ICT sector braced for take-off

By James Ratemo and Macharia Kamau

Kenya’s ICT sector has caught attention of most African countries, and stands as an emerging regional ICT hub, despite a few setbacks in some of the segments and numerous complaints from end users about pricing and quality.

The landing of two undersea fibre optic cables, (Teams and Seacom) at the coast is expected to herald innovations across the ICT sub-sectors, following a drop in connectivity costs and increased Internet speeds.

A third undersea cable, East Africa submarine system (EASSy) is set to land mid this year, to further shove the industry to a technological boom, and further trigger connectivity price wars among operators and providers.

Though current broadband prices remain a bone of contention, with the players arguing that they are fair, the Government insists they should further come down. They were expected to drop with the entry of the third undersea fibre optic cable the EASSy.

James Wekesa, chief commercial officer of West Indian Ocean Cable Company, which will lay and run the EASSy cable, said the firm would adopt a different pricing model and also have packages that would allow even small companies subscribe. This, he said, would bring in an element of competition to the market.

"We will have flexible packages to suit different bandwidth capacity needs ranging from one month, up to 10 years, and our prices will be relatively lower, due to the nature of EASSy ownership. It is more of a developmental project unlike the other cables that are commercial," he said.

He added that the pricing would be a third of current market prices. The cable is set for completion in March, and commercially available for use in June,

With the undersea cables in place, Ndemo said the task at hand was making adequate use of available broadband, and generating income from it.

"In the ICT sector, we have solved infrastructure problems. We are only lagging behind in local content development," he said.

Information portals

A number of players have heeded the content development call. In the last year, there has been increased activity online, with the creation of information and lifestyle portals, as well as the move by companies to carry out transactions online.

However, analysts believe the solution to increasing local content online, lies in developing content suited for mobile phones, a gadget that is increasingly assuming an all round importance in the country.

"More people are accessing the web through their cell phones than computers, and this is an opportunity for developers to come up applications that can help users access content in formats suited to their phones," Mathews Dawes, managing director of All Amber, said at a mobile web conference in Nairobi last week.

"There is also an opportunity in doing websites in different local languages, even translating the existing content."

However, Rick Joubert from South African firm, Yonder Mobile Media, noted that developing applications is a challenge, as many of the region’s subscribers are on phones that cannot support such applications.

"Nokia 3110 and Samsung E50 are the phones that have the largest market in Africa, compared to other continents that have the iPhone as the phone with the large share," he noted.

"There is an opportunity for applications that are basic and text oriented, but still deliver the message and allow digital engagement."

The situation might change locally following the removal of tax on mobile phone handsets.

Dorothy Ooko, head of corporate communications at Nokia East and Southern Africa, said the move might see the firm move more of the ‘high-end’ handsets this year.

"Our smart phones, which used to sell at around sh65,000, are now retailing at around sh45,000, which is a significant fall. In fact, traders from Tanzania and Uganda are now flooding to Kenya to buy phones, since they are cheaper than in their countries," she said.

A lot still needs to be done to develop content for mobile phones, since this is the platform accounts for a bulk of Kenya’s 3.5 million Internet users.

But, there is general consensus that Kenya’s mobile industry is something akin to a global technological wonder.

Mobile money transfer services, which originated in Kenya, are now being replicated not only on the continent, but also the world. Mobile operators are counting on the services to raise their revenues through service charges, as well as through partnerships with banks.

M-Pesa and Zap, the two foremost mobile money transfer services in Kenya, have 8 million and 450,000 customers respectfully. Essar Telecom recently launched its Yu Cash, while Telkom Kenya said it would soon start similar services.

Rosy future

In fact, Morgan Stanley has forecast a rosy future for Safaricom over the next two years, based primarily on the innovation behind the service provider’s M-Pesa service.

The global financial services firm said it would revolutionise banking in Kenya.

Morgan Stanley forecast Safaricom’s revenue to grow by 22 per cent this year, and a further 16 per cent in 2011, up from its previous estimates of 12 per cent, and 10 per cent, respectively.

"We forecast Safaricom will surpass one million mobile broadband subscribers by 2012," says Morgan Stanley in last month’s report.

Safaricom Chief Executive, Michael Joseph, said the entry of under sea cables means cost of connectivity would fall further.

"By March this year, Safaricom will stop relying on satellite as backup, but instead resort to fibre optics," he added.

He blamed satellite broadband, which is costly, for the high connectivity costs.