A new parastatal to spearhead developments in the sector has been set up, and indications are that the Government is considering introduction of tax concessions for ICT investors venturing into the rural areas.
The new body, called the Kenya Information and Communications Technology Board, will advise the Government on all relevant matters on development, co-ordination and promotion of ICT industries. President Kibaki announced the formation of the new Board in a Gazette notice last month.
And last week, the Government pledged to offer a raft of incentives including financial support to ICT firms that invest in rural areas.
New licensing strategy
The Communications Commission of Kenya Director General, Mr John Waweru, announced a new licensing strategy offering concession and tax rebates to firms that invest under developed regions.
The latest initiative is seen as a deliberate attempt by the Government to promote capital flows in the rural areas.
Speaking at the East African, Regulatory Post& Telecommunication Organisation (EARPTO), Waweru said the move was in tandem with their current industry drive to reach unconnected rural populations.
He said they were keen on ensuring that children in Arid and Semi Arid Lands (Asal) were able to benefit from ICT.
CCK estimates that10 million Kenyans living in rural areas with a capability of spending Sh100 every month would generate revenue of Sh1 billion on monthly basis.
Waweru noted that most ICT investors have opted to establish themselves in urban and profitable areas. He said there was need to encourage infrastructure sharing as a way of reducing high investments in the deployment of services to all parts of the country.
Enhancing competition in the sector
Kenya, he said, had a mere penetration of 24 per cent for a population of over 30 million.
"This is an indication that there is still a lot more to be done in order to address the market efficiency access as well as the true access gaps," Waweru said.
Giving incentives, he said, is projected to enhance competition in the sector, which would stimulate more investors and ultimately improve communication service to all.
He announced that they had invited nine service providers who had completed a detailed survey and in the next one-month they would get the bids.
Waweru explained that ICT was listed as one of the tools that country would use to attain the Vision 2030 and a step towards achieving the Millennium Development Goals.
Rural areas have poor infrastructure and high illiteracy levels, which make them unattractive to potential investors.
Mission to expand Internet infrastructure
Speaking earlier at the launch of the new study on Internet Supply in Kenya, the CCK Director urged investors to seize the Country's ICT potential.
Waweru said the Government is on an ambitious mission to expand Internet infrastructure across the country.
As part of the plan, CCK commissioned a study in November 2006 to analyse the Internet market in the country.
The study, which focused largely on the Internet supply, found there are more than 2.7 million Internet users in Kenya. This figure is in contrast to an earlier International Telecommunications Union's estimate of only 1.5 million. Nairobi Province has the highest concentration, taking over 80 per cent of the Internet users followed by Coast at a paltry 9.4 per cent.
Only about 20 per cent of the users are spread in the small towns, the study says.
Connection costs still high
Netcom Information Systems (NIS), a local ICT and management consultancy firm in Nairobi, undertook the Internet Market Study.
Releasing the study at the Kenya College of Communication and Technology, Nairobi, Netcom Director, Prof Timothy Mwololo said the cost of bandwidth and leased line tariffs has remained high despite liberalisation of the Internet sub-sector.
There are more than 50 Internet Service providers (ISPs), 20 public Data Network Operators, six Internet backbone and gateway operators and over 20 local loop operators. "International bandwidth currently costs U$4,400 Mbps and Kenyan users pay Internet Service Providers and Cyber cafes U$ 5200Mbps for the service," Mwololo said.
The findings show that the Government is the leading user of Internet accounting for over 28 per cent followed by commercial sector (23.4 per cent), Health (16.9 per cent) and Academic (1.38 per cent). All other sectors combined consume only 19.6 per cent.
Low penetration in schools
In the academic sector, higher institutions of learning are the major consumers of Internet, meaning there is still low penetration in secondary and primary schools.
Although many schools could be offering computer courses, few are connected to the Internet due to the prohibitive charges, the study shows.
Mwololo said CCK should licence more ISPs to provide Internet access and switch services and compel all service providers to publish their tariffs for fair competition.
The operators should also separate local and international traffic tariffs and maintain a flat rate telecommunication charges or volume-based pricing for fixed or mobile dial-up Internet services.
"There is also need to collapse the Internet hierarchy so that end users can directly acquire international bandwidth without having to pass through the ISPs. For example, ISPs should be able to purchase bandwidth from the mobile (phone) operators," Mwololo said.
The current hierarchy starts with the global Internet at the top that serves International Backbone and Gateway Operators (IBGO) and VSAT operators, Public Data Network Operators (leased lines and Internet access network providers).
Costs are passed down to customers
The third level of the hierarchy includes ISPs and Cyber Cafes who in turn serve end users - individuals, businesses, institutions and Government.
The costs at each level of the hierarchy, the study reveals, are passed down the level below and ultimately are paid for by the Internet customers or subscribers.
The tariffs at each level therefore determine the affordability of the Internet services to the customers, and in some cases, the quality of services.
Some of the existing IBGO and VSAT operators in the country include Telkom Kenya, Safaricom, Celtel, Kenya Data Network and Jamii Telecom.
Receiving the study, CCK Director Eng John Waweru said the Internet Sub sector would open up opportunities for ICT investors.
Waweru called on investors keen on Business Outsourcing to consider Kenya as a lucrative centre for investing. He said the Government will expand the Internet infrastructure to reach all parts of the country.
"The low uptake of the internet poses the risk of Kenya lagging behind in reaping the benefits from the fast evolving digital economy," Waweru said.
Slow growth may deny Kenya foreign investment
CCK has in recent past focused on engaging experts on the diverse facets of the sector to undertake studies to enable informed choices.
"Though the Internet sub sector remains one of the most liberalised sectors in the country, its growth has not been in tandem with the other market segments in the wider telecommunications market," he added.
The low penetration and dispersion of the Internet poses a major threat to the realisation of the Millennium Development Goals and the mounting of e-health, e-education and other e-government programmes and applications.
"Keeping track of key developments in the market is crucial in identifying the opportunities and threats in the industry, in order to make the requisite regulatory interventions to guarantee the continued growth of the sector," Waweru said.
To Waweru, the slow growth may deny Kenya huge foreign investment since investors look at the level of Internet penetration and usage before making investment decisions in new and emerging markets like Kenya.
He urged investors to capitalise on the untapped potential in the sector by opening up more ICT businesses.
Africa has been dogged by inadequate statistics
The study was undertaken to unravel true situation in the country instead of depending on international bodies, which largely give inaccurate estimates.
Further, the study was to identify factors constraining growth of the Internet sub-sector and to recommend how best to stimulate market development.
"Insight into these factors is crucial for decision making for the regulator, industry players and other stakeholders, including the Government," said Waweru.
For long, Africa has been dogged by inadequate statistics in virtually all sectors of the economy. This scenario, according to Waweru, has created a situation where most of the statistics on the continent are a product of western experts.
The statistics generated in this manner, tend to grossly underestimate and under represent the capabilities and reality obtaining African countries.
It is this scenario that ignited the Netcom study to generate an interactive market database.
Waweru promised that the keeping and updating of existing databases would be ongoing to allow accurate policy development and implementation.
"As we move towards evidence-based regulation, it is imperative for stakeholders to work in consultation with each other to ensure the country has accurate and sufficient statistics that guide decision making," he said.
He said his commission would study the recommendations and strategise on their implementation.
The executive summary of the study results is now available on CCK website (www.cck.go.ke/internet_market_study).
CCK has invited inputs from the public upto April 19 before it can start planning implementation of the recommendations.
Autor(en)/Author(s): James Ratemo & Elizabeth Mwai
Quelle/Source: ALL Africa, 15.04.2007
