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Somaliland Telecom Industry At A Critical ‎Crossroads‎

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In Your Issue 211 ''What Is Going On In ‎Somaliland?‎‎

What Is Going On In Somaliland ‎‎????‎‎‎ ‎‎‎

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Somaliland Telecom Industry At A Critical ‎Crossroads‎‎‎‎

TDI VS Somaliland Telecoms

By Ahmed Sh. Farah

The recent controversy surrounding the dispute between TDI an American Telecom/venture capital company and the local Telecom operators in Somaliland is making allot of people lose their poise, it is symptomatic of the lack of civil, thoughtful and informative debate about important issues facing Somaliland’s political and economic development. Too often commentary about this hot-button issue has been less about how to improve the Telecom industry as a whole or the relevant technical huddles needed to overcome the present chaotic situation in Somaliland and more about pointless speculation unrelated to this subject.

The local Telecom operators in Somaliland have largely succeeded with the help of the Somaliland media in casting themselves as little Davids (mom and pop operations) against the government supported TDI goliath. Putting aside the arguments advanced by one side or the other, the importance of a healthy, competitive and robust Telecom in industry in Somaliland can’t be overemphasized. The central question that needs a clear and convincing answer is whether the existing Somaliland Telecoms have the capacity or the capabilities to undertake such a daunting task of centralizing all the disparate Telecom operations in Somaliland. The answer to this question should be the determining factor of whether they are tasked to undertake the huge challenges associated with this project.

The situation calls for an objective independent analysis of what is needed to propel this pivotal sector of the Somaliland economy to the second stage of its development. In this highly contentious emotionally charged atmosphere characterized by the fear of the unknown, it is important not to loose sight of the basic facts and what is good for the industry as a whole rather than the narrow interests of the competing factions. Further examination is needed to study whether it is wise or even feasible for the local Telecom operators to provide the necessary means to enhance and maintain common telecommunication facilities delivering services in a carrier neutral environment. The lessons learned by the success or failure of the Telecom industry in Somaliland are immensely important to the success or failure of other sectors of the Somaliland economy.

The primary objective for the Somaliland government should be to establish a telecommunications centre, sort of like a (Telecom Motel) with all the necessary infra-structure critical to housing equipment for switch, co-location and other telecom-related needs. It must provide the telecommunications tenants of this facility an opportunity to interconnect with each other and direct access to international carriers and service providers. The responsibilities of such a facility operator generally include among other things the provision of environmental controls (air conditioning, fire suppression, etc.), redundant/backup power supplies and high security

There is indeed something fundamentally wrong with the present system in Somaliland where one needs several phones lines to stay in touch with business or political associates who live in the same town. To their credit the telephone companies in Somaliland have managed to cobble together some semblance of communication in and outside of Somaliland where none existed before. At the moment though the Telecom industry in Somaliland is at the proverbial place where the road forks, which way Somaliland takes will have a long lasting impact on the business environment in the country for a long time to come.

Taking the easy way out

Lacking the necessary funds and the technical know how needed to succeed in the beginning, many of the fledgling Telecom companies in Somaliland have reached service level agreements (SLA) with foreign carriers to help them in the new emerging market, solve the technical problems that are bound to arise and generally give them guidance for improvement and enhancement of the products and services they offer to their customers in Somaliland. These foreign carriers developed closer partnerships with the local Telecoms they serviced over the years, selling them turkey solutions and charging them exorbitant prices for a long time. These higher prices were immediately passed on to the Somaliland public in usage fees and other services.

A turnkey solution relies on one provider implementing an entire solution for a customer; from supplying all its system and service needs, executing a billing system and taking care of all the technical difficulties the customer encounters in routine operations. Hence turnkey solutions are far more expensive due to their exclusive nature; it limits the ability of the customer to shop for a more cost effective ways to design and implement upgrades or enhancements.

Running business models based on turkey solutions is far more qualitatively different than managing a modern multi-carrier competitive telecommunications facilities. The technical skills required to manage a successful dynamic telecommunication centre is entirely a new ball game for the less sophisticated local Telecom operators in Somaliland. It is a hard business to break into, harder still due to the uniqueness of the local environment and the methods employed to make a simple move of all the telecom companies in one location. It is not my intention here to discourage these local operators but merely to point out few of the many issues or challenges ahead before making such an important move by the authorities concerned.

