24 August 2014

Rwanda: Scramble for 4G Internet Kicks Off

Telecommunications firms and Internet services providers are getting set to tussle it out for clients as the date for the long awaited launch of the 4G LTE internet draws closer.

September 1, 2014 has tentatively been set for the official launch following months of successful testing.

Once on the market, consumers and businesses that rely heavily on the internet will benefit from 4G internet speeds that are more than ten times faster than the current 3G services widely on the market.

MTN and Airtel were quick to place adverts in local newspapers arousing the appetite of clients who have anxiously been waiting for faster internet.

The 4th Generation Long-Term Evolution (4G LTE) network is spearheaded by Olleh Rwanda Networks (ORN), a joint venture of the Rwandan government and Korea Telecom.

According to the deal, ORN will play the role of wholesaler while the telecoms and internet service providers (ISPs) will be the retailers. ORN conducted a successful trial phase in 13 government institutions, 13 public locations and 17 private sites, including hotels and companies. The trials ended in July.

Airtel has already opened up about its rates and called on the public to order for 4G gadgets ahead of the launch.

Their Simcards cost Rwf20,000, the modems Rwf77,000, while routers, which can connect 4G internet to over 30 computers cost Rwf98,000.

Monthly subscriptions will cost Rwf20,000 for 5GB, Rwf38,000 for 10GB and Rwf73,000 for 20GB.

The pricing is relatively low because the target is to reach 95 per cent of the Rwandan population within the next three years. Both ORN and the retailers will have to continually work out ways to make the service affordable.

During the trial phase, there were concerns over costs and pricing and the fact that the launch date has been set, is sign that there is some progress.

"Other internet options will still be available for normal users. 4G is meant for people and companies that rely on superfast internet, that is why it is a bit expensive," a source told The New Times last week.

"Each telecom company is negotiating with ORN individually, so they will definitely not have a uniform charge."

Rhee Dongwon, an official at ORN, declined to divulge details of the negotiations, although he pointed out that the deadline is tentative.

"We will revert back to you when we finalise on the date of commercial launch," Dongwon said in a statement.

The Regulator, Rwanda Utilities Regulatory Authority (Rura), had to intervene to build a consensus but was very strict with the launch date, saying all discussions must not derail the September launch schedule.

Patrick Nyirishema, the Director General of Rura, explained that disagreements are "normal" and that the government is closely following the outcomes.

"There is nothing strange when parties involved agree on important commercial arrangements," he said.

"When they agree, they will go ahead and will not need Rura's intervention. But in case they disagree, we have to come in and facilitate an agreement," Nyirishema said.

Both ORN and the retailers have made investments and are looking at how best they can get returns from their investments.

When contacted, Tigo said they were "absolutely ready."

"Tigo is committed to the success of 4G high-speed mobile internet in Rwanda and throughout Africa. Tigo in Chad launched the first 4G pilot service in Central Africa (in July). With a strong record of digital innovation over a long period of time, Tigo looks forward to offering such services and working with any partner to deliver this," Yasmin Amri Sued, the Tigo brand and communication manager, told The New Times.

In June 2013, The government and KT Corporation - the largest integrated telecommunications service provider in South Korea - signed a shareholders agreement to establish a Joint Venture (JV) Company to deploy a high-speed (4G LTE) broadband network to cover 95 per cent of the population in three years.

During the signing of the joint venture, the Minister for Youth and ICT, Jean-Philbert Nsengimana, described the agreement as "a major step in Rwanda's drive to become a modern, knowledge-based economy."

As principal shareholders, KT's role was to bring in expertise and make staged cash injection of around $140 million, while the government equity investment in the JV included assignment of its extensive (over 3,000 km) national fibre optic network assets, spectrum and a wholesale-only operator license. Debt and vendor financing will be sourced to complement these equity contributions.

The deployment of high-speed broadband capability in Rwanda is geared towards accelerating development of the country's ICT sector, create jobs, as well as help facilitate socio-economic progress.

Based on recent reports published by the International Telecommunications Union (ITU), 95 per cent broadband penetration would translate into a 10 to 13 per cent boost in GDP growth for Rwanda.

KT and Rwanda will also seek opportunities to extend the business model of the joint venture to neighbouring countries.

Rwanda targets to have 95 per cent of citizens connected to the internet by 2017. According to Rura, 20 per cent of the population were active internet users by March 2014.

The government wants to make ICT service provision a major driver of the Economic Development and Poverty Reduction Strategy (EDPRS2) blueprint.

By connecting all sectors of the economy to ICT services, the government aims at achieving the EDPRS2 targets by 2018.


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