Zachary Ochieng
25 February 2008
Nairobi — Kenya has registered a considerable growth in mobile teledensity over the years even as fixed teledensity continued to decrease alongside calling rates.
Consequently, total teledensity (both mobile and fixed) increased from 8.8 lines per 100 people in April 2003 to 14.7 lines in May 2005 following a steady growth in the number of mobile subscribers.
Despite this growth, according to the UN Conference on Trade and Development (Unctad) Information Economy Report 2007-2008, "the great majority of fixed line subscribers - 94 per cent - still live in urban districts, while only 6 per cent of fixed lines reach out to rural areas."
According to the report, the latter also explains the decrease in the absolute number of fixed line subscribers, suggesting that mobile telephony is a substitute for fixed line telephony.
Following the licensing of the two mobile providers - Safaricom Ltd and Celtel Kenya, the number of mobile subscribers grew significantly, as did the geographical areas covered by the mobile networks.
Besides, connection tariffs dropped from $142 in 1999 to $33 in 2005. Call charges also dropped from $0.40 per minute in 1999 to $0.20-$0.32 per minute in 2005.
"Since Kenya still has a single fixed-line provider, the most recent tender for a second national operator having failed in March 2007, it is not surprising that long distance and international tariffs have decreased by only 25 to 40 per cent, while local call prices have risen by 20 per cent," the report says.
It adds: "It is no surprise that in 2001, three years after the introduction of competition, the number of mobile telephone subscriptions had started overtaking the number of fixed telephone subscriptions and towards the end of 2005, the number of mobile subscribers was 10 times larger than the number of fixed telephone ones."
In June 2004, Telkom Kenya's monopoly was ended and three new kinds of licences - network facilities providers, applications service providers and content service providers - were introduced by the government, somewhat opening up the market. The liberalisation of the Voice over Internet protocol (VoIP) telephony is also under review. Econet Wireless is also set to roll its network as the third mobile operator.
Following the strong growth of the mobile phone sector, fixed line tariff and revenue levels have decreased in 2004 and 2005 with local call charges falling by 15.6 per cent, compared with 31 per cent for long distance calls and about 33 per cent for international calls.
Prices for fixed-to-mobile calls fell by 7.4 per cent over the same period. Whereas changes in mobile call charges in recent years have been described as insignificant, a 28 per cent reduction of international mobile call charges by Safaricom has eased prices for consumers calling abroad.
The report says that overall, Kenya has experienced an increase in teledensity to 18.5 mobile subscribers per 100 population in 2006, compared with 7.8 in 2004 and 13.5 in 2005.
In terms of licence agreements, the two operators have covered the majority of the areas required, adding new districts according to business growth. For instance, Celtel significantly exceeded its licence targets from its very first year of activity, while Safaricom remains the operator with the highest number of subscribers.
Between 1995 and 2004, Kenya experienced remarkable growth in the proportion of mobile subscribers among its population, and this has been credited with giving an important boost to activities in the small business sector. According to the government's 2005 Economic Survey, mobile phones had a positive impact in the development of the small business sector as they created approximately 437,900 new jobs.
When mobile phones were first introduced to the Kenyan market in 1992, they were so expensive that only the wealthiest of the population could afford them.
Considering that 64.8 per cent of the Kenyan population lives in the rural areas and only 40 per cent lives above the poverty line, the wealthy represented a small market. This resulted in a marginal mobile subscriber growth of less than 20,000 between 1993 and 1995. With the establishment of the Communications Commission of Kenya (CCK) in 1999, based on the Kenya Communications Act of 1998, the level of competition in the mobile market increased. As a matter of policy, CCK expects competitive market forces to determine prices.
Neighbouring Uganda is considered by the International Telecommunications Union as a model for other developing countries that aim to develop and seek development impact from their mobile telephony sector.
Although more than 82 per cent of the total population lives on a dollar a day or less and telephony may seem to be a luxury, the number of mobile phone subscribers has grown tremendously in the past 10 years.
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