Establishing a functioning Somaliland PTT

Most African countries use their PTTS (Post, Telegraph and Telephone administration) as a strategic asset on which they maintain total control citing fears related to their sovereignty. This sector of the economy is the primary engine for closing the digital divide that marginalized the African continent and relegated its people to the fringes of the world economy. It is primarily responsible for accessing markets and wealth creation. A healthy and viable telecommunications industry is fundamental to the economic growth of Somaliland. Somaliland has a good opportunity to make rapid improvements in the telecommunications industry by adapting modern business practices and learning from the mistakes of other African countries.

The competitive model that currently exists in Somaliland must be maintained at all costs, leaving the market forces to separate winners from losers. The government for its part must promulgate the “policy and regulatory framework” necessary for a competitive telecommunications industry in the country. First of all, the Government must figure out the over all communications needs of its citizens and then find ways to implement policies that lead to the overhauling of the current disorganized industry

African PTTS have formed strategic alliances with large European PTTS or similar Telecom companies in order to overcome the financial and technological huddles they face to become competitive in the new global economy. There is nothing inherently wrong about a particular government like Somaliland partnering with bigger Telecom operators who have deeper pockets as long it is carefully done with the right players in the market place. Among other things this gives the PTTS in Africa an opportunity to make substantial improvements in telecommunications infra-structures and import new management techniques that would otherwise take years to develop.

Not All Telecoms are created equal

To understand the current dispute between the Somaliland government and the local Telecom operators it is important to keep an open mind and separate facts from fiction by concentrating purely on what is at stake and what needs to be done to centralize interconnections between the different Telecom operators, improve the infra-structure and contain costs. A short Primer on the different players in voice and data communications would be helpful to serve as an example of what is needed in Somaliland. One can go on and on talking about the esoteric nature of the Telecom industry, but for the purposes of our discussion it is important to limit selves to the larger overarching issues in this industry.

There are two main categories in the provision of telephony services; local and long distance carriers. In industry parlance both categories are referred to as common carriers, a common carrier is simply a Telecom company that sets itself out to the public for hire to provide communications services.

A long distance carrier or IXC (inter exchange carrier) provides connectivity between local telephone companies and the rest of the world. AT&T, MCI and sprint in the US are some of the better known IXCs. Before the landmark 1996 deregulation act in the US, the long distance carriers were not allowed to have access to subscriber lines like residences and local businesses. These services were provided by what is commonly known as LECS or (local exchange carriers) aka Baby Bells. LECS were restricted to providing telephone service only within their own LATAS (local access and transit area). These LATAS are the geographical areas where the local telephone companies operate. Crossing LATA boundaries require an interconnection between local operators which is dependent on network to network interface NNI

In the context of the Somaliland Telecom industry each local telephone company acts as ILEC (incumbent local exchange carrier) with a long distance service provided by a foreign Telecom. In the begging it was not terribly important for the different Telecom companies in Somaliland to interconnect with each other as their customer base was small, but as the telephone penetration increased countrywide, it is becoming increasingly difficult to communicate easily across different networks. The biggest problem facing the Telecom operators today in Somaliland is their lack of switching capability even within their own networks. This problem is more acutely felt in larger towns where businesses are particularly vulnerable to the lack of connectivity between the telephone companies

In lieu of a central switching system, Somaliland Telecoms have implemented a solution based on a PBX (private branch exchange) mainly used for office and campus environments. PBX users share a specific limited number of external phone lines to reach the outside world. This is the main reason why it is difficult to reach people back home during peek hours. Large scale telecom operations involving thousands of people must have a central Tandem switch to handle the thousands of calls made by customers each minute.

In order to accomplish interconnectivity between the different players in the Telecom industry in Somaliland as separate entities, each Telecom operator must buy a tandem switch; it must establish a POP (point of presence) at the network of other operators much like the long distance carriers IXCs used to do before deregulation. This is practically unfeasible due to the huge costs involved and because the different Telecom companies in Somaliland are fierce competitors.

