Telecom firms which have invested heavily in the Internet business in anticipation of a connection frenzy following the landing of two undersea fibre optic cables in Kenya might have to shelve their profit targets for now.

New research data suggests that the growth of the Internet will depend on literacy levels and availability of communication gadgets.

"The development of data services will largely depend on growth of PC penetration and high-end handsets," says the survey by Renaissance Capital and Synovate.

This comes against the background of heavy investment in fibre optic cables by telecommunications operators and the government.

Telecommunications operators are now moving aggressively into the data segment of the market as revenues from voice services plateau or dip due to stiff competition.

Victor Kyalo, deputy chief executive at Kenya ICT board, says that, despite having addressed the problem of infrastructure, the country still has a lot of work to do in terms of addressing literacy levels and making sure that people have access to computers. " I agree with reports totally, to make the infrastructure meaningful we need to address these issues and that why we have the one million computers task force," said Mr Kyalo.

PC penetration in the country stands at eight per cent or approximately 3.4 million subscribers.

A study by the industry regulator Communication Commission of Kenya (CCK) indicated that the number is expected to increase to 10 million by 2012 following the linking of the country to the rest of the world through the two undersea fibre optic cables.

However, low literacy and limited access to computing facilities means that despite the improved local and international telecommunications connectivity, the majority of Kenyans are still unable to access the Internet.

Apart from the two undersea cables that have already made a landing locally, namely Seacom and Teams, two additional fibre optic cables, Eassy and Lion, are expected in the country in the near future.

Both the government and the private sector have increased their investment in terrestrial infrastructure.

Prior to the arrival of the undersea cables, the country relied on satellite connectivity whose cost was high and quality wanting.

The high connectivity costs were passed on to consumers making Internet access so expensive as to only be within the economic reach of a privileged few.

Most Internet Service Providers (ISPs) opted to provide their services in urban areas.

Research by Synovate released last week indicates that although there are wide disparities in Internet use across socio-economic groups in Kenya, there has been remarkably strong growth throughout the country largely driven by phone-based access.

"The mobile phone look well set to be the new driver of Internet access," read a section of the report, which went on to define the mobile phone as "critical to the success of higher Internet penetration."

Access to the Internet on the mobile phone is mostly growing at the expense of public access routes.

Growth in rural Internet access and usage in particular is largely on the mobile phone.

But at least three in every ten Kenyans may never have the opportunity to access the Internet due to low literacy levels, age and attitudinal barriers.

Out of those interviewed in the Synovate study, 27 per cent of those who don't use the Internet do not know what it is.

The research however also notes that there is a keen interest among non users to know how the Internet works.

Information permanent secretary, Dr Bitange Ndemo, says there is need to invest in training and creating local content so as to draw more people into the Internet.

"We are almost through with infrastructure. It had to come first in order to create the much needed employment and make training much easier" said Dr Ndemo. "My frustration is with educated people who have refused to be entrepreneurial and create content."

The United Nations Information Economy Report 2009 says lack of local content online and limited to ICT devices such as mobile phones can limit the uptake of technology in developing countries that otherwise enjoy a relatively high level of connectivity.

Local content is information provided in languages spoken locally and reflecting the values, lifestyle and the needs of local community.

The report notes that such content can help create new business opportunities and improve information that is critical for Small Medium Enterprises such as agricultural market information or weather forecast.

Futuristic studies show that soon everything would rely on Broadband( high speed internet) including healthcare where some watches will monitor blood pressure and send data to doctors, some of the countries that have achieved great internet penetration such as Finland had to declared Broadband as one of the basic human rights.

Part of the government effort to address the computer literacy is by training of entrepreneurs through the Kenya ICT Board, the body will spend up to sh1 billion of the money borrowed from the World Bank on training for Digital Villages.

The government also removed the 16 per cent duty on all mobile handsets during this years budget, the government is also working on a one million laptop initiative where it will subsidize the interest on any money borrowed from financial institution, however it is yet to make public the modalities on how interested people will get the loans.

Other than partnering with handsets manufacturers to offer handsets subsidies, one of the mobile telecommunication company, Safaricom has been running a special offer for laptops at Sh19,999 so as to increase it data market.

At the moment 1.6 million of its total subscribers use handsets to access internet, it has also come up with a offer for unlimited internet access at a cost of Sh200 per day.

Safaricom also signed a exclusive deal with Infrastructure company Jamii Telecomm Limited to use its 1,000 kilometer fibre optic network in Nairobi and Mombasa for he next five years and also owns 22.5 per cent in Teams cable and also bought capacity in Seacom.

Zain, Telkom Kenya and Essars's Yu network have also invested in the undersea cables.

Zain intends to rollout a third generation 3G network by the first half of next year.

3G enables users to access high speed internet while on the move, currently it's only Safaricom that has deployed that technology in the country.

The other operators have not been able to rollout the technology citing the high licensing fees of $25 million required by CCK.