[By Duncan McLeod]
Triple-play services, consisting of television, telephony and broadband Internet access, delivered over the same physical cable infrastructure, are not something one typically associates with African telecommunications. Now, however, a Kenyan company, Wananchi, is planning to bring fibre connectivity to hundreds of thousands of homes in East Africa, in the process remaking how a continent thinks about what can be done with high-speed connectivity.
Mobile operators have done a great job of wiring up Africa, bringing voice telephony and even basic Internet access to hundreds of millions of people for the first time.
Companies such as MTN, Zain, Vodacom and Orange have stepped in where the incumbent fixed-line operators — which are still owned by the state for the most part — have failed. Mobile networks are changing the continent, facilitating in-country and cross-border business, and helping improve the lives of millions of people. And it’s all been achieved through a bit of good, old-fashioned competition between commercial operators.
Yet African consumers still don’t have access to the sort of broadband pipes that people in Asia, Europe and North America take for granted. Where high-speed broadband is available, it’s usually expensive and too often unreliable. Wananchi, flush with several hundred million dollars of funding, wants to change that, bringing fibre-optic networks directly into Kenyans’ homes.
The story of telecoms in Kenya is a remarkable one for the speed at which it has changed. Until a couple of years ago, accessing the Internet in the East African nation was a prohibitively expensive exercise. A lack of international Internet bandwidth — traffic was carried over satellite — meant a simple digital subscriber line service was out of reach of all but the richest Kenyans.
The picture has changed dramatically with the liberalisation of the market, the introduction of new competitors and the construction of three undersea telecoms cable systems. Three years ago, Kenya had no access to submarine cable infrastructure. Today, Seacom, Eassy and Teams all land there. From having among the most expensive international access charges, the country now has among the lowest.
Now, thanks to this new infrastructure, and a market-friendly regulatory environment, investors are pouring money into the East African nation. The government has sold a majority stake in the fixed-line incumbent, Telkom Kenya, to France Telecom; competition in the mobile space is reasonably robust; and new competitors are entering the market, their pockets bulging with cash.
Wananchi, for one, is investing US$200m. Backed by Cisco Capital and East Africa Capital Partners, the company is building a WiMax wireless broadband network in Kenya’s cities and towns, as well as in Dar es Salaam in Tanzania.
But it’s not the WiMax network that has caught people’s attention. Rather, it’s Wananchi’s plan to roll out a last-mile fibre network in Nairobi and Mombasa and, in so doing, deliver what’s probably the first triple-play fibre solution in sub-Saharan Africa.
Though the focus initially will be on the cities and big towns, Wananchi expects it will eventually take fibre connectivity into even the remotest towns in Kenya. Over time, it plans to offer residential customers in the cities access to the Internet at blistering speeds of up to 150Mbit/s.
The company, which enjoys the backing of Mark Schneider, founder of US triple-play giant Liberty Global, has already begun marketing its services under the Zuku brand, offering always-on Internet connectivity for less than R140/month. “It’s Africa’s turn to get this type of technology,” says Schneider. “The wireless business has become a powerful driver but there are lots of things it can’t do that we want to bring to Africa, like video entertainment, which needs very high-speed broadband connectivity.”
Wananchi is sourcing content and plans to offer a top-end package of broadband Internet access and a bouquet of more than 100 television channels for about R500/month. These are the sorts of prices consumers elsewhere on the continent — including South Africans — only dream about. The questions the rest of the continent needs to ask now are: what has Kenya done right to attract this sort of investment, and how can the rest of us emulate it?
Richard Bell, CEO of East Africa Capital Partners, says Wananchi would love to replicate what it’s doing in Kenya in SA, but he says the regulatory environment precludes it from investing here. It’s a real pity when investors with deep pockets are turned away because of inaction or failure on the part of policy makers and regulators.
Wananchi is not the first company to wrinkle its nose at SA and head to Kenya instead. Despite winning a high court victory that helped liberalise the SA telecoms market, JSE-listed Altech instead elected to pump billions of rand into building fibre networks in countries in East Africa, rather than in its home market.
Our policy makers and regulators ought to be embarrassed that they presided over an environment that let it happen.
- Duncan McLeod is editor of TechCentral; this column was first published in MTN Business’s customer magazine, [email protected]
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