6 February 2016

Africa: Netflix Forays Have Broadband Providers Quaking in Their Boots

Photo: Netflix
Netflix

Following the recent expansion of American online content streaming company Netflix around the world, Internet users in Rwanda are wondering whether they will enjoy quality online entertainment given limited broadband and prohibitive prices in the country.

The Internet television offers excusive and original content to its subscribers who have broadband connection to view live TV programmes, series, movies, documentaries and other types of entertainment on any smart device anytime, anywhere.

The online media company is famous for the service known as Video on Demand (VoD), a video content offering on Internet that is cheaper than some pay-TVs that offer the same content at exorbitant subscription prices.

However, some local online entertainment consumers say the world-leading Internet TV might not be the game changer that it is billed to become if Internet Service Providers (ISPs) and mobile network operators (MNOs) do not assess the market to align their data revenue strategies with the new entertainment model that could increase broadband demand.

Netflix requires one gigabyte of data per hour for each stream of standard-definition video and up to 3 GB per hour for HD video (high quality images). This also can apply to other Internet live streaming services.

A consumer pays Rwf3,900 per hour of streaming video using 4G LTE bundles. Tigo Rwanda subscribers pay Rwf7,800 for two hours of live streaming in HD, which translates to Rwf241,800 a month, while monthly data subscription on Tigo, at Rwf39,000, will buy only 10 hours of video content. However, watching the same two hours a day costs Rwf234,000 a month on Netflix.

A bundle of 1GB at MTN is Rwf2,000 while Airtel charges 1.5GB at Rwf800 for a daily pack but every user chooses their consumption preference. Some can spend more or less than Rwf234,000 per month.

Lee Ndayisaba, a recent Netflix subscriber who has knowledge in VoD services, believes ISPs and MNOs will assess the market and change their data revenues to reap from the entry of Netflix and related online content service providers into the market.

"Somebody might see an opportunity in upgrading their Internet platforms to give more Internet because now people have a reason to look for Internet," Mr Ndayisaba told Rwanda Today in an interview.

According to Mr Ndayisaba, Internet users mainly check emails, upload or download files and watch some videos on YouTube. But with Netflix, there are "millions of hours of content that they can watch from home at a little money," hence increasing their broadband demand.

"I think ISPs will have to reassess the market and the demand," he said.

Netflix recommends between 1.5 megabytes per second broadband connection speed and 5.0 mbps for HD.

John Mugabo, an Internet user in Kigali, said the bandwidth (consumed information capacity per second) is often unstable as the ISPs offer less bandwidth than what consumers desire, slowing the connection.

According to latest figures from Rwanda Utilities Regulatory Authority (Rura), only 20,700 Internet subscribers had access to broadband (more than 256kbps) in September 2015.

There are many factors industry experts link to unreliable Internet, including service providers and technologies.

"I think the technology which is widespread is 3G," said Johnny Kayihura, CEO of Axiom Networks, a local ISP that serves businesses. "It is a 'shared bandwidth technology,' whereby if you have 100 users around one area who are connecting to the base station next door, you are all sharing the capacity that is on that base station.

"So, if you go to another area which has only 10 people, and another with 1,000, there is no way it can deliver quality service."

According to Mr Kayihura this also applies to 4G LTE.

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