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High charges hurting ICT growth

Wednesday December 16 2009

By ALLAN NGUGI

THE GROWTH OF KENYA’S INformation and Communications Technology sector has, in the last 10 years, been nothing short of phenomenal.
From the huge growth in mobile telephony to the use of computers and the Internet, the industry, now estimated to be worth Sh10.5 billion, is a real success story by most yardsticks.

But there remain various obstacles that continue to hamper an even bigger explosion in this sector.

They range from the still quite high cellphone airtime and inter-connectivity rates charged by some of the providers, refusal to bring down Internet rates especially for retail users despite the coming of the fibre-optic cable, and what some observers view as a near-monopolistic regime in a sector that was liberalised only 10 years ago.

These high charges, instead of helping boost the economy, say some economic analysts, actually impede growth as they do not foster optimum business activity, but instead only create enormous wealth for a few individuals.

This may be what has led a frustrated government to contemplate forcing the prices down through controls.

As the most rapidly expanding economic engine, this sector could quickly become the nation’s cash-cow and a source of skilled, youthful employment.

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According to the most recent United Nations Development programme (UNDP) report, which ranks the development status of countries globally, Kenya is third in ICT growth after the continent’s powerhouses, South Africa and Egypt.

The country’s Internet usage currently stands at 3.5 million but this is for PC-based users only. This is bound to leap substantially when the uptake of mobile Internet services fully takes root. Kenya is already fourth in Africa in this medium.

This huge potential in an industry that is still below 60 per cent of capacity in the mobile sector and less than 10 per cent for the Internet is not lost on both the government and other players.

A LEGITIMATE CONCERN IS THAT some major stakeholders, already raking in billions, have not only done their best to curtail efforts to substantially reduce charges, but also resist portability — that which allows customers to call across networks cheaply.

This is an obstacle that has seen the Prime Minister, the PS for Information and Communications, Dr Bitange Ndemo, the CCK and others express outrage and vow to change all this. The stakes are too high for monopolistic tendencies to be allowed to thrive.

Just as bad is that when the much-hyped fibre-optic cable landed, the hopes of many Kenyans for cheaper Internet prices were quickly dashed by the same players. The super-speeds came but the same prices remained.

Just why fibre-optic which costs 90 per cent less than the satellite system would not lead to even a modest drop in prices is mystifying.

If a major Internet company such as Kenya Data Networks whose officials have been calling for a vast drop in prices could afford to cut theirs by 90 per cent and they are a major stakeholder in some of the fibre-optic companies, why not the others?

Consumers are getting severely short-changed by these expensive, communications-unfriendly services. The economy is the other major loser.

Lower charges would mean wider usage, more and cheaper transactions, growth in the sector, and, ironically, more money in the bank for the for the ICT-based corporations.

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