KPLC’s fibre network deal stirs TV market

Power firm gives Wananchi Group a headstart in the race for control of converged media market with a plaform sharing agreement

Multi-media firm, the Wananchi Group, is using the national electricity transmission network to build a fibre optic platform expected to open a new front in the bruising battle for control of Kenya’s lucrative media market.

The platform – a product of an agreement between the media firm and Kenya Power and Lighting Company — puts Wananchi on a converged media highway that enables it to compete in television content, internet provision, data and voice transmission markets.

“We are deploying the “design unseen” network in key urban areas that enables us to install our fibre network on KPLC’s electricity poles,” said Suhayl Esmailjeee, the chief operating officer at Wananchi Group.

A national fibre optic network running on KPLC’s power transmission system offers Wananchi the potential to play in TV broadcasting and telecoms markets and a chance to compete in the internet service providers (ISPs).

Replicating KPLCs power transmission network gives Wananchi access to the more than one million electricity customers and substantially reduces the cost of cable TV transmission that is currently only possible with the expensive infrastructure support involving the digging of trenches to lay terrestrial cables.

It gives Wananchi a head-start in the race for control of premium TV market currently under the grip of MultiChoice Africa under the DStv brand but analysts warned that Wananchi could also use the massive bandwidth it offers to transmit self-generated local content making it a direct competitor in the Kenyan television scene.

Because the fibre optic cable can also be used to transmit data means Wananchi Group’s internet service provision arm can use it to take high speed internet to the one million homes and offices that consume electricity supplied by Kenya Power.

For Kenya Power, the fibre networks opens a new revenue stream that will help reverse profitability trends that have been dropping with increasing reliance on expensive thermal power from independent producers to meet rising consumer demand.

Wananchi’s fibre network will run parallel with KPLC’s own fibre optic network that the power firm is building for the planned entry into the data, audio and visual transmission market.

KPLC entered the telecoms market early this year and plans to launch the service in the first half of next year.

Mr Esmailjeee said Wananchi will use the quadruple play transmission system to relay voice, data, video and television images under a converged technology platform. Wananchi’s move is also expected to speed up the ongoing shift in the way consumers access telecommunication services.

A number of service providers have moved from radio wave-based technology – that uses satellites and base stations - to fibre optic links that offer larger capacity and are cheaper to operate in the long term.

More than 20,000km of fibre optic cables have been laid in Kenya – a large fraction of it in cities such as Nairobi and Mombasa in readiness for a looming wave of technology convergence that will see a single fibre optic line deliver almost all communication services to homes and offices.

Force change
The convergence, expected to begin in earnest in two months, will force change from the current mix of technology solutions that uses radio waves, satellite connectivity or physical telephone lines to transmit data and voice.

Front-runners in the race to connect Kenya through the fibre optic networks are Kenya Data Networks, AccessKenya, Telkom Kenya, the government through its TEAMs project and Jamii Telecom, who have laid thousands of kilometers of fibre optic cables.

The terrestrial cable networks are expected to offer a cheaper data and voice transmission platform and connect villages and homes to the international network of high speed connectivity to be offered by undersea cables like the East African Marine System (TEAMs) and Seacom.

“The undersea cables will reduce latencies and cut communication costs by 75 per cent, allowing seamless communication to the rest of the world,” said Mr Kai Wulff, the managing director of KDN.

Operating a fibre optic network has become a major competitive advantage for telecoms firms in recent months as the consumer market demand for high speed internet grows and technology pushes the convergence agenda.

“We literally have three cables lying on top of each other in some areas. We encourage sharing, but the players see cables as a competitive advantage,” said Bitange Ndemo, the Information PS.

Wananchi is a relatively late comer to the fibre optic connectivity race and is now holding the first to market advantage in the television segment of the telecoms industry.

It is banking on a $100 million cash injection it recently received from American Media Telecoms Fund (AMTF) to realize its goal of offering fibre connectivity to more than 400,000 homes in the next two years.

The network that Wananchi is building will carry a bouquet of more than 200 television channels, high speed internet and voice services into homes and offices.

“We have a complete network in Nairobi and our next goal is to ride on KPLC’s power-lines network for a national reach,” said Mr Esmailjee.

To deliver the services, Wananchi will rely on a Hybrid Fiber Coaxial network — a telecommunication technology that uses fibre optic and coaxial cables to deliver broadband content (such as video, data, and voice). The fibre will be literally twisted around specialized cables that run alongside power lines.

Unlike other players in the fibre optic market who are aiming for the largest share of the growing internet market, Mr Esmailjee said Wananchi’s primary focus will be on the TV market with data and voice services acting only as value added products.

“There is so much noise about data right now but for us TV is the growth market. We sign up between 50 and 400 new TV subscribers every month,” he said.

Wananchi offers cable TV services under its Zuku brand, which was hit by negative publicity after its high profile launch last year yielded strong market interest that consumers said was not matched with prompt delivery. Wananchi said it had lacked the money it needed to drive its plans.

Wananchi has been a main benefactor of the Africa Telecoms Media and Technology Fund (ATMTF) that bought strategic stakes in two Internet Service Providers — Wananchi Online and Simbanet as well as cable TV operator, Mitsuminet in May last year.

The company recently completed the purchase of a five per cent stake in state owned undersea fibre optic cable TEAMs. KPLC expects the latest partnership agreement with Wananchi to help drive its revenue growth by allowing it entry into new business areas.

It marks Kenya Power’s transformation into an infrastructure provider that will offer a network for the transmission of electricity, internet, television and voice services to homes.

KPLC got the licence it needed to diversify into data transmission in April this year after it met the regulator’s conditions.

The company plans to use its new mandate to create a 1,500km fibre optic backbone helped by the existing electricity transmission network. The Sh2.6 billion System Control and Data Acquisition (Scada) project is being financed by the European Investment Bank with the Swedish firm ABB as the contractor.

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