Things could not shine brighter for ICT industry - Daily Nation

Things could not shine brighter for ICT industry

Sunday January 3 2010

By NATION Correspondent

After a slump in 2009 due to the global credit crunch, the ICT industry is renewing hopes of recovery and can look forward to a sustained, slow revenue growth in 2010, industry analysts say.

Information technology research firm, International Data Corporation (IDC), says two themes will dominate events in the IT and telecoms markets in 2010; recovery and transformation. And, with a global economic reclamation widely anticipated, modest growth in IT and telecoms spending is expected.

Muriuki Mureithi, a consultant with Summit Strategies, says since 2009 was a year dedicated by most operators to building infrastructure, he expects the focus to shift to customer differentiation in 2010. “I expect more focus on quality of service to the customer, the introduction of a wider range of services and products to address the niche markets and, certainly, very low prices for voice services,” Mr Mureithi says. 

The consultant expects that the government, through the Ministry of Information and Communications, will continue to jump-start areas that have been slow, such as Business Processing and Outsourcing (BPO) and ICT parks. In 2010, analysts say mobile phone operators will intensify their focus on data provision as revenues from voice calls near saturation. Already, Telkom Kenya’s Orange, Zain Kenya and Yu have announced plans to roll out 3G networks this year.

The 3G technology is designed to enable mobile operators to offer their clients a wide range of advanced services, including high-speed Internet, while achieving greater network capacity. Safaricom was first to roll out 3G services in the country when it obtained a licence in October 2007. It has around 1.65 million 3G customers.

Demand growing

With the country now linked to two under-sea fibre-optic cables, the demand for data services in Kenya is growing, and mobile telephony operators are keen to capitalise on it.

According to the latest global statistics, 3G networks all over the world are facing capacity issues as mobile broadband becomes more popular. It is predicted that 3G mobile broadband users will soar to over two billion worldwide in the next five years.

Although in 2009 the country was connected to two under-sea fibre-optic cables, little was done to lower retail bandwidth prices. In June this year, the East African Submarine System (EASSy) is expected to go live, and it is anticipated this will ignite a competition that will drive down Internet prices.

The company terms Kenya’s Internet market as an oligopoly that lacks competitive pressure that would yield better pricing. The debate is informed by the high expectations last year that the landing of the cables would offer consumers access to high-speed Internet and significantly reduce prices.

The move by mobile phone operators to provide Internet services is also expected to continue driving down consumer prices, and there are reports that a fourth cable — LION (Lower Indian Ocean Network) — might land at the Kenyan coast this year. France Telecom, which owns 51 per cent of Telkom Kenya, is involved in the construction of the cable, which connects Madagascar, the Reunion Islands and Mauritius.

New communications regulations that cut across the ICT industry and seek to address outstanding consumer issues are expected to be implemented. Among the new guidelines are requirements by industry operators to submit to the Communications Commission of Kenya (CCK) any intended change of their tariffs for approval.

In this year also, mobile phone money transfers will continue to play a critical role in bridging the gap between the banked and the unbanked. Traditional money transfer firms will face tough times even as banks come up with new strategies to counter the competition, which will stiffen after Nokia, the Finland-based firm, launches Nokia Money, a service for extending cash transfer that targets 300 million subscribers.