[kictanet] ISP providers cry foul over bandwidth prices
Kai Wulff
kai.wulff at kdn.co.ke
Fri Mar 30 21:30:43 EAT 2007
Sure,
you see we have a detailed price list which gives distances and prices.
This does NOT include International capacity since this would be bundling of services.
International capacity starts from 1750 USD per M 1:1 (KDN does ONLY sell dedicated capacity, not diluted one).
Fiber price depends on volume uptake but is in the region of KSH 70,- per month and KM for a single link (again, depending on service levels ..). So that is around 30.000 to Mombasa for 64K?
10M are in the region of KSH 1M to Mombasa. As I said, it depends on the solution, contract period, SLA, backhaul technology ....
You see, we try to sell a solution that caters for all the needs of the customer, so you will have a diverse pricing structure. The question is like: How much is a house ... it depends on size and design ..
Kai
Besides the pricelist there is the business sense:
Let's assume the cable to Mombasa with all the equipments and shelters and generators and project overheads costs 1B KSH. Monthly O&M (protecting the cable, rent, power, AC ..) is about 5M KSH. An investor wants his money back after 8 years. Interest per month on 1B KSH = 10M KSH:
Let's say in scenario 1 you are selling 100Mbps with an average price of 1M per 10M = 10M per month
GOP = 5M per month (excluding interest)
Booking interest costs for the paid capital (with 12%) the monthly loss is 5M .. so this does not work
Now you can double the price .. then you make GOP of KSH 5M per month, 60M per year and your billion is paid back in little less than 17 years .....
OR ...
You double uptake and keep the price like in 1 ... 17 years
OR ...
You take business of 1Gbps and reduce the price average by 70%, then you make 15M per month and you pay back over 8 years ...
You see, I prefer the last scenario or even the case whereby we sell 10Gbps and the average price per 10M is only 30 000 KSH per month .... or 100Gbps and 3000 per M or 1Tb and 300 per 10M .. the cost to the operator does not change!
Get my point? We need more demand = local content! Then it will fly VERY easily.
----- Original Message -----
From: Alex Gakuru
To: kai.wulff at kdn.co.ke
Sent: Friday, March 30, 2007 08:56
Subject: Re: [kictanet] ISP providers cry foul over bandwidth prices
Why not give the fibre link cost figures simply like e.g. 256k shillings (a).. 512k shillings (b). etc... Add if you need our bandwidth 256k at contention ratio x:y shillings add shillings (z) etc..
Application, my earlier example, a firm just wants to connect their Nairobi- Mombasa branches to run an application and they don't satellite bandwidth.
Another (an ISP) needs the link to supply internet to their Mombasa clients.
CCK recently stated "information must be given in simple and plain English"
Kai Wulff <kai.wulff at kdn.co.ke> wrote:
I think there is some confusion!
The international capacity is not transported to Nairobi by the fiber cable
in the ground! We transport the capacity that comes by SAt with the fiber to
Mombasa! So the fiber will not affect this.
As for Trunk costs, they have dropped already substantially and are a
function of capacity uptake. You see, Maintenance costs and Capex for the
cable is constant, capacity is unlimited, so the only factor that brings
down price is higher uptake and vice versa.
Rgds
Kai
----- Original Message -----
From: "A. Wanjira Munyua"
To:
Sent: Thursday, March 29, 2007 10:50
Subject: [kictanet] ISP providers cry foul over bandwidth prices
A thought-provoking piece here Listers: ISPs in Kenya say their hopes that
they would pay significantly lower costs for bandwidth once providers
Telkom and Kenya Data Networks unleashed cable, are yet to materialise.
They wonder why. The thinking was that once these two providers replaced
satellite links with fibre between the two cities of Mombasa and Nairobi,
they would see a sizeable cut in prices they pay for their bandwidth.
Worth noting is that these networks which KDN and Telkom have built, and
which ISPs say have failed to deliver the expected fall in prices,
represent a key link in Africa's fibre. The two companies are extending
theis fibre towards the Ugandan border, where it will link up with the
fibre owned by Uganda telecom and MTN Uganda, then run through Uganda to
the Rwandan border to link up with MTN Rwandacell's fibre.
