13 November 2017

Uganda: Internet Costs Drop By 73 Percent in 3 Years

Photo: The East African
A mobile phone subscriber surfs the Internet.

Kampala — The cost of internet in Uganda has dropped by 73% to US$70 per Mbps over the past three years, signaling a reduction in the cost of doing business.

In an exclusive interview with The Independent, the Executive Director of Uganda Communications Commission, Godfrey Mutabazi said, the drop in cost is as a result of the implementation of the fourth generation licensing regime that recently earned the commission an award from the International Telecommunication Union (ITU).

"The current policy demands that we maintain an open technology neutral licensing regime that only distinguishes between service and infrastructure provision; that is why we have been able to attract all these global brands in the last 10 years," Mutabazi said.

Mutabazi said as at the end of last June, UCC had licensed 23 Public Infrastructure Providers (PIP) - firms that distribute optic fibre to boost internet penetration. It had also licensed over 30 public service providers (PSPs) - which provide data and voice services.

He said that the entry of the big fibre firms has meant that small players like telecom companies maintain some of their own fibre but not invest in new ones because they can be supplied by the big ones.

This, according to Mutabazi, makes small players such as like telecom firms record capital expenditure savings which ultimately translates into reduced retail prices for internet and more uptake of the service.

Available data from the UCC indicates that the sector registered an estimated 14.5% growth in mobile internet subscription (1,698,215 new subscribers) and a 3.2% growth in fixed internet subscription (4,850 new subscribers) in the period April - June, 2017.

In the same period, the estimated internet users increased by 3.7% from 16,484,312 to 17,102, 456. Internet penetration increased from 43.8% to 45.4% (1.6% increase) in the same period.

Going forward, Mutabazi said that the UCC has procured a quality of service equipment to enhance its monitoring and provision of billing and metering assurance so as to deal with complaints related to data losses by some telecom customers.

The reduction in internet price is not only benefiting private sector players.

On Oct. 30, the National Information Technology Authority Uganda (NITA-U) announced a reduction in the price of internet bandwidth for government offices from US$190 per Mbps to U$70.

This meant all Government Ministries, Departments and Agencies (MDAs) would get connectivity through the National Backbone Infrastructure (NBI) at the new price in the market.

Through its NBI, NITA-U has over 2,400km of fiber laid across Uganda and in a number of towns and plans to extend to more towns. The IT authority plans to have connected 730 MDAs by the end of FY 2017/18 up from 321 MDAs connected presently.

"... this effort has been deliberate and we are happy to have led the industry in reducing the cost of connectivity to government offices by over 84% since 2010, when 1Mbps cost a government office US$1200 compared to the current cost of US$70 for 1Mbps," James Saaka, the executive director of NITA-U explained in a notice.

NITA's new move was in response to the government's recent decision to buy internet services from the struggling Uganda Telecom arguing that it was offering them a better deal at US100 per Mbps compared with NITA's US$300 per Mbps.

Data service providers have welcomed the reduction in price. Ali Balunywa, the sales and distribution director at Airtel Uganda told The Independent that the reduction would benefit businesses and a very big youth population in Uganda spending most of their time on social media trying out many things.

"... .for us the drop in price of internet means the customer get better experience and affordability," he said.

In terms of policy, he said, there is need for collaboration between the private sector and the government in line with provision of services like electricity and other infrastructure related services in hard to reach areas so as to lower cost of investment in the communication sector.

Balunywa said that the licensing regime has allowed many players to join the market and will see more affordable services coming to the market much faster than it is at the moment.

Michael Niyitegeka, an ICT consultant and internet user told The Independent that the downward movement of price of internet is good at the moment because it would support business growth and ease usage of the service.

He urged government to give incentives to importers of internet using devices so as to deepen penetration and use of internet on the market.

He however, said that as the price goes down, and more service providers join the market, the UCC must enhance its monitoring mechanisms to ensure that the consumer gets value for the service.


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