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With abundant capacity, Internet firms now in fierce market battle

By | September 15th 2009

By James Anyanzwa

Stiff competition is taking shape in the Internet market with service providers re-positioning to control the corporate segment, while extending tentacles to the residential broadband niche.

Internet business and access in the country had been a corporate affair for many years with 80 per cent of the three million users concentrated in Nairobi.

A few Internet Service Providers such as AccessKenya, Kenya Data Network (KDN) and Wananchi Online are making huge inroads into the residential Internet market but their presence is yet to be felt.

"Residential broadband is a profitable segment for our business. There is a great potential for growth because the segment is under penetrated," said Mr Jonathan Somen, group managing director, AccessKenya.

Workers haul part of the Teams fibre optic cable onto the Mombasa shoreline in June. The country’s connection to the global undersea cables ushers in competition among Internet service providers. Photo: File

AccessKenya says it has connected 2,000 residential customers in addition to its corporate clients.

Mobile phone operators — Safaricom, Telkom Kenya and Zain Kenya — are also eyeing the same market niche.

"The market has been receptive. We have seen a lot of interest," says Ms Angela Mumo, head of corporate communications at Telkom Kenya.

Telkom Kenya says it is connecting between 150 and 200 cus tomers every week. Instaconnect is another entrant into the Internet market with plans of consolidating its position in the corporate market.

The company expects to give its peers a run for their money by hooking corporates on the Internet via the fibre optic within the next three months.

Various buildings

"We are planning to start rolling out a fibre optic network to connect various buildings in Nairobi," Mr Amirali Merali, the company’s Chief Operating Officer told Financial Journal Last week.

The company says the move is part of its strategy aimed at creating value addition to clients and allowing increased usage of bandwidth owing to excess capacity in the market. Instaconnect specialises in providing customised solutions, which help improve corporate efficiency.

The entry of the undersea fibre optic cables—Teams, Seacom and Eassy— is expected to increase the number of Internet users to more than 10 million in the next five years.

The cables will link Kenya to the rest of the world at cheaper rates compared to the current satellite connectivity.

Bandwith speeds

Instaconnect has signed up to Seacom cable enabling it offer its customers a 300 per cent increase in bandwidth speeds at the same price. AccessKenya has bought 2,500mb of capacity on the Seacom fibre optic cable together with a similar capacity on the Teams cable.

"Our clients will be offered 128kbps to 2mb business class link capacity," said Merali.

The country uses just 1,200mb of satellite capacity. Instaconnect hopes to buy enough capacity from both Teams and Seacom with a view of offering high-speed and reliable Internet connectivity to its clients.

Broadband and Internet penetration and availability of bandwidth is still very low in Kenya mainly due to lack of infrastructure and relevant local content.

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