Five East African countries will have invested a combined US$400 million in terrestrial fibre optic cables when work is completed on national fibre optic backbones that each is at different stages of building.
When complete, this vast network will carry Internet connectivity from the border with South Sudan in the north to Tanzania’s border with Zambia and Malawi in the south and the Democratic Republic of Congo in the west.
The terrestrial link, which is dubbed the East Africa Backhaul System, will then link into the submarine fibre optic cables on the East Africa coast.
This fibre, which covers more than 15,600 kilometres, links the five countries of Uganda, Kenya, Tanzania, Rwanda and Burundi, will create the largest inter-linked region on the continent.
In January, Rwanda completed work on her 2,300km cable at a cost of $60 million. Korea Telecom (KT) undertook the fibre-laying work.
The cable covers the capital Kigali, links to the country’s main border posts with Uganda, Burundi, Tanzania and DR Congo.
It also covers all the four provinces, links into the main Police headquarters, universities and other remote government and administrative offices.
Tanzania is continuing with work to lay its more than 10,000 kilometre cable, costing some $170 million. Professor John S. Nkoma, the Director General of Tanzania Communications Regulatory Authority (TCRA) said linking the cable to the main borders with Malawi, Zambia, Kenya, Uganda, Rwanda and Burundi is almost done.
Nkoma was speaking in the Rwandan capital during the 18th Congress of the East Africa Communications Organisation (EACO) – an umbrella body for the telecoms regulators in the region.
Nkoma said private operators in Tanzania have got to pick up the cable to reach those areas that will not have been reached by the national backbone cable.
Phase one of the project covers 7,000 kilometres and the second phase will cover 3,000 kilometres. Like all the others, Nkoma said the Tanzania facility will be deployed by government to promote e-governance, e-health, e-commerce and e- learning.
Burundi is currently laying a 1,300 kilometre cable at a cost of $10.5 million, a grant from the World Bank.
The cable will cover key entry points—two on the Rwandan border and one on the Tanzanian side. The cable will also cover the capital Bujumbura and all the 17 provinces. ZTE of China has been awarded the tender to lay the cable.
Salvator Niyibizi from Burundi’s Ministry of Transport, Posts and Telecommunications told the Congress that the first phase is expected to be ready early next year.
The cable is expected to reduce the cost of internet access by more than 70 percent. Today, internet users in Burundi pay the highest for connectivity with operators parting with $3000 megabytes per second per month for bandwidth via satellite.
In Uganda, the government acquired a Chinese loan of about $102 million to lay the 2,100 kilometres plus cable, which has been embroiled in a corruption scandal and is more than 18 months behind schedule.
Patrick Mwesigwa, the acting head of Uganda Communications Commission (UCC) told the Congress that is implementing the backbone project in three phases with the first phase already done.
Work on phase two, which link the south of the country to the north is due for completion at the end of this year.
Phase three, which will connect the cable with Rwanda, is expected to begin in the course of the second half of the year.
“By mid-next year, the national backbone should be completed,” Mwesigwa said. He noted that the Ugandan cable has two components—one has linked all government offices and another with spare capacity for the private operators to lease.
The Kenya government is also investing $60 million in a fibre cable of its own. The National Optic Fibre Backbone Infrastructure (NOFBI) is being implemented by Chinese firms Huawei, ZTE and a third firm, Sagem.
Unlike the other countries of East Africa, Kenya’s private sector has laid a lot of the fibre optics. Some 5,000 kilometres of fibre had been laid by the private players by June 2010.
The five partner states plan to link their cables in one network to lower the cost of communication by increasing the speed and capacity of internet connectivity.
Telecommunications regulators from these partner states are also pushing for a regional internet exchange point to keep traffic within the region local.
Tuesday, May 31, 2011
Samsung to invest US$140m in Africa push
Consumer electronics manufacturer Samsung Electronics will invest US$140 million in an African push that is aimed at growing sales revenue, build assembling plants and engineering academies sponsor research projects and fight counterfeits.
George Ferreira, Samsung Africa’s chief operating officer said this investment will further be injected in growing its market share, increase distribution of its products on the continent and engage governments to lower import duty on electronic products.
“Our investments in Africa in the next five years will be approximately $140 million,” Ferreira said in a phone interview following the conclusion of the five-day Samsung Africa Forum 2011 that concluded in Nairobi on Friday.
This year alone, the firm plans to invest another $40 million in Africa, with a target to more than double sales revenue.
“Our plan is to grow approximately 60 percent this year and for the next four years, we should be growing approximately 45 to 55 percent every year,” Ferreira said.
He said that in 2010, the firm’s sales revenue from Africa grew by 31 percent to reach $1.2 billion. The company has set itself a sales target of $10 billion by 2015.
Globally, Samsung Electronics revenue hit $135.8 billion in 2010 with an ambitious vision to reach $400 billion by 2020.
