/s sooner or later. In response to requirements for higher data rates, today’s average operator in the developed world is now focusing on using optical fibre cable with attenuation as low 0.17dB/km at 1550nm which can better support high transmission speeds but we still see cables with attenuations as high as 0.40dB/km going into Africa. For those who are not familiar with fibre attenuation, the difference between 0.17dB/km and 0.40dB/km in an optical fibre represents about 130% of power loss experienced by signals as they propagate in optical fibre. This has a profound impact on the capacity that can be transmitted and the distance the signals can go before they have to be amplified. While cabled fibre with 0.40dB/km at 1550nm is compliant with one of the International Telecommunication Union standards, that standard was developed when the industry’s transmission requirements were primarily for voice transmission that did not require a lot of bandwidth. It is not optimised for today’s or tomorrow’s transmission requirements.

It came as a shock to us that some vendors are still pushing PDH transmission equipment for the long haul network market to unsuspecting operators in Africa. PDH (or Plesiochronous Digital Hierarchy) was intended for low transmission rates, is now obsolete for the long haul market and has long since been replaced by SDH (Synchronous Digital Hierarchy) for optical networks. Selling PDH equipment for the long haul telecommunication market in this day and age is analogous to dumping old computers that can never be upgraded to work with current operating systems and software.

The telecommunication industry will suffer the most from the dumping of cheap and obsolete equipment. Building fibre optic telecommunication networks is expensive business and costs can be in hundreds of millions of United State dollars. The breakeven point for a telecommunication network is generally long and could be 10 years or more especially in Africa where there is significantly more price pressure on the operator from end users. Fortunately, fibre optic networks when properly designed and deployed can last for up to forty years or more before any costly upgrades are required. The operator can thus make significant returns long after the breakeven point with minimal operating and upgrade costs. Unfortunately, when network designers design networks only to minimize upfront costs of network rollout without a clear view of network upgrade and operation costs, their business model is bound to be problematic. By selecting appropriate cable, transmission equipment and proper installation procedures, it is conceivable that an operator can spend significantly more on upfront costs and make significant servings on upgrade and operation costs.

What is most cruel about the dealings of some vendors with African operators is not just the supply of obsolete equipment, sometimes it is outright deception. There are incidences where the equipment is sold to the operator at lower than the market value to hook them up while the vendor knows fully well that the equipment needs immediate upgrade. When the time comes for upgrading, the vendor then makes a killing by selling the upgrade equipment at exorbitant prices knowing fully well that the customer is locked into their technology and does not have any other options. Moreover, in most cases the vendor also has the contract to maintain the network which they charge at higher than the market value and driving the overall cost of network ownership to higher than global averages. In other cases, with the support of their governments, some vendors offer subsidised financing to African operators with conditions that the vendors supply all the equipment, installation and maintenance services. While the initial network rollout cost and the cost of capital usually appear attractive to the operators, the value of goods and services offered sometimes fall far too short of the cost charged. As an example, the government of Uganda deployed a network using a Chinese vendor for $62 Million only to find out that Rwanda had deployed a similar network for $38 Million. Instead of using ITU G.655 non-zero dispersion shifted fibre optimized for wavelength division multiplexing as requested by Uganda, the vendor secretly used a less expensive G.652 fibre with half the number of fibre strands requested by the customer. This infuriated the Ugandans to the point that President Museveni ordered an investigation into the issue. We believe that if this had happened in other parts of the world, this could have long been litigated – obviously Africans are being taken for a jolly ride.

A lot has to be done to alleviate the dumping of cheap and obsolete telecommunication equipment and services into Africa. The single most important deterrent is education – all network planning and design engineers should be trained to properly design networks that are optimized for lowest cost per mbps over the life of the network. This may imply using innovative equipment and technologies that may prove more costly on day one but significantly less costly to maintain and upgrade over the life of the network. Africa does not have to follow in the footsteps of operators who deployed their networks in the 80’s or 90’s but instead leap-frog older technologies and take advantage of emerging technologies to deploy most cost effective networks. There also has to be some more seriousness on the part of Africa’s continental organizations such as the NEPAD e-Africa commission, Africa Telecommunication Union and the Division of Information Society of the African Union to develop and enforce regulation that would prohibit unscrupulous vendors from exploiting the vulnerabilities of some African operators. These organizations can definitely steal a page from the European Union’s Information Society on how to regulate the telecommunication industry for all their member states.


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