[kictanet] [www.eThinkTankTz.org] Internet Services more expensive in .KE than .TZ & .UG

Thu Nov 3 11:56:35 EAT 2011

Francis,

Price as a % of  Gross National Incomes is actually a better comparative factor than Absolute values.  To test the level of affordability across different economies, you have to benchmark according to their individual average incomes. That is why 100USD per month of internet access in the US economy is considered cheap whereas the same 100USD per month for internet  in Kenya is astronomical -since our average monthly incomes are 100USD.

As for the undersea cables I agree with Anders & others before him ( Denton 2000 found @
tmdenton.com/pub/reports/icais_mod2_slides.pdf)  whose study actually showed that undersea cable is only 3% of the equation - compared to 60% for the local access network. This is to say that the submarine cable(s) are nice to have but as we have come to experience first hand -  they do not solve your consumer pricing problems.

walu.

--- On Thu, 11/3/11, Francis Hook <francis.hook at gmail.com> wrote:

From: Francis Hook <francis.hook at gmail.com>
Subject: Re: [kictanet] [www.eThinkTankTz.org] Internet Services more expensive in .KE than .TZ & .UG
To: "Walubengo J" <jwalu at yahoo.com>
Cc: "I-Network Uganda" <i-network at dgroups.org>, eThinkTankTz at yahoogroups.com, "KICTAnet ICT Policy Discussions" <kictanet at lists.kictanet.or.ke>
Date: Thursday, November 3, 2011, 11:36 AM

Walu,I'd want to look at two things - if we look at absolute values, kenya is still cheaper (but when making a composite from GNI which itself is based on population, etc) then things get a little skewed.

- the 2008 data vis a vis the 2010 data - a span of 3 years.   And perhaps we should question the accuracy of the data here vis a vis what we know happened in terms of infrastructure developments.   For Tz and Ug their costs have almost halved in that period  from 57 and 61 respectively.  Kenya during the same period was 49.8.    Yet we were among the first to see much lower costs from 2H 2009 when two  cables landed here.  In tz one cable landed (i.e. less competition) in the same year ergo costs could not have dropped that much and perhaps the terrestrial network for backbone and last mile was not as well propagated as ke had (telkom, kdn, NOFBI, etc).  And to repeat, just one cable that year in Tz.

So I'd question the accuracy of the historical period but also issue a caveat abt looking at how GNI, population, etc may skew the absolute values somewhat.
On that note, I hear from RSA friends their internet costs are pretty high yet this index shows it at 5.3 currently - an INCREASE from 4.5 in 2008?  We know in 2008 RSA only had satellite and a thin strand of fibre controlled by Telkom SA - so again the distortions thanks to looking at GNI and population.

On 3 November 2011 11:09, Walubengo J <jwalu at yahoo.com> wrote:

True that Anders,

the biggest component in the internet price equation is the cost of local access.  
But that still begs the question: Does .UG and .TZ enjoy a better domestic infrastructure/ better business environment/better tax regimes/etc (just to quote some of your variables) than .KE?

Why are the costs in the neighbourhood lower than in .Ke?

walu.

--- On Thu, 11/3/11, Anders Comstedt <anders at ssvl.kth.se> wrote:

From: Anders Comstedt <anders at ssvl.kth.se>
Subject: SV: [www.eThinkTankTz.org] Internet Services more expensive in .KE than .TZ & .UG

To: "'Walubengo J'" <jwalu at yahoo.com>, "'KICTAnet ICT Policy Discussions'" <kictanet at lists.kictanet.or.ke>

Cc:
 eThinkTankTz at yahoogroups.com, "'I-Network Uganda'" <i-network at dgroups.org>

Date: Thursday, November 3, 2011, 10:26 AM

On your last comment , UG vs KE, and UG being “supplied” with bandwidth from KE, you live in a past mindset. The majority of the cost driver is local networks, and to some extent national backbones, not international connectivity. The VSAT days obscuring this are gone after the landing of fiber cables. This has become even more apparent after transit prices has plummeted, also in East Africa.
  Try Telegeography for some data on commercial conditions on Internet
 transit. Below USD 10 /Mb/month at global nodes. The price to get there on any global fiber system is USD 50-150 or less. Mombasa to London was expected to fall from USD 3000-5000 to USD 500 by the most optimistic pundits as cables arrive. It is now more like USD 100-150. 
  Several deals include backbone transport to Kampala and other major landlocked nodes in that price. Just check what EASSy partners, like WIOCC, and SEACOM are into in their wholesale business. 
  So the big cost element is the access network. In East Africa that is more or less the same as 3G mobile for Internet access but for some services in major cities. The second cost driver, far more expensive per Mb than international connectivity,  is the national backbone, but it is (or should be) anyway just a few percent of the total. 
What is then the economics for 85-90% of the cost, local access, in various countries? Good business or bad business? Provider efficiency? What may drive or prevent competitive pressure? Taxes and license costs? Customer density? (covering sparsely populated areas is a financial disaster for telcos globally). Lots of things to
 benchmark. ITU statistics not very helpful here.   Having more than a casual opinion about end-user prices begins with having knowledge about cost drivers.
  CheersAnders

Från: eThinkTankTz at yahoogroups.com [mailto:eThinkTankTz at yahoogroups.com] För Walubengo J

Skickat: den 3 november 2011 07:05
Till: KICTAnet ICT Policy Discussions
Kopia: eThinkTankTz at yahoogroups.com; I-Network Uganda

Ämne: [www.eThinkTankTz.org] Internet Services more expensive in .KE than .TZ & .UG    
Contrary to popular belief, ITU's recent statistics @

http://www.itu.int/ITU-D/ict/publications/idi/2011/Material/MIS2011-ExceSum-E.pdf

indicates that ICT services (internet, voice, video) are generally more expensive in Kenya than in our neighbourhood. Specifically, the cost of ICT services as compared to average national incomes is at 30% for .UG, 31% for .TZ and 33% for Kenya.

In layman terms, Kenyans have to fork out 33% of their average monthly income  if they want to enjoy decent access (e.g. 20hrs of internet) per month.

So PS Dr. Ndemo, it looks like before you become President, what are you doing to make sure we catch up and bypass our neighbours as far as pricing of ICT services is concerned?

walu.
nb: incidentally, we are the ones supplying .UG the bandwidth - so how comes its cheaper in Kampala?

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