Big Slap in the Face for Africa

Founded by former Econet Wireless executive, Zachary Wazara, (pictured) Broadacom could significantly chew into the existing players’ near oligopolistic dominant positions in the country’s telecommunications sector. Broadacom’s offering cuts across voice telephony and broadband internet on cheaper platforms.

This is in contrast to some companies’ approach of offering new products at a premium price, enabling them to quickly recoup their investment and thereafter gradually reduce prices as the number of customers increases and competition picks up. Broadacom is entering the market with fairly low prices, where according to their submission to Potraz, an intra-network call will only cost six US cents a minute. 

According to a business analyst, Broadacom is employing a phenomenon known as disruptive innovation, a process where new start-ups firms gradually but systematically chip away at dominant incumbent players’ market share by offering a lowly-priced option to lower and middle-income consumers. They then improve the quality of their offering and attract more discerning customers until their quality catches up with or even surpasses that of incumbents.

The Broadacom service is based on a platform called McWILL.

“This technology has a very efficient utilisation of bandwidth and can therefore deliver very fast speeds and penetrate buildings very easily,’’ Broadacom CEO Zachary Wazara said, adding that the technology allows the seamless delivery of video streaming, data, voice and value-added services at the same time.

This differs from the conventional mobile telephony system, GSM.

Analysts say the potential of the McWill system to disrupt the existing status quo is high and may explain why major companies as Econet, as the dominant owner of Wimax infrastructure in Zimbabwe, launched its own VoIP products early this year.  

Wazara said: “We are targeting the average Zimbabwean who has been denied value for money on voice, and has had no access to broadband. So currently, all high density areas of Harare have instantly available and affordable voice and broadband. Service is now also in Chitungwiza, Ruwa, parts of Bulawayo and Mutare is coming up in the next 30 days. Thereafter we move into the cities in between.’’

Broadacom was granted a Class ‘A’ IAP licence and which allows them to setup and operate a national broadband network encompassing both public and private data networks, VPN Services and Internet Services. The licence also allows the establishment and operation of a voice network using Internet Protocol (VoIP) together with attendant services.

Broadacom has invested more than US$20 million to date and are now closing their next round of financing for a further $10-15m over the next 18-20 months, with 90% of the base station equipment needed for the next 12 months already in the country.

The company expects the quality of service in terms of coverage and capacity to increase with each month as it rolls out. In the next three months, they expect to introduce a few value-added services that will not be replicated in the short-term by existing networks. –– Also See Page A10.