[kictanet] Day 5 - Statistics on Affordability- CCKInternetStudyReport

Kai U. Wulff kai.wulff at kdn.co.ke
Sat May 5 10:59:02 EAT 2007


My point is:

Yu have limited room for infrastructure since the cost is constant and only
increased usage can drop the price. The Government should NOT be a
competitor but a price sensitive user!

You will have enough people now competing for the business of the Government
and the private users .. That forces prices down. Having a state owned cable
or a state owned Telkom is in my opinion not the way forward.

Rgds

Kai


-----Original Message-----
From: kictanet-bounces+kai.wulff=kdn.co.ke at kictanet.or.ke
[mailto:kictanet-bounces+kai.wulff=kdn.co.ke at kictanet.or.ke] On Behalf Of
Wainaina Mungai
Sent: Saturday, May 05, 2007 10:35
To: kai.wulff at kdn.co.ke
Subject: Re: [kictanet] Day 5 - Statistics on Affordability-
CCKInternetStudyReport

Kai said;
> The problem is when you create the demand and then some World Bank money 
> starts to compete before you can recover the cost..
> ...The private sector needs the Government as a user there as well as the 
> private companies and consumers. [Only then will the prices drop!]

Pricing
I would like to assume that competition from government is as good as
competition from other market players. The beauty of competition is in the
way it forces the private sector to put a smile on the face of every
consumer ;-) so as to guarantee revenue. I am convinced that a significant
drop in prices results only from fierce competition and some degree of
regulation. TESPOK and others fought for years to introduce competition
which resulted in the current lower prices of internet and telephony
services. 


The recent intervention of CCK on the pricing of mobile services is a case
that proves that price controls may become necessary to protect consumers.
For internet services, we need many 'small scale' providers whose products
and pricing would be more market-driven and responsive to fluctuations in
consumer needs. 

For instance, an internet user paying KShs. 6,000 per month for DSL per
month is actually incurring 14 cents per minute for a 30-day month. This is
a great deal for any 24 hour user who may even make money through such
access to the internet. The same user would be said to incur 28 cents per
minute if s/he were to use the link for an average 12 hours per day at the
same monthly rate. There may be a catch here but there is a high probability
that more businesses can survive on such low rates and pass such rates down
to rural consumer. 



---
Wainaina Mungai
http://www.madeinkenya.org

SUSTAINABLE DEVELOPMENT is development that meets the needs of the present
without compromising the ability of future generations to meet their own
needs.


