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Africa needs its own Facebook

19 November 2014, 12:09 *Gugu Lourie

AS A regular user of Facebook, WhatsApp and Twitter, the thought of not having access to these free social platforms fills me with some trepidation.

While it may be said that the best things in life are free, someone somewhere must have invested lots of money in the infrastructure that allows for such services to be freely available to millions of others.

Social media are aptly described as over-the-top content (OTT) players – they seemingly piggyback on infrastructure invested by others.

In South Africa and the rest of the continent the use of these free platforms has grown rapidly in the past few years and continues to rise.

This is so because they have satisfied an important social need – free communication between people, especially friends and families.

However, in Africa these free platforms are not contributing to the continent’s economic growth. Can Africans live without social media?
Unlike Africa’s big operators MTN [JSE:MTN], Airtel Africa, Vodacom [JSE:VOD], Millicom and Vodafone, which have contributed immensely to the growth of the African economies, OTTs have not invested on the continent.

This begs the question: apart from providing free communication access, what have OTTs such as Facebook, WhatsApp, Skype and Twitter done for the continent in the past decade?

Africa’s big operators employ millions of people and contribute billions into the continent’s gross domestic product (GDP). And of course they make a profit too.

They invest billions of dollars in building and upgrading their network infrastructure across the continent, enabling millions of Africans to communicate with themselves and the rest of the world.

What are OTTs contributing to Africa’s GDP?

The answer is absolutely nothing – they are simply enjoying a free ride on African operators’ networks.

This is untenable situation that needs to be remedied through balanced cooperation between mobile network operators and OTT players.

Commenting on the anomaly, MTN South Africa CEO Ahmad Farroukh says operators cannot be in complete control of the internet ecosystem. He also noted that a broadband pipe that lacks appealing content and applications means little to end users.

No free ride for OTT players

“On one hand, we need to stress that there should be no free ride for OTT players, mobile network operators will protect their customer base and revenue streams. Rules of engagement will have to be defined between operators and OTT players,” says Farroukh.

“Involvement of global forums that represent operators such as the GSMA will most likely be necessary to define the rules of engagement.”

The MTN boss made his remarks at the AfricaCom conference last week.

Also read: Chiefs urged to utilise social media

But some proponents of OTTs argue that operators should accept to be “dump pipes” for OTTs.

Farroukh says mobile operators need to put a plan in place to avoid being forced into the role of providing a “dumb pipe”, investing and providing the infrastructure, but allowing OTT app providers to own the customer and make money in the future.

Aside from the obvious social benefits of OTTs, does it make sense to allow them to repatriate millions earned from advertising out of the continent?

That said, Africa’s operators must continue to invest billions of dollars to upgrade their networks.

Maybe it is high time that Africa’s big five operators formed their own OTTs that will provide similar services like Skype, WhatsApp, Facebook and Twitter.

African governments might want to find a way to raise revenues from OTTs even if such a move might lead to their shutting down.
China survives without Facebook and Twitter – even though the rationale for closing them down was totally different.  

Understandably, proponents of OTs will argue that being forced to pay operators in Africa would destroy innovation and impact users and the internet negatively.

China continues to thrive without these OTTs and has created its own giant social media company known as Tencent, which has brought out the Chinese Weixin or WeChat social media.

South Africa's ecommerce and media giant group Naspers [JSE:NPN] owns shares in Tencent, which it has helped build into an OTT behemoth.

This is the time to make a move - OTTs have finally realised that they need to cooperate.

Operators like MTN, which has been vocal on this issue, must put pressure on OTTs to pay them for use of their infrastructure.

Extra revenue for operators means Africa will continue to have high standard networks, and in the long run more Africans will be connected to the internet.

* Gugu Lourie is a former correspondent for Thomson Reuters, Business Report, Finweek magazine and Fin24 (writing a blog titled 'Googled'). He is the editor of techfinancials.co.za. Views expressed are his own. Follow him on #twitter @LourieGugu.

 - Fin24 is part of Media24, a subsidiary of Naspers. Naspers has a 34% stake in Tencent.

- Finance24


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