Kenya’s internet costly as firms fail to share platforms

The cost of internet in the country remains expensive with Kenyans spending an estimated 3.1 percent of their average monthly earnings to purchase a one gigabyte (GB data), which is above the standard two percent, a new report has revealed.

The Alliance for Affordable Internet (A4AI), in its report, defines affordability as 1GB of mobile broadband data costing not more than two percent of average monthly income global benchmark.

The study reveals that the average cost across Africa is 7.12 percent, and in some cases 1GB costs more than a fifth of average earnings.

According to the report, Kenya trails other countries in the region on internet accessibility. However, the cost in the country remains affordable when compared with the neighbouring low income nations.

The A4AI report shows Kenya lags behind low income countries such as Uganda, Tanzania, and Rwanda on accessibility.

Kenya was graduated to a low middle income country in 2014 after rebasing its economy from the Least Developed Countries category.

Generally, the report indicates that consumers in African countries are paying some of the highest rates in the world for internet access as a proportion of their income.

The report attributes the high cost to lack of a shared infrastructure that can significantly help to cut down on the price. For instance, in Kenya, the two main companies have installed their own infrastructure such as communication masts, meeting the cost solely.

The report notes that such cost are expensive to the majority with an exception to a few wealthy, citing this as the reason why 49 percent of Africans still cannot access the internet.

A few countries — Mexico, Rwanda, and Peru — have begun building wholesale open access networks (WOANs) to spur market competition and expand connectivity.

“The Affordability Drivers Index includes multiple indicators on infrastructure sharing policies and the amount of shared infrastructure in a country as positive factors for lowering industry costs,” the report points out.

It adds that in recent years, a growing number of stakeholders have looked to build on this open access approach by developing WOANs.

The study points out that a number of governments have been considering WOANs as a way to foster competition, decrease costs, and increase connectivity.

“Different models of these networks are possible, although most rely on public-private partnerships, as the deployment of such networks demands high capital expenditures,” reads the report.

In the case of Mexico and Rwanda, two of the most advanced and promising examples and both based on 4G LTE technology, retail prices have decreased, and new retailers have started to operate.

Overall, observes the report, these projects offer stakeholders a few lessons: as major infrastructure investments, noting that these projects require extensive political will, capital, and time as foundations for development and impact.

Initial observations from Rwanda, Mexico and Peru suggest that WOANs can be a viable alternative in certain conditions.

“These projects are best suited to countries facing lower levels of connectivity and more consolidated markets that require more substantive changes in their broadband market. Regulators looking for more granular innovations to spur competition should look to other policy levers,” the report notes.

Telecom operators have recently invested billions on the networks, especially fourth generation (4G), in the quest to increase usage of data services.

The 4G technology gives users faster speeds and eliminates buffering when downloading video clips.

According Communication Authority of Kenya (CA), the service revenue from the mobile subsector grew by 9.4 percent to record Sh270.5 billion in 2018. Similarly, the investments grew from Sh41.5 billion reported in 2017 to Sh57.5 billion in 2018.

The share of data as a percentage of the total revenue collected in 2018 stood at 20 percent. Voice still commands the lead on income.

Safaricom has cut its data prices by 42 percent in response to increased competition in the telecommunications industry, in the year ended March, according to disclosures by Vodacom.

Safaricom offers a broad range of data bundles including daily, weekly and monthly packages. Data accounted for 19.5 percent of Safaricom’s Sh240.3 billion sales in the year to March, up from 10.3 percent five years ago.

As at June 30 this year, the number of internet subscriptions stood at 49.9 million with 99.9 percent being on mobile data. This was an increase of 21.4 percent since June 30, 2018.

During the fourth quarter of the 2018/19 Financial Year, the number of broadband subscriptions stood at 22.2 million up from 21.9 million subscriptions reported during the third quarter. Broadband subscriptions accounted for 44.5 percent of the total internet subscriptions

Telecoms operators Safaricom, Airtel and Telkom Kenya were last week sued over the expiry of data and loss of unused internet bundles. Safaricom, has, however, reviewed their plans with options of data than can expire andothers that cannot.

Lawyer and ICT practitioner Adrian Kamotho sued the firms and the industry regulator at the Communications and Multimedia Appeals Tribunal.

He wants the three operators compelled to offer a service where subscribers can roll over unused data at no costs.

Mr Kamotho is borrowing from the South Africa experience where the telecom regulator in February issued new rules that demand operators must let customers roll over unused data.

Safaricom controls about 63 percent of the mobile market followed by Airtel at 24.6. Telkom Kenya, the telco with the third highest market share, is in the process of merging its operations with Airtel.

The A4AI is an initiative of The Web Foundation, with partner organisations that include Google and Facebook.