Cutting-Edge and Cutthroat: Telecommunications in Africa

As long I can remember, my cellphone has been the laughing stock of my friends. When everyone else had flip phones, mine still had an antenna and a bad tendency to pocket-dial people. While others got 3G and international roaming, I could never get bars inside my house. And in the last year, before I moved to Somaliland, my friends all converted to iPhones, Blackberrys, and Droids while I continued using the Motorola burner that my dad bought in 2005.

I’ve always paid my own cellphone bills, and as a student on a budget, opted for low-end, pay-as-you-go monthly plans. Most of my phones never had T9, so my texting skills are infantile. I’ve become accustomed to having a phone that doesn’t work half of the time, charges me 25 cents per text received, and functions more as a pager. Just ask my friends…I usually get their calls on my mobile and then call them back from my house landline phone.

Before moving to Somaliland, I tried to mentally prepare myself for a new life without many of the things I had always taken for granted – fast internet, a wide variety of food, and functional TV channels. I didn’t think much about whether or not I would have a mobile phone here.

Having traveled a decent amount, I’ve noticed that almost everyone I meet around the world has a mobile phone. It seems that no matter how poor or underdeveloped the country I travel to, everybody still can scrounge together enough money to afford a cellphone. Migrant fishermen in Malaysia, sketchy street-lurkers in Colombia, grandfathers in Morocco. When I was in Ghana four years ago, our driver had two cellphones. I can travel thousands of miles from home and back again, and the only person I ever meet without a mobile is my mom, who is quite happy to live without one.

I took this out of our van's window - I bet you 73 million Somaliland Shillings that she owns a mobile phone

Because of my travels, I was not at all surprised to discover that the telecommunications industry is alive and booming in Somaliland. In fact, all of Africa is becoming saturated with cellphones, and mobile companies and phone manufacturers are paying close attention. An emerging African middle class combined with the increasingly low prices of mobile phones mean that the continent now offers millions of potential customers in a large market that is only beginning to be tapped.

Somaliland is an ideal example of why the telecommunications industry is booming in Africa. In the late 1980’s, Siad Barre, the repressive dictator of the Somali Republic, launched repeated air attacks on Hargeisa. The bombing completely destroyed most of the city and crippled the infrastructure and development of the northern region. I doubt that telephone poles had been erected in the country back then, but if any did exist, Barre’s assault surely took them out.

Fast-forward 20 years and the story is quite different. Although Somalia remains trapped in continuous civil war, Somaliland has begun to develop, albeit slowly, and some foreign investment has trickled in – largely from Somali diaspora. Many of the major infrastructure challenges hindering development, such as poor roads and no electrical grid system, are incredibly expensive and difficult problems to solve. But what about phones?

Infrastructure challenges in downtown Hargeisa

That is where the mobile phone industry comes in. In the US and the UK, landline phones existed for decades before cellphones ever came around. Almost all of the continental United States is criss-crossed by telephone poles providing phone service to landlines in every household. Although arguably more reliable than the satellite coverage used by cellphones, landline phones come at an enormous start-up fee: the cost of installing thousands of telephone poles throughout the country.

For a country like Somaliland, where infrastructure is already poor and the government struggles to provide services with the small budget that it does have, mobile phones have provided the perfect solution. Not surprisingly, the telecommunications industry has taken off in the country.

It is interesting to note that not only are mobile phones ubiquitous here, they are also far more advanced than many of the phones I’ve seen in America. Sure, iPhones and Blackberries haven’t quite flooded the Horn of Africa yet. But the mobile I was given by my school here has many more features and capabilities than my mobile back home. A cheap Chinese model, it has a radio, camera, television, video recorder, and Bluetooth options. You can also use it for file storage and load mp3’s onto it. Those of you with smart phones are probably laughing, because I must sound out of touch if I think it is ‘cutting edge’ for a phone to be able to play mp3’s. But can your iPhone simultaneously hold two SIM cards and receive or place calls from both?

If you still think that my Somali phone’s capabilities are pathetic, I will ask you this: can you walk into a store in America with no cash or credit cards on you and buy a box of cereal with only your cellphone? No, you can’t. You can over here. Light-years ahead of the West, the mobile banking/payment frenzy has hit Africa.

In Somaliland, the service that allows you to make purchases with your cellphone is called Zaad and is provided by Telesom, the largest and most popular mobile provider in Somaliland. How it works is quite simple. You find a money changer on the street and give him a fixed amount of money, say $50. This money changer will take your cash and in return, text you $50 ‘credit’ on Zaad. This credit can be used like cash, and every merchant in the country has a Zaad account – even small qat shacks! So if you want to buy a Coca-Cola from a roadside stall, you can just Zaad the amount owed to the seller (a Coke costs about 3,500 Somaliland shillings, roughly 50 cents). You will then get a notification on your phone showing that your Zaad balance has been decreased by 50 cents and the merchant will get a text saying his Zaad balance has been increased by 50 cents. The beauty of Zaad is that it has the possibility of transforming Somaliland into a cashless society. In fact, many of our students pay their semester tuition via Zaad!

Mobile banking/payment services are an interesting topic and innovations in the fields will continue to help Africa for years to come. For many Africans who live in countries with few traditional and trustworthy banks, mobile banking is the sensible alternative. Companies are also expanding their range of services; in addition to mobile banking, some offer the options of international money exchanges and remittance transfers.

