Business Daily (Nairobi)
Kui Kinyanjui
25 February 2008
Internet users in Kenya should expect no connectivity price changes despite the operational turbulence caused by post- election violence.
Internet Service Providers (ISP) said that while the recent violence increased their operational costs, upward adjustment of prices would be impossible in the prevailing business environment.
"We do not see prices rising. ISP pricing structures are mostly pegged on the dollar, so on big swings on the exchange rate can force adjustments," said Mr Tej Bedi, the managing director of IS Solutions. "With a solution to the political crisis becoming increasingly possible, we anticipate prices will remain stable and should indeed decrease," he said.
Internet service consumers have been fearing that the ISPs may increase connectivity prices citing increased operation costs in the wake of sectarian violence at the beginning of the year.
"It has been suggested that the post-election violence might affect the capacity of ISPs to maintain bandwidth and broaden their offerings, potentially pushing up Internet prices," said Mr Jonathan Somen, the managing director of AccessKenya.
"We know of no such constraints on expansion nor have we experienced any breakdown in any of our services to our clients ," he said.
Mr Somen, who is also chairman of the Telecommunications Association of Kenya (TESPOK), said customers could count on lower prices once international fibre optic cables land in the country, reflecting government assurances on the same front.
Fibre optic cables are expected to further bring down the cost of connecting to the Internet significantly.
Mr Bedi, whose firm has a 12.5 per cent stake in international cable project SEACOM, said it will be passing on cost-saving benefits to its customers when the cable lands in Mombasa.
Customers expect connection fees to drop by up to 65 per cent of the current prices. This would mean that a monthly Internet connection that is currently costing Sh12,000 would fall to just over Sh4,000.
Said Mr Somen: "Firms should be negotiating forward contracts for bandwidth, which they can utilize this year to ensure they remain ahead of the curve on capacity and value for money," said Mr Somen. Analysts said the short-term slow down would be catered for by rising demand.
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