Making mobile inroads in Africa

As I outlined in my previous Industry Insight, VPN (virtual private networks) services for the enterprise are the final frontier of business for a great many mobile operators on the African continent. Because of a lack of legacy wireline carriers in Africa, mobile operators here are in a unique position to address this opportunity. And mobile operators have already been making inroads with VPN services.

In a recent report by TeleGeography, the researchers found that mobile operators worldwide expanded their WAN/VPN service deployments via Ethernet over MPLS by 12% in 2013. In Africa, the growth rate was even higher-57%. As I alluded to in previous Industry Insights, mobile operators need these VPN service offerings to offset the decline in average revenue per user that has been occurring for several years, and the near complete saturation of the consumer mobile subscriber market.

An example of this came last February, when MTN signed an agreement with PCCW Global to provide VPN services to its customers in nations around the world where it did not already have a footprint. As the multinational presence continues to grow in SA, Nigeria, Kenya and other countries where it operates, arrangements such as this with PCCW Global will become increasingly important.

African operators need to be able to contend with other tier one operators such as Orange, Telefonica, Vodafone and others to provide a complete menu of service offerings for large enterprises.

By offering layer three VPN services, MTN can prioritise traffic for multinationals with locations in Africa, the Middle East, the United Kingdom and now Asia, Europe and North America. This is only one of several new service fields MTN is entering into, including IPTV, which the operator stated was in the product pipeline in 2013.

The exclusive window of opportunity African mobile operators enjoy will not last forever. They must beware of competition in the VPN services market from non-telecoms players. Global high-technology companies from IBM to Oracle to SAP are rolling out VPN-like services on their own or in partnership with smaller local IT firms in various sub-Saharan markets. African mobile operators would be wise to use their home field advantage while it's still significant. They have the basic infrastructure in towers and cell site access equipment; all that is really needed is a way to deliver VPN services to the edge of the mobile network in an integrated fashion.

So, what's needed to get VPN services to the mobile network edge?

To provision VPN services for enterprises, mobile operators must get layer three capabilities all the way to the network edge to provide the gigabit throughput that enterprises demand. How else will Johnny and Janie Corporate-Employee be able to get the signal for their new true 4G smartphones and tablets they BYODed into the enterprise? What's needed is a device that will deliver gigabit capability, enabling operators to continue to offer value-added services alongside those from third parties such as WhatsApp.

Fundamentally, it's right for operators to take this action. The reality is there's a false choice that's been overlooked by many about the VPN services that mobile operators provide: without the access, backhaul and termination into the Internet that mobile operators provide, there would be no possibility for over the top (OTT) services from the likes of WhatsApp, Skype or Snapchat.

VPNs are crucial for next-generation mobile networks as they enable 3G and 4G wireless to share a common IP infrastructure as well as support new services. And because VPNs can service multiple sites, multiple applications and multiple enterprise customers simultaneously, they will serve as the cornerstone for the great expansion of mobile enterprise services we are only now beginning to realise.

The exclusive window of opportunity African mobile operators enjoy will not last forever.

The great revolution in VPN services for mobile networks is powered by Internet Protocol/Multi-Protocol Label Switching, commonly referred to as IP/MPLS, which offers mechanisms to provide scalable VPN networks. MPLS VPNs come in two main types: L3 and L2 'flavours'.

L3 or IP VPNs, based on IP, support very important functionality such as connecting enterprise customer sites by emulating a 'backbone'. The mobile provider VPN connects sites in part by exchanging information with enterprise customer routers. Offering a robust solution, L3 VPNs easily handle traffic handoff from site to site, such as those involved with LTE (long-term evolution). L2 VPN emulation of edge routers and point-to-point Ethernet connections is also possible, and L2 and L3 VPNs can function together in the microwave backhaul for mobile operators providing enterprise services.

It will take an integrated device that is purpose-built to bring IP routing capability into the microwave backhaul and make possible enterprise layer three VPN services for mobile operators. This growing demand for enterprise VPN services drives the requirement for IP/MPLS functionality in the microwave backhaul, but nowhere as much as in the developing world, which includes Africa.

So much so that even small regional African operators are turning to microwave solutions to provide VPN services to small and medium-sized enterprises, due to lack of wireline infrastructure. And even where wireline infrastructure does exist, its reliability and capacity leaves much to be desired.