The West needs to catch up.

These guys are chewing qat under a tree on a hot Somali afternoon. They may have bought their qat via Zaad, a mobile payment service

I’ve discussed why telecommunications in Somaliland is cutting-edge, now I’ll talk a bit about why it is cutthroat. In America, if I have a plan with AT&T and my friend has a plan with Verizon, we can call each other’s phones even though we have different service providers. Having grown up in the US, I never even stopped to consider how incredibly inconvenient it would be if you were only able to place a call to a person who had your same service provider. Thankfully, a functional US legal system means that if AT&T tried to block its customers from being able to call Verizon customers, the US government would probably intervene and rule this action illegal, stating that AT&T was acting as a monopoly and abusing its market power – harming  the average American consumer.

The key assumption in the example is a functional judicial system where legal action can be taken and lawsuits can be filed if companies abuse their power. Welcome to Somaliland, where despite a relatively stable democracy and some legal process, disputes are most often settled through clan mediation.

The result of this is that the two largest telecommunications providers in Somaliland, Telesom and Somtel, do not connect to each other. Most people in the country use Telesom, but if they want to call a Somtel number, they cannot do it. They can only reach that number by calling it from a Somtel SIM card. This is very inconvenient because all of the teachers use Somtel, unlike the rest of the country. As I mentioned earlier, most phones here have a dual SIM capacity. I have two SIM cards, Telesom and Somtel, with two completely distinct mobile phone numbers. My phone can hold both SIM cards at once, and it asks me whenever I try and send a text whether I want to send it from my Telesom or Somtel number.

Truth be told, ‘cutthroat’ is a bit of an overstatement. Although the companies are ferociously competing against each other for market share, Telesom is far more popular than Somtel. In a country where two different service providers do not connect to each other, it is a huge barrier to entry that Telesom already dominates the majority of the market. If Somtel wants to get a new customer, it has to convince him that Somtel is a better company and also that other people will soon follow him and join Somtel. If Axmed switches from Telesom to Somtel, but no one else does, then nobody can ever call Axmed again.

Until next time, remember that although you may have a fancy new iPhone, I have two Somali numbers operating from one cheap Chinese phone. And it has a color TV feature! Step your game up, America…

A Telesom billboard

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15 thoughts on “Cutting-Edge and Cutthroat: Telecommunications in Africa

  1. wpse says:

    John,
    This was a fascinating post, really interesting points you raised about cell phone use in the developing world. Do you remember an article that Dad pointed out some time back about Indian farmers having cell phones so that they could check in about market rates for their produce? The same idea that even though they were very poor cell phones were a vital resource for their survival and saved them unnecessary journeys.

    BTW Even your Luddite mother is considering an I phone or something so I can record and post all the activities I’m doing with kids at noon art! It’s a great way to share!
    xx Mum

    • John Enos says:

      Thanks Mum, glad you enjoyed the post! I somewhat remember the article you mentioned…Dad has been talking about mobile banking for a long time.

      But an iPhone, for you? I never would have thought…

  2. Nomad somaliland boy says:

    seriously i like your posts john , thanks for sharing …

  3. Mike says:

    I thoroughly enjoyed reading this post. I’ve always found this to be a very intriguing topic in developing countries…the sight of a devote muslim man riding a moto, wearing customary Islamic attire and talking on what looks to be an iPhone is an image I will never forget. When given the tools Africans truly are technological whizzes. Thanks for sharing John

    • John Enos says:

      Hey Mike, thanks for leaving a note. It’s always an unusual sight to see someone in the developing world using futuresque technology. Like Senegal, I’ve seen plenty of pious Somali Muslims in traditional garb texting on their cellphones. Hope all is well with you and that you continue to check out the blog when you have time.

  4. Cindy says:

    Enos, nice post! But don’t be so surprised at the innovative mobiles and mobile banking solutions – Necessity is the mother or invention! Africa = in need; Necessity = mother of invention = Africans most resourceful, innovative and resistant beings on earth!

    • John Enos says:

      True that! I’d read a lot about mobile banking in Africa before coming here, so I knew it was prevalent around the continent. It’s great to see it in action now

  5. Rayma says:

    So… what happens when someone loses their phone, or it breaks? Do they lose their money, or is there some kind of central e-bank where the money can be stored and transferred?

    Loving the blog by the way. Your latest post about hyenas reminded me of this guy: http://www.hemmy.net/images/animals/lionwhisperer15.jpg My previous opinion of hyenas being entirely vicious and deadly has softened a bit…

    • John Enos says:

      Yeah, there is a sort of central e-bank. You cannot send or transfer money from your phone without entering your personal pin number first. (Think of it like losing your debit card). It is definitely inconvenient, but unless the person knows your pin, they can’t use any of your Zaad money. If you did lose your phone, you would just call Telesom and tell them, and they would freeze your account and issue you a new Zaad number.

      Thanks for the comments on the blog. Hyenas are still nasty and vicious, they’ve just been slightly domesticated in Harar…

  6. Very interesting topic indeed, pros and cons in one article, have a nice stay in somaliland (my motherland) 🙂

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