Cyber café owners are feeling the pinch as many of their customers turn to alternative platforms of accessing the internet. Photo/FILE
The technological revolution sweeping through the country appears to be marking out the internet café business for extinction.
In a trend that is set to mimic the mobile phones’ relegation of public pay phones, increasing access to the internet by individuals at home and offices through portable modems is bringing to a halt the rapid growth of cyber cafés.
A surge in the number of cyber cafés that had opened in the past few years to cash in on poor internet penetration is coiling back, as oversupply of public internet services coincides with a consumer base that is steadily acquiring its own internet connection from internet service providers (ISPs).
Mobile companies have over the past couple of years driven their plug and play modems to individuals, allowing them to access internet through their lap tops and desktop computers.
Mobile professionals, in particular, have picked up the modems to access the internet while on the go.
Cyber café operators who spoke to Business Daily said that their revenues have dipped since mid this year.
“From about five months ago, our sales stood between Sh3,500 to Sh4,000 per day. This is in contrast to before when we could make between Sh7,000 to Sh8,000,” a cyber assistant at Light Touch Cyber told Business Daily.
The proprietor of the business, James Mubia, said client numbers have dwindled.
“It has been crazy. The telecoms’ modems have for sure impacted on our business,” he said.
The cost of the modems, which started off at Sh10,000 a piece, have gradually dropped to the current all time low of Sh3,000.
Data bundles have similarly taken a nose dive.
Currently, Telkom Kenya lowered its charges per megabyte (MB) to one shilling.
Safaricom charges Sh2.50 and Zain Kenya Sh1.71 for the same.
In addition, the cost of acquiring computers and their accessories has dropped.
The scrapping of value added tax on computers and accessories last year led a fall in their prices greatly enhancing their appeal.
Computers are now available from less than Sh10,000 for refurbished, minimum specification models.
Mobile companies are also subsidising laptop costs, knocking off a few thousand shillings from their conventional prices and bundling them with free modems.
Analysts say that the business model of internet cafés is under threat from the evolving internet market dynamics.
A stiff rise in competition has seen a majority of the businesses lower their browsing charges to Sh0.5 per minute.
The competition has seen some cyber cafés firms lower their prices to three cents for a minute spent online.
While revenues shrink, the cost of operations have risen.
“Our electricity cost has risen tremendously, besides the monthly rental fees,” said Mubia. Caroline Wavinya of Ferinet Cyber — that charges Sh1 per minute — said the price reductions are hurting the sector and renders it unsustainable in the long term.
Other costs for cyber operators include employee salaries.
A number of players have sacked their long-serving staff to employ younger ICT graduates who are paid a little less in a bid to keep the wage bill under control.
Others are diversifying their operations to supplement revenue from internet services, with some offering training on computer applications and systems.
But players are, however, optimistic about the future, saying that even in the developed world which have the highest internet penetration in homes and offices, cyber cafés still exist.
“What is clear is that the current high number of players will be unsustainable. There will be fewer firms offering quality services, “ Mubia said.
Those striving to remain relevant in the market are counting on an efficient internet infrastructure.
Guarantee speeds
Most cyber cafés are not yet linked to the fibre optic platform, citing costs and other challenges of last mile connection.
Last mile connection refers to linking individual homes or offices directly to the fibre optic cable network using either dedicated lines or wireless technologies like Wimax.
“If we can get fibre connections that can guarantee speeds, then we can rope in more customers without necessarily lowering our prices,” Mubia said, adding that “the advantage for us and for customers will be, at least, to double the current satellite speeds even if the prices of data bundles remain the same.”
On her part, Wavinya, of Ferinet Cyber, told Business Daily that the firm had lost about half of its client base to operators who have tapped into the fibre connectivity.
“Downloading files on the fibre platform is relatively faster than satellite,” she said.
Analysts say that bottlenecks in dial up connections through the plug and play modems could slow down their onslaught on the cyber cafés.
Because they offer a shared internet access through the nearest telecom mast, they are prone to slow speeds, erratic connections, and are inefficient for downloading large files.
The fact that most individuals do not have printers at home still necessitates a visit to the internet cafes.
However, in the next few years, the pressure will be too much to bear, players said.
As more people take to accessing the internet through modems, free Wi-Fi hotspots and 3G mobile platforms, the cyber business appears to be headed for leaner times.
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