Business Daily (Nairobi)
Okuttah Mark
26 October 2009
Zain Kenya intends to roll out the third generation network 3G by the first half of next year to enhance it data business and make it more competitive in this market segment.
Out of the four telecommunication companies, only Safaricom has the 3G licence, a technology which enables the operator to provide its subscribers with wireless Internet connectivity while on the move.
Zain's managing director, Mr Rene Meza, says the delay in rolling out the technology has mainly been due to the high licence fee charged by the industry regulator--Communication Commission of Kenya (CCK) which it says does not make business sense.
Internet access
"We shall roll out the service mid next year, but we are talking with the regulator to review the licence fee downwards" said Mr Meza. " We have already started the procurement of the equipment needed to roll out the service.
Currently, the regulator charges $25 million for the licence. Safaricom rolled out its service in October, 2007.
The technology allows the operator to offer mobile internet access, mobile video conferencing and videophone.
Corporate organisations whose employees work in the fields are normally the key target.
Since it is a wireless technology, it makes it easy for one to access internet in the rural areas where Internet Service Providers have been shy to take their services.
Telecommunication companies are focusing on the data business to boost their revenues as the competition in the voice segment gets stiffer and a reduced Average Revenue Per User ARPU, due to the lowering of tariffs by the operators.
Data business
Zain says in the past one year, its data business has improved by over 50 per cent but did not say how much that data business contributes to its overall revenue.
Other than the 3G service, the operators have also invested in fibre optic network to boost their data business.
A report by CCK indicates that the number of users that connect to the internet through their landline phone has decreased by 1.9 per cent while those of leased customers decreased by 6.7 per cent in quarter one of 2008 compared to 29 and 32 in the same period in 2007.
The CCK attributes the decline to the change of customers needs within the internet sub sector
"The decline could be characterised by the demand for wireless connections that have grown between September and December last year" noted the report.
Safaricom , Telkom Kenya and Zain Kenya have in the past few months engaged on a fierce media campaign about their wireless internet connection.
As opposed to dial up or leased internet services where a use is grounded at a particular place, the wireless internet connection provides mobility to the users.
Other players include the local loop providers such as Flashcom and Popote wireless.
Safaricom has the mobile office where users can access the internet using the internet through laptops, all a user need to do is to invest in a USB and a modem and subscriber to the services.
It's clients can also use the Blackberry to access the internet.
Telkom Kenya clients on the other hand can access internet through their CDMAs or through their iPhones or use the traditional dail up method or the leased line.
Zain Kenya clients can access the internet through the mobile business (350).
However the speed of the internet connection is determined by a number of factors such as the availability of bandwidth, number of users within the same cell and the level of voice usage within the same sector.
In the three months on review the wireless internet represented a 0.98 per cent of the total market.
The penetration of the internet services in the country currently stands at 9 per cent while the total users are 3.3 million.
Despite the low usage of internet in the country, the revenue generated by two principals players in the sector, the Data Carrier Network Operators and the Internet Service providers shows the potential that the sector holds.
For example, the DCNO sold internet bandwidth capacity worth Sh5.1 billion in that quarter a rise of 5.9 per cent compared to the same period in 2007.
ISPs on the other hand generated Sh2.5 billion in the same quarter posting a 1.77 per cent increase from the previous year of review.
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