Landlords’ steep charges slow down the pace of broadband Internet reach

High access fees charged by county governments and property owners are frustrating efforts to deepen broadband Internet penetration in the country despite heavy investments by service providers.

Market surveys show that property owners or their agents are demanding between Sh21,000 to Sh300,000 per month to give service providers access their buildings and mount telecos equipment.

Counties have also not spared telcom firms this anguish. Mombasa for instance charges Sh100 per metre of cable which is laid out through its way leaves while Nanyuki has set a Sh600 fee. Nairobi, which has attracted most of the investments, charges Sh20 per metre.

The prohibitive costs have left the providers with almost 60 per cent unutilised Internet bandwidth, besides keeping prices high for the end users.

Statistics by the industry regulator, the Communications Commission of Kenya (CCK), in the year to June indicates that only 41.3 per cent of the available bandwidth of 862,850 Mbps is currently being utilised, showing that most providers are yet to get returns on their investments.

“More than 50 per cent of the available capacity is idle as evident from the utilisation level of 41.3 per cent. The anticipated increase in Internet and data services is expected to further raise the utilisation levels in the near future,” CCK noted in a report.

The unutilised Internet broadband capacity has seen the providers cut the number of their employees by 6.8 per cent to stand at 6,671 directly employed staff at the end of 2012/2013. This is from 7,154 workers in 2010/11.

“Both male and female staff numbers declined by 9.1 per cent and 2.4 per cent respectively during the period under review,” said CCK.
But investments in the sector increased by 14.3 per cent to reach Sh3.9 billion in 2012 from Sh3.4 billion recorded in 2011.

Telecommunications infrastructure providers led by Jamii Telecoms, AccessKenya and the Kenya Data Networks, all who said they were connecting their clients for free, said exorbitant fees charged by property owners are frustrating their efforts to meet demand in the market.

Statistics from CCK further indicate that the number of fixed fibre subscriptions increased by 86.8 per cent to 58,197 in the year 2012/13 from 31,155 subscriptions recorded in 2011/12.

“This growth in fixed fibre subscriptions indicates an enhanced access to broadband services that has been accelerated by increased roll-out of fibre by the competing providers in the country,” reads part of the CCK report.

On average, AccessKenya spends between Sh350,000 and Sh600, 000 to connect a building depending on the civil works, distance, cost of equipment and backup power for optimal uptime and City Council way leaves.

AccessKenya CEO Jonathan Somen says there is a need for policy that classifies Internet as a utility similar to water, electricity and telephony since it is now a basic necessity for tenants.

“There are no charges for the utility providers to bring in these services and the same should apply to the Internet. It would also be appropriate to have one route in and another route out of the building for full redundancy,” said Mr Somen.

“The biggest challenges we are facing are mainly the time it may take to get way leave approvals and exorbitant charges from building managers to host fibre equipment ,” said Mr Somen.

AccessKenya has connected 595 buildings to the fibre in Nairobi and Mombasa but says it could have doubled the number were it not for bureaucracy in getting way leaves approvals.

Other than the paying the landlords and the estate agents , the telecos are also grappling with the issue of cables being cut by road builders which they say leads to delay in deployment of fibre and the completion of the jobs within deadlines.

Joshua Chepkwony, the chairman of Jamii Telecoms, said high costs had made it impossible for his firm to connect some clients as building owners were demanding more than their customers pay them a month.

“We have had incidence where some estate agents are asking for even triple the amount the customers we want to connect would pay us per month which makes it impossible for us to do the connections,” said Mr Chepkwony.

He said the problem was compounded by multiple cuts by road and sewerage contractors.

“Road and sewerage contractors should be compelled to issue a performance bond so that if they cut a fibre cable, they are made liable for it,” he added.

Jamii Telecoms says it loses Sh300 million annually in repair of fibre optics alone.

Several attempts by the government and stakeholders to address this problem have not been successful.

The latest bid was a proposal by the ICT ministry in July to have changes in the Building and Construction Act to recognise fibre optic as being an essential infrastructure as is the case with water and electricity.

The proposal would also compel property developers to have Internet access points on buildings for use by data providers connecting homes and businesses.

The ICT Cabinet secretary Fred Matiang’i said landlords and estate agents demands were against the push by policy makers to bring down the cost of connectivity for larger Internet uptake.

“There is no law to compel property owners to allow us into their premises. Often we are asked to pay access fees or some owners say they have signed exclusive agreements with our competitors thus locking us out,” said Mr Chepkwony.

Attorney-General Githu Muigai last June also initiated changes to legislation on vandalism.

The changes included stiff penalty for convicted telephone and electricity cable thieves who face up to 10 years in jail or a Sh5 million fine.

The changes have strengthened the regulators’ power to deal with rampant destruction and theft of utility equipment such as Internet cables and electricity transformers.

Tougher supervision

The proposed law also targets scrap metal dealers with more stringent supervision that includes the tracing of every consignment to its origin.

The penalties were enhanced through amendments to the Kenya Information and Communications Act 1998 and the Energy Act 2006.

Under the current laws, destruction of electricity and power cables is punishable by a fine of Sh100,000, a jail term of three years or both.

Mickael Ghossein, Telkom Kenya CEO, says the firm has connected 500 buildings in Nairobi and that to increase more broadband penetration in the country, there is a need for an “Open Access” policy that would compel the providers to share ducts or cables to reduce duplication.

“Sharing of fibre optics will result in the optimal use of laid out infrastructure. This will also allow more focus on the upgrade of the same infrastructure rather than on the building of competing networks,” Mr Ghossein said.

He said it was imperative for telco operators to highlight the importance of introducing specific rebates and special tariffs on electricity, thereby improving on cost efficiencies that will result in even better competitive pricing for consumers.

The industry regulator had proposed that operators share their fibre optic networks.

Telkom Kenya is replacing its copper cables with fibre to curb cable vandalism and offer better services and more solutions to its customers across the country.

The bulk Internet market has seen some of the operators put a limit on what a consumer can purchase.

Telkom Kenya recommends a minimum of 1Mbps which allows the client to enjoy dedicated Internet connectivity to their premises.

But the capacity available can be up to 1Gbps.

AccessKenya says its base product for Internet is 128/256 Kbps up and down.

The country has a total of 12.4 million Internet subscribers, with those accessing the Internet through mobile handsets and modems accounting for 88.8 per cent while those on broadband only accounting for 11.2 per cent (1.39 million subscribers).

Wananchi Telecom Limited controls 39.1 per cent in the fixed Internet market segment followed by Kenya Data Networks with 21.6 per cent.

Access Kenya is its third position with 12.4 per cent market share while Orange has 11.5 per cent with Safaricom at fifth position with a 7.2 per cent market share.

Unlike wireless Internet access, fibre offers reliable and huge data capacity that is gaining traction with companies that want to adopt video conferencing or other services that are bandwidth- hungry such as tele medicine.

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