[kictanet] CCK Internet Study- Online Deliberation Week2&3 Summaries

[John Walubengo]

Dear Listers,

We are now concluding the report on the above previously
held Online discussion.  Plse go through the summarised
comments and we welcome any corrections, modifications or
additions before end of day Wed 20th June 2007.

Below Week 2&3 Summaries.

Theme-Hierarchy of Providers
Joseph Mucheru felt that the Internet Market Structure had
not been sufficiently regulated to ensure the players (ISP
& IGO) kept to the terms and conditions of their licence. 
He pointed out that whereas the current licensing regime
stipulates that IGO do not do direct retail to consumers,
this was not the case in practice.  ISPs were also not
expected to build their infrastructure since they were
expected to lease capacity from the PDNOs – but this was
not the case in practise. Mucheru said that the industry
had deteriorated to a level where all players are doing
everything and anything to for profit gain and it was
costing the country in terms of failure to leverage on the
economies of scale – had the licensing terms and conditions
been adopted. Basically, Trust between IGOs, PDNO & ISP has
been lost, making it very difficult to build economically
efficient Internet Networks. Eric Osiakwan agreed by adding
that the duplication of effort by the players results in
enormous costs that are eventually dropped onto the
Consumers.


Theme- Statistics on Affordability 
Mucheru said that the main obstacles towards affordable
internet services included the costs of the equipment,
namely Modems, Satellite dishes, the PC and Installation
Costs.  However, given more users, these costs are likely
to come down.

Kai Wulff felt that the key thing to bringing down internet
costs lay in developing local content- thus reducing the
need to rely on international (external) content which in
turn implied buying international bandwidth. Joan Walumbe
said that awareness of Internet benefits particularly for
the rural communities was necessary to create demand. Fatma
Bashir agreed with Joan’s observation and added that there
was a need to build information centers in the rural sector
that could informally train users on the Internet.  She
commended KDNs initiative to link secondary schools to the
Internet, saying that it would create a virtuous cycle
where parents, their children and entrepreneurs can
simultaneously benefit from the Internet.  

However, James Rege cautioned that Fiber alone could not
address the Access component and other technologies will
need to adopted for the last mile, such as WiMax, Wifi,
Satellite amongst others. Florence Etta said that last mile
solutions had a complex web of actors, services and
possibilities and should be well planned and provisioned –
preferably with support from cheap sources of funding such
as the African Development Bank (AfDB)

Njenga MP said that considering most rural families lacked
significant disposable incomes, it would be better to serve
them using the Universal Service Fund which would subsidise
their communication costs.  But Wainaina Mungai argued that
the rural community is actually not so financially
indisposed particularly if their uptake for mobile
telephony was anything to go by.  He said that given the
right access that focused on value-adding activities for
their rural lifestyles, their Internet uptake will easily
exceed expectations - along the same lines as their uptake
for mobile telephony has.  

Dr.  Bitange Ndemo felt that one way of making services
available was by government providing the infrastructure on
Open Access basis.  He cited the case of the domestic link
between the two Cities of Nairobi and Mombasa saying that
the cost of bandwidth on this route was exorbitant despite
the existing competition.  Kai Wulff argued that the cost
of the service was a function of usage and prices would
essentially go down once usage picks up.  But Brian Longwe
interjected by saying usage was also a function of price,
thus presenting what Eric Osiakwan referred to as the
classic chicken and egg problem.  In such a case, Eric
said, it is always better for the Private Sector to take
the business risk of adopting what Dr. Ndemo referred to as
the concept of low prices high volume business models.

Michael Joseph reminded members that it was worth noting
that pricing was not the only key factor but service
delivery, reliability, availability need to be considered.
In general, industry standard Service Level Agreements
(SLAs) that would encourage Operators to lease more
bandwidth capacity from the upstream providers were
critical.

As Operators, he said, they will be needing more and more
transmission capacity both
within and outside the country and were therefore looking
seriously at all the various proposals that are evolving.
In particular, he said, they were looking forward to
reviewing the detailed plans for the Regional FiberOptic
network, including dates or termination points, pricing etc
so as make their plan accordingly.

Theme – Statistics on Dispersion.
Kai felt that the recent push by Government with the World
Bank assistance in building internet infrastructure was
presenting unfair competition to the private sector.  He
gave the example of the obvious failure by Government in
providing fixed line services to the citizens through their
public utility company Telkom Kenya.   He argued that using
the same approach in building domestic optical fiber
infrastructure may lead to similar experiences, namely,
little or no access, expensive and unreliable services.  He
strongly felt that Government should let the Private sector
drive the build-up of the domestic fiber and furthermore,
he expected that Government should be the largest consumer
of the Private Sector build infrastructure.

Becky Wanjiku, wondered if the Government could work in
partnership with the Private Sector, by way of having MOUs
that enabled Government to fund the communications projects
while the private sector implemented and operated them. But
Wanaina Mungai preferred that World-Bank type of Funding
would be best accorded to Community Based Organisations
(CBOs) but if given to Private Sector, then there would be
need to ensure that the Profit motive is moderated.

