The recent landing of the Seacom and TEAMS cables, as expected, has created a lot of excitement in the market. Understandably, expectations are and should be high.

True, the undersea cables are a viable tool in addressing the access, speed and pricing challenges currently facing the data market in this country. Even then, it is important to understand that some of the envisaged advantages, especially in pricing, will not happen overnight.

At this point we have only connected to the Seacom cable which does have an impact on Safaricom pricing. Soon, we will connect to the TEAMS cable and have access to approximately 19 per cent of the capacity on that cable. Ultimately and hopefully, pricing in this market will be driven by a robust and competitive telecoms environment.

One would have to make a holistic assessment of the entire value chain of Internet connectivity, without necessarily focusing only on the investment outlay in the two international fibre cables that have landed in the country.

Let me highlight some of the variables that come into play when looking at the per MB cost that is eventually offered to the market.

Contrary to popular belief that satellite bandwidth will be retired as soon as the fibre optic cable lands, this is a myth. Although it will now be possible to scale down one's dependency on satellite, however, it will be some years before we can comfortably do without it.

Satellite capacity vendors such as Intelsat et al, offer this capacity on the basis of long term contracts, with better pricing obtained on the basis of length of contract.

Users such as Safaricom can not immediately exit these contracts without paying high penalties, so most will be retained until their expiry. In addition to the foregoing, we still require satellite bandwidth at two levels.

First, to provide redundancy for our international connectivity as we await guaranteed restoration on additional cables such as EASSY and LION.

At present both TEAMS and SEACOM share single point weaknesses which are the SE-ME-WE 4 cable and the Mombasa landing points. Therefore, we will retain some satellite capacity, and incur the attendant costs, until probably the end of 2010.

The next is the costs of backhaul transmission to end users from Mombasa. One of the constraints to the delivery of broadband is the national backhaul. At present we have not seen the desired reduction in costs of backhaul from Mombasa to Nairobi as there are currently only two commercially operational cables serving this route (Telkom and KDN).

We are yet to have visibility of the cost and quality of the two additional backhaul systems to be brought in to operation by KPLC and the government's NOFBI. So at present we are basing our national backhaul costs on the existing fibre and micro-wave link costs, which are still significantly high.

Investment outlayIn addition to the initial investment outlay for both TEAMS and SEACOM, it should not be forgotten that these investments have very high running costs, averaging out between four and six per cent of the investment cost per year in operation, administration and maintenance costs.

This is in addition to costs that will be paid to the landing station staff at the local level to administer and monitor the connectivity to the cables.

We must realise that onward connectivity pricing from Fujairah comes at a price. These include what we refer to as cross-connect fees (i.e. the cost of connecting from one cable system to another) and the recurring costs of leasing bandwidth to destinations in Europe and Asia.

Being connected to international high speed internet bandwidth is just one part of the whole. It then follows that operators have to deliver this connectivity to consumers at their homes and work-places, indeed where they are.

This can be done over a variety of platforms using wireless and wire line technologies. The consolidation activities you are seeing in the market are not exclusive to Safaricom.

There are several highly publicised acquisitions by some of the key players in this sector for instance, Wananchi's acquisition of Simbanet.

This activity is a logical outcome of the unified licensing regime which now sees regulation in the sector moving towards a technology-neutral stance and hence allowing players to maximise on their infrastructure to deliver various ICT services on a multiplicity of technology platforms.

The purpose of this sort of activity is not to kill competition. In fact, it is quite the contrary, by ensuring that the market has stronger players.

The CCK will see an environment where these players make full use of scarce resources by deploying even in rural parts of the country and by so doing, extending the penetration of ICT services beyond its current five to eight per cent level. Internet penetration has largely been suppressed and restricted to urban areas serving an elite group.

The entry of bigger players with deeper pockets will logically result in a faster national rollout of ICT services leading to increased competition and a wider range of product offerings for the ultimate benefit of the consumer.

Joseph is the CEO Safaricom