>  
>  FROM: kictanet-bounces+kai.wulff=kdn.co.ke at kictanet.or.ke
>  [mailto:kictanet-bounces+kai.wulff=kdn.co.ke at kictanet.or.ke] ON BEHALF OF
>  Rebecca Wanjiku
>  SENT: Friday, May 04, 2007 10:23
>  TO: kai.wulff at kdn.co.ke
>  SUBJECT: [kictanet] Day 5 - Statistics on Affordability -
>  CCKInternetStudyReport
>  
>  
>  thanks Kai for the response,
>  we need many people responding to this issue,
>  
>  in my opinion, the government should find a way of using the WB money
>  through the private sector, so that the private sector does not see as if
>  the government is competing and killing the profit margin,
>  
>  in this regard, the government could come up with some MOU with the
>  private sector so that some of the money invested is government's and
some
>  PS.
>  that way, part of the profits will be ploughed back (it will be
>  mandatory)
>  
>  i remember during the OFC workshop, Kai shared how IFC funded a private
>  secotor consortium to carry out some survey at USD 300k and a similar
>  survey carried out by govts was valued at USD 3m
>  
>  maybe this can help reduce costs and provide a way for govt and PS to
>  work together and deliver quality market services, develop the content
and
>  all..
>  
>  its just an opinion, its not absolute,
>  
>  lets hear as many voices as possible,
>  it is at these forums/discussions that great ideas come up,
>  
>  regards
>  
>  _KAI WULFF <KAI.WULFF at KDN.CO.KE>_ wrote:
>  
>  Hello,
>  
>  we leave it to the ISPs to create the demand. We were hoping that with
>  our
>  rural initiatives, like connecting schools and showing them how to
>  educate
>  the parents (and make money with this) will increase the demand on a
>  natural
>  way.
>  
>  What we have seen wit some Rural BTS, it takes about 12 month until it is
>  
>  break even ...
>  
>  The problem is when you create the demand and then some World Bank money
>  starts to compete before you can recover the cost. It is my strong
>  believe
>  that wherever a device can be operated, there WILL be a market. The
>  private
>  sector needs the Government as a user there as well as the private
>  companies
>  and consumers. Only then will the prices drop! We still focus too much on
>  
>  the INTERNET, what most people need for a start is LOCAL information and
>  communication .. so I would say: 90% local IP traffic and 10%
>  international
>  ..
>  
>  Kai
>  
>  
>  ----- Original Message -----
>  From: "Joan Walumbe"
>  To:
>  Sent: Thursday, May 03, 2007 10:26
>  Subject: Re: [kictanet] Day 5 - Statistics on Affordability -
>  CCKInternetStudy Report
>  
>  
>  > Walu,
>  >
>  > I agree with you that affordablity is a factor especially for rural
>  > communities when it comes to access to the internet. But I think that
>  lack
>  > of awareness is an even bigger factor. It's fine for the urban folk
>  (who
>  > already recognise the benefits to the internet etc.) taking a short
>  break
>  > in
>  > shags to have the internet access when back home, but it there is no
>  > demand
>  > for the internet among the residents what is the point?
>  >
>  > So does KDN enter a market and then hope to create demand or is their a
>  > market that demands the service or is it a little of both?
>  >
>  > I understand that Kai would not be venturing into the rural areas if it
>  
>  > did
>  > not make any financial sense. Can anyone provide some info/statistics
>  on
>  > demand for internet access in rural areas?
>  >
>  > Joan Walumbe
>  >
>  > ----- Original Message -----
>  > From: "John Walubengo"
>  > To:
>  > Sent: Thursday, May 03, 2007 9:01 AM
>  > Subject: [kictanet] Day 5 - Statistics on Affordability - CCK
>  > InternetStudy
>  > Report
>  >
>  >
>  > Day 5- Statistics on Affordability.
>  >
>  > I acknowledge an interesting thread filtering in on Trust relationships
>  
>  > b/w
>  > IGOs/ISPs...feel free to continue contributing on that as well as on
>  > today's theme on affordability (multi-tasking
>  > encouraged by internet technologies ...)
>  >
>  > and just to pick up from Kai's projection of KDN fiber hitting Bungoma
>  in
>  > early August 2007. This would be quite a welcome and timely
>  development,
>  > but at what cost to the consumer? To what extend will the (internet)
>  > services be affordable to the rural/average communities?
>  >
>  > Affordability is a subjective term gven that what is considered cheap
>  by
>  > the
>  > Bill Gates of this world is probably not so for the average Kenyan on
>  the
>  > street. In trying to get an objective measurement for affordability,
>  the
>  > Report pegged it on the national average incomes. In other words, if
>  the
>  > monthly average income in Kenya is around 100USD and if the average
>  > monthly
>  > cost for internet access is also around 100USD then obviously the
>  average
>  > Kenyan will not bother with accessing the Internet - it just becomes
>  way
>  > beyond their means or too expensive or not affordable.
>  >
>  > The report indicated that access through the more convenient Internet
>  > Dial-up/Desktop services costed over 200% the average incomes (too
>  > expensive), while the same access through mobile phones was costing
>  just
>  > 8%
>  > of the average incomes (quite affordable). What needs to be done in
>  > order
>  > to make Internet Services more afforable to Kenyans?
>  >
>  > 1 day deliberation on this one.
>  >
>  > walu.
>  >
>  >
>  >
>  >
>  >
>  > _______________________________________________
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>  
>  
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>  
>  Rebecca Wanjiku,
>  journalist,
>  p.o box 33515,
>  Nairobi.00600
>  Kenya.
>  
>  Tel. 254 720 318 925
>  
>  blog:http://beckyit.blogspot.com/
>  
>  
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