The need for a reliable neutral entity

Since the local telephone companies are fierce competitors engaged in a ruthless struggle for supremacy, it will be unfair to trust any one of them or any combination of them for that matter to take the role played by a PTT. The only way Somaliland can have a free, viable and robust telecom industry is to bring in an independent tier 1 network operator who is not part of the local retail telephony market

This entity will act as a voice and data communications specialist, a one-stop shop for all your network needs while at the same time introducing new and enhanced operating procedures for the industry. For the sake of clarity the existing Telecoms and the new entity will have to operate as entirely two different business models. This ensures complete neutrality on the part of the new tier 1 operator. The government, a foreign Telecom or a consortium of new entrepreneurs independent of the existing Telecoms can do this job.

It will be difficult for one, two or all of the existing companies to act as independent operator. Since they are in competition with each other they can’t be neutral to one another or to any future company trying to enter the market. It is like the proverbial fox guarding the hen house. If they band together and build a new gateway for Somaliland they will just freeze the market right where it is now, keeping out other potential challengers. This is also the main reason why Southern Somalia where a similar situation exists is unable to overcome this problem. The government or the legislative branch will not be to force them to accept new players into the telephony and data markets in Somaliland.

Carrier neutral switch partitioning

The closest model in the telecommunications hierarchy that is similar to what Somaliland needs is a CLEC (competitive local exchange carrier) with carrier neutral switch partitioning capabilities. The core business of CLECS is interconnecting ILECS (incumbent local exchange carrier) which in the Somaliland context are the local Telecoms by either proving them with co-location facilities or selling them access to unbundled network elements (UNE) also known as local loop. Notice that Somaliland Telecoms are not involved in this kind of business at the present moment, hence the need for such services. The provider of such services can be trusted to stay neutral since it has no dog in the local Telecom fights. The more carriers this provider can serve the more money it makes. In that case its interest will be served by having as many Telecom companies as possible.

Switch Partitioning refers to outsourcing your switching needs to a reliable switch Operations Company that provides solutions that allow multiple carriers with fair variable cost pricing that ties their monthly switching cost to their traffic volumes. Rack space and power is also available to the different carriers to house their equipment in the premises of the switch operator. New gateways are able to handle both traditional TDM (time division multiplexing) and next generation VoIP (voice over IP) technology platforms. Interconnections between the different Telecoms at the site are made easy by the availability of loop-around provided by the gateway operator.

Perhaps the biggest advantage this arrangement has over individual switches is the consolidation of the network operations centre (NOC) in one place. This allows for the successful monitoring of the network on 24×7x365 basis. A successful provider should also be capable of supporting a trouble ticketing system and a reporting system which includes both written and online formats. This affords the connected customers with a predictable business environment that is less expensive than building their own NOCS.

For the Time being only a model based on this arrangement or a similar solution can offer the Somaliland Telecom industry optimum performance with the least cost to local Telecoms and the public at large. This system allows individual companies to retain ownership and control of their networks while at the same time making it easier for the Somaliland Telecoms to conduct transactions with one another with relative ease. Furthermore each Telecom operator can buy or sell routes directly with other operators


The Somaliland government must recognize the critical importance of the telecommunications sector to Somaliland’s future well-being and the need for a modern policy framework. A common set of best practices and procedures for competitive Telecom market must be adapted to facilitate continuous improvements in the industry. The ministry of the Telecommunications and Posts must be strengthened and given all the resources it needs to over see the development of a world class competitive industry that delivers services at reasonable prices for the welfare of all citizens.

Expanding phone service throughout the country and increasing competition between the Telecom companies must be a top priority for the Somaliland government. It must encourage the reluctant Telecom companies to make further improvements to existing telecommunications services in regional and rural areas in Somaliland. The existing Telecom companies need to find the right balance between the needs of their vulnerable customers and the changing competitive telecommunications market in Somaliland. They must realize that increased usage gives them an added incentive to expand services which in turn will increase their profits. Remember a rising tide lifts all boats.

Ahmed Sh. Farah


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