London — Africa's ISPs are not well known for innovating in data markets dominated by mobile operators. Most survive on a diet of corporates and high-end household users. But now Kenya has three operators - Surf, POA! Internet and Moja Wi-Fi - all of whom are looking to find new user markets in places and at price points that are currently underserved.
Africa's ISPs have stayed in a narrow market niche: companies wanting connectivity and household connections for wealthier clients. There have been challengers who have stepped out of the niche, companies like Afrimax and Smile. They have expanded their subscriber base but it has not bought them commercial success.
The three Kenyan companies - Surf, POA! Internet and Moja - are all trying to find a place and a price where internet access makes sense. Surf is focused on public hot-spots, POA! Internet is increasingly focused on low income household users and Moja Wi-Fi on public transport.
Each has a different approach to pricing. Surf is looking at creating an advertising-supported access offer. POA! Internet wants to create an operating cost base that will allow it to adjust its prices to get low-income customers. Moja Wi-Fi is taking a hybrid approach, taking payment for giving access to particular operators who need access to its users. In both the case of POA! Internet and Moja Wi-Fi content has been a serious lure for users.
What follows are brief sketches of the different approaches adopted. Surf's Mark Summer says:"Our goal is never to be an ISP." Brave words that might lead to new business models that will allow more Africans to access the Internet and to do so in many different places
Surf has over 1000 Wi-Fi hot-spots covering Kenya's most populated cities including Nairobi, Mombasa, Kisumu, Eldoret and Naivasha. In early 2018, it was probably covering around 50% of the population.
The majority of these offer Express Wi-Fi on the Facebook created platform and offer free access to Facebook. The remainder operate as Surf hot-spots, more of which in a moment. Surf's internet connectivity supplier is Internet Solutions who are piloting consumption based pricing for corporate customers (See Internet News).
Prices start at KS15 and you can get 2GB for KS100. One of the pains of accessing Internet is data expiring so Surf has been experimenting with different validity periods: for example, you can get 4.5 GB for 30 days at KS350. The majority of active users - currently in the tens of thousands - use 100 MB but there are a smaller number who produce the majority of the revenues. At the low end of usage, it's WhatsApp and Facebook and at the higher end there's lots of video. You also get people running their business on the internet, selling things through WhatsApp groups. Summer describes the users as "lower middle class, aspirant."
Surf Spots are advertising supported. Summer says:"It's a customer base that advertisers don't know how to interact with. The advertisers are digital first advertisers. It's companies trying to get people to sign up to their apps".
"Over next 6-12 months we'll replicating what we've done well or got right in other parts of Kenya and elsewhere".
POA! Internet offers Wi-Fi hot-spots and a home Wi-Fi service in three low income and rural areas. It operates in Kibera, Kawangware and Kiambu County. The first two are urban low income areas and the latter is a rural area just under an hour outside Nairobi. POA! Internet's CEO Andy Halsall says:"In rural areas, it's all about price and availability. Outside the towns and off the main roads there is little or no 3G or 4G".
The Wi-Fi hot-spots have tens of thousands of customers and the home Wi-Fi customers are in the thousands:"There is customer growth in the areas we're targeting: urban low income and rural areas that are underserved by the 'big guys' We've got to get it to them at a price that's viable for them".
It offers KS10 (US10 cents) per hour for hot-spot users, KS50 (US50 cents) for a day; and KS350 (US$3.50) for a week. Home users pay KS1500 (US$15) a month. All these offers are unlimited.
"Our home customers consume an average of 35 GB per month. It's a large amount of data at a low price point. US$15 is relatively high in these areas but it's still cheaper than the competition. We're still at the higher end of the spectrum and we aim to get the price lower". It has been able to negotiate better wholesale bandwidth deals in a market (Nairobi) where there is plentiful competition and prices are falling.
Moja Wi-Fi is a free public wi-fi service focused on public transport launched by Erik Hersman and based around its BRCK rugged router: its latest version is called SupaBRCK.
SupaBRCK's internet connection is possible via mobile data. The device can hold 3 SIM cards with support for both 4G LTE and 3G network. It connects users to the internet via Wi-Fi network, and the network can support up to 100 users simultaneously with no loss of quality.
SupaBRCK also has the content delivery network (CDN) capability, which allows companies or individuals where they can store their content locally. This setup reduces data cost as some of the content are stored locally on the device itself as opposed to downloading them from the internet.
This year Moja Wi-Fi has rolled out in Nairobi and Kigali. Anybody who gets on the bus or matatu can get connected. As Hersman sees it:"80% of people who have smartphones don't pay for connectivity. We don't target the people who pay".
There 850 hot-spots of which 750 in Nairobi and 100 in Kigali and there will be 400 more in Kigali in the next two months. There are a number of static SupaBRCK hot-spot locations. (wait for a later issue for a more detailed article on Moja Wi-Fi).
It has 350,000 active users per month and the ratio of users between Nairobi and Kigali is three to one. In Kigali it has a grant from the Government that covers the cost of the backhaul of a high-speed backhaul through KTRN. So how long do people spend on it on matatus? It varies depending on the traffic: 45-60 minutes on the busy Thika Road but only 10 minutes on the much improved Ngong Road.
The user has local access to a range of content loaded on the server and updated regularly. Facebook offers free updates to its app and they can access loans from local online start-up loan company Tula. There are TV shows, books, music and music videos:"We local cache hyper locally." The content offered includes Yes TV and the locally popular Shamba Shape Up.
Last week Kamal Bhattacharya resigned as Safaricom's Head of Innovation. Someone has to be innovating how data is provided. These companies may not yet of got it right but they're working hard to try and find some new answers.