KDN and Telkom Kenya are frontrunners in more than one venture to connect
the eastern coast of Africa to international fibre, and no doubt this
Mombasa-Nairobi link which Kenyan ISPs are grumbling about will play a
pivotal role - regardless of which marine cable goes live first. Question:
If the KDN and Telkom Kenya's Nairobi-Mombasa fibre has not resulted in
the benefits the industry expected, should we be optimistic that once they
hook onto international fibre we shall get the 60% or greater falls in
prices? What's to be done to assure the benefits are forthcoming?
Wakabi
ISP providers cry foul over bandwidth prices
By Okuttah Mark, Business Daily, March 29, 2007
Defying predictions of cheap online access, Internet Service Providers
(ISPs) are yet to experience significant price reductions on bandwidth
charges since Telkom Kenya and Kenya Data Networks laid terrestrial optic
fibre between Mombasa and Nairobi.
Mr Sammy Buruchara, the managing director of ISP NairobiNet, said charges
levied by the two operators remain prohibitive, thus hindering their
expansion.
"There is no difference from what they are charging now to what we used to
pay for the satellite link," said Mr Buruchara, while referring to the
VSAT links which have been used in the absence of cable.
For a 2Mbps broadband link from Nairobi to Mombasa, Mr Buruchara said he
pays over Sh500,000 (US$7,142.) per month. Kenya has 23 ISPs with an
estimated 1.5 million Internet users. Most are in Nairobi and Mombasa.
But an official at Telecoms disputed the charge.
Mr Patrick Njagi, a data service manager, said a combination of increased
competition and the fibre optic cables have reduced broadband prices by
almost 40 per cent since last October. "The price has drastically reduced,
especially in Nairobi because of stiff competition since the licensing of
various Public Data Network Operators (PDNOs) by the Communications
Commission of Kenya," he said.
So far CCK has licensed more than 14 PDNOs to build and operate
telecommunication Infrastructure such as fibre optic cables.
Advertisements Telkom Kenya has been running since the launch of its
Mombasa-Nairobi cable claim that its bandwidth prices have reduced by
half. Telkom Kenya's website states that rending a 2Mbps line from Nairobi
to Mombasa costs Sh700,000 (US$10,000) per month, exclusive of VAT.
"The prices are still quite high even if they say they have reduced them,"
said Mr Buruchara. "It is still impossible to do video-conferencing. Who
can raise the Sh1.8 million for 10 Mbps per month currently being charged
by Telkom Kenya?" he asked.
But Telkom's Mr Njagi blamed the high Internet connection fee on
International prices. "Our subsidiary company JamboNet has very little to
do with the Internet bandwidth pricing," he said. "Those are determined by
the international satellite operators."
_______________________________________________
kictanet mailing list
kictanet at kictanet.or.ke
http://kictanet.or.ke/mailman/listinfo/kictanet
Please unsubscribe or change your options at
http://kictanet.or.ke/mailman/options/kictanet/kai.wulff%40kdn.co.ke
_______________________________________________
kictanet mailing list
kictanet at kictanet.or.ke
http://kictanet.or.ke/mailman/listinfo/kictanet
Please unsubscribe or change your options at http://kictanet.or.ke/mailman/options/kictanet/alex.gakuru%40yahoo.com
------------------------------------------------------------------------------
Be a PS3 game guru.
Get your game face on with the latest PS3 news and previews at Yahoo! Games.
------------------------------------------------------------------------------
_______________________________________________
kictanet mailing list
kictanet at kictanet.or.ke
http://kictanet.or.ke/mailman/listinfo/kictanet
Please unsubscribe or change your options at http://kictanet.or.ke/mailman/options/kictanet/kai.wulff%40kdn.co.ke
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <https://lists.kictanet.or.ke/pipermail/kictanet/attachments/20070330/920c5015/attachment.htm>
More information about the KICTANet
mailing list