KDN dials up rates slash as Internet pricing wars intensify

Pressure to reduce the price of communication intensified on Tuesday after national data solutions provider, Kenya Data Networks (KDN), lowered its connectivity rates by 90 per cent.

But consumers will still have to await cheaper rates following a corresponding action from their data suppliers.

Even as the company became the first to lower its connectivity rates from the current industry average of $5,000 per megabytes to $400 per megabytes following the highly anticipated arrival of fibre optic connectivity last month, it emerged that KDN’s move will primarily benefit Internet Service Providers and large companies who buy directly from the firm.

Although these groups act as middle-men between the infrastructure firm and the end-user and will add their own mark-up before passing on the price drop to the consumer, the price of accessing communication will fall by a considerable margin.

Exactly how big a margin and how quickly is still unknown, but analysts said the move meant that any price gains for consumers were unlikely to be noticed any time soon, as mid-tier players moved to realign their product offerings in light of the price drop.

“Consumers will not notice any significant price falls until the ISPs lower their rates.

Many of them had entered into long term contracts with their satellite providers which will start expiring in the next quarter,” said a source who declined to be named due to his relationship with the company.

KDN made the announcement that it was lowering its rates after successful trials of Seacom Submarine fiber optic cable capacity on its network, which includes a vast inland fibre optic network, a WiMax or wireless Internet mesh as well as a collection of small Internet ‘hot spots’ that it hopes to use to expose consumers to the speeds on fibre optic connectivity.

Increase consumers

“We will be offering free services on our ‘Butterfly’ service, which is accessible in hot spots in airports, restaurants and other public areas,” said Mr Vincent Wang’ombe, KDN marketing Manager.

Mr Wang’ombe said his firm was keen to increase the number of consumers using KDN’s Butterfly service from the current 10,000-15,000 to over 200,000 by next year.

The firm had already embarked on an ambitious plan to provide hot spot connectivity in universities.

A hot spot is the term used to refer to a location where users are able to connect to the Internet within a small radius around a small base station.

After a week of free trials on the service, users will have to pay Sh1,900 to access the hot spots, down from the previous Sh2,999 charged by the firm.

Debate has been rife in the Internet industry over the cost-saving benefits of international fibre optic links which were anticipated to bring the cost of communicating down by as much as 10 times.