Lucy Kimani felt that both Government and Private Sector
had a role in developing infrastructure.  She said that
both may however have different but justifiable reasons for
getting involved.  Private Sector may be keen in focusing
in the urban (quicker return) areas whereas the Government
had an obligation to ensure communication services reached
all areas including more often than not, the non-economic,
rural areas.  Fatma said that the Government should however
take on the key role of building capacity by way of
providing ‘roaming-digital-kiosks’ that would enlighten the
users and stimulate demand for the Internet Services.

Alice Munyua said that there was nothing wrong in the
Government taking the lead in providing or building
domestic fiber backbones.  She cited the case of the
Malaysian Government which built the Malaysian Super
Corridor (MSC) which is a national information superhighway
at cost of USD40 Billion. She added that Private sector
would still have a role to play, particularly at the
content, application and tech-skill levels.

Eric Osiakwan said that it would be wrong to outrightly
discourage Government intervention in Infrastructure
development because it has had different results in
different countries.  He cited Turkey where he said that 
the Government intervention through the Turkish public
utility company lead to massive expansion of Internet
Services, but acknowledged that the same could not be said
in the case for Kenya.

Dr. Bitange Ndemo said that the purpose of  the World Bank
Loan was to stimulate demand a head of cheap bandwidth from
the fibre cable.  Areas that needed this type of
stimulation include Rural ICT Centres, the Government,
Universities and Colleges and BPOs.

He added that the procurement of subsidized bandwidth will
be done openly where all operators would have a chance. 
This does not in anyway compromise any  Private sector
initiatives because they would be paid the market rate of
bandwidth. 

He explained that the participation of Government in
construction of Terrestrial fibre  networks and the
undersea cable was to fast track availability of cheap
bandwidth that would in turn help the economy to grow
faster.  Secondly, he said that Kenya  needed an Open
Access model that would help SMEs in the country to compete
with the big Operators, like Jamii Telecom, KDN and the
rest..  He added that the Private sector had failed to
provide the necessary infrastructure for economic
development and no Private Operator had shown interest in
rural Kenya until the Government made the business case for
rural ICTs.

He however assured the Private Sector that  Government had
no interest in competing with them.  Government role was to
facilitate development.  Infrastructure in the ICT
Sector had lagged behind and what the Government was doing
was simply to facilitate its  development and leave the
Private Sector to compete in an Open Access
platform.  He reiterated that Government had the obligation
to enable every Kenyan citizen to play a role in economic
development especially the SMEs that constitute 95% of
businesses in the country.

He  concluded by saying that  there was absolutely nothing
wrong with borrowing from the WB to stimulate demand for
the investment Government was making in the ICT sector. 
Some of the funds would  be used to develop capacity to
utilize ICTs and development of local content. 
Essentially, Government was simply  stimulating demand that
would become consumers of Private Sector products.

Alex Gakuru gave a general reaction that touched on both
Affordability and Dispersion Issues. On local content, he
suggested that all government departments should now be
having web content while KENIC should be encouraged to
bring down their domain registrations fees. On the demand
issue, he urged Operators to think outside their
traditional markets and start enlisting new communities
such as Church Ministries amongst others.  On Education, he
said there maybe need to seek for trust funds to
continuously educate Users while on Infrastructure, he
commended the Government on their move to facilitate a
national reach for communications.   Harry Hare added that
ICT Infrastructure development should actually be elevated
to the same level as National Road or  Power
Infrastructure.  Infact, he suggested, that all the three,
ICT, Road and Power Infrastructure should be planned in
sync to avoid duplication of effort where the ICT people
are often seen digging up through roads that were
constructed with little or no provision for Data-ducts. 

Theme - Impact of the Recommendations
Alex Gakuru supported most of the recommendations  but
cautioned against any Government takeover of the KIXP. 
Eric wondered why the Regulator would be building the
Infrastructure but Professor Meoli Kashorda corrected the
misconception by saying that it was the Government that had
been tasked with that exercise.  He further elaborated what
was meant by a National Information Infrastructure (NII). 
He said that a NII was actually an ICT strategy that was
aligned to the national strategic economic plans (ref
Singapore, Mauritius, China NII ). That is, NII aligns the
national economic/development strategy with the national
ICT strategy (rather than just policy).  He added that,
that was the only way to translate infrastructure to
traffic
and therefore revenue for the operators. 

 Brain Longwe also supported most of the recommendations
with cautions on a few.  In particular, on the issue of
dissolving the separation between ISPs and IGOs, he was of
the idea that it would be better to start a fresh licensing
regime subsequent to a stakeholders meeting that discussed
what the future internet market would look like.  The new
licensing regime should then aim at structuring the
critical areas within such a vision while being fairly open
with the non-crtical areas On SLAs, he felt that it was
easier to stipulate the Internet standard but it maybe
quite a challenge to monitor the same for enforcement.   

====Ends====
walu.



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