Samsung used the Nairobi forum to display some of its products ranging from mobile devices, laptop computers, digital cameras, internet-connected televisions, refrigerators and washing machines.
Ferreira said Samsung wants to lead the African market by 2015, something that will see the company overtake long standing market leaders like Sony, Nokia and South Korean rival, LG Electronics.
Today, Samsung operates in 42 African countries from a mere 15 in 2009.
With its Africa headquarters in Johannesburg, South Africa, Samsung has opened regional offices in Nigeria for Western Africa and Kenya for Eastern Africa.
In the mobile handset segment of the market where the company largely rivals Nokia, it claims a market share of about 20 percent with Nokia leading with a share of between 35-37 percent according to Ferreira.
“On mobile handsets, we want to get over 30 percent of market share. This will then put us on a par with Nokia,” he said.
He said Samsung has overtaken Nokia in western Europe in the mobile market and seeks to do the same in Africa.
“To me it’s not whether we will beat Nokia or not. It’s only a matter of time because globally, we are overtaking Nokia,” he said.
In terms of research, Samsung already runs an engineering academy in South Africa and is looking to replicate it elsewhere on the continent with the goal of graduating 10,000 electronics engineers in Africa by 2015.
The Nairobi forum, coming after the very first one last year in Johannesburg served as a platform to demonstrate Samsung’s strategy as well as innovations that the company has to offer.
The forum focused on introducing localized products that cater for the African lifestyle.
Earlier in the week, Samsung Africa president, Kwang Kee Park, said, the company will largely focus on Africa’s top 10 economies, which together generate 79 percent of the continent’s wealth and house almost 47 percent of the population.
George Ferreira, Samsung Africa’s chief operating officer said this investment will further be injected in growing its market share, increase distribution of its products on the continent and engage governments to lower import duty on electronic products.
“Our investments in Africa in the next five years will be approximately $140 million,” Ferreira said in a phone interview following the conclusion of the five-day Samsung Africa Forum 2011 that concluded in Nairobi on Friday.
This year alone, the firm plans to invest another $40 million in Africa, with a target to more than double sales revenue.
“Our plan is to grow approximately 60 percent this year and for the next four years, we should be growing approximately 45 to 55 percent every year,” Ferreira said.
He said that in 2010, the firm’s sales revenue from Africa grew by 31 percent to reach $1.2 billion. The company has set itself a sales target of $10 billion by 2015.
Globally, Samsung Electronics revenue hit $135.8 billion in 2010 with an ambitious vision to reach $400 billion by 2020.
Samsung used the Nairobi forum to display some of its products ranging from mobile devices, laptop computers, digital cameras, internet-connected televisions, refrigerators and washing machines.
Ferreira said Samsung wants to lead the African market by 2015, something that will see the company overtake long standing market leaders like Sony, Nokia and South Korean rival, LG Electronics.
Today, Samsung operates in 42 African countries from a mere 15 in 2009.
With its Africa headquarters in Johannesburg, South Africa, Samsung has opened regional offices in Nigeria for Western Africa and Kenya for Eastern Africa.
In the mobile handset segment of the market where the company largely rivals Nokia, it claims a market share of about 20 percent with Nokia leading with a share of between 35-37 percent according to Ferreira.
“On mobile handsets, we want to get over 30 percent of market share. This will then put us on a par with Nokia,” he said.
He said Samsung has overtaken Nokia in western Europe in the mobile market and seeks to do the same in Africa.
“To me it’s not whether we will beat Nokia or not. It’s only a matter of time because globally, we are overtaking Nokia,” he said.
In terms of research, Samsung already runs an engineering academy in South Africa and is looking to replicate it elsewhere on the continent with the goal of graduating 10,000 electronics engineers in Africa by 2015.
The Nairobi forum, coming after the very first one last year in Johannesburg served as a platform to demonstrate Samsung’s strategy as well as innovations that the company has to offer.
The forum focused on introducing localized products that cater for the African lifestyle.
Earlier in the week, Samsung Africa president, Kwang Kee Park, said, the company will largely focus on Africa’s top 10 economies, which together generate 79 percent of the continent’s wealth and house almost 47 percent of the population.
Friday, April 29, 2011
Uganda Telecom ordered to pay Ush3.5b to MTN Uganda
The Commercial Court has ordered Uganda Telecom to pay MTN Ushs5billion as part of monies owed in Inter-Connect Fees for the period 2008-2009.
The Head of the Commercial Court, Justice Geoffrey Kiryabwire, ruled against UTL in the principal sum of Ushs3.5billion, with interest up to October 2008 amounting to Ushs1.5billion, and additional interest of 19% of the full amount until payment is made in full.
Court also awarded MTN Uganda damages of Ushs100million.
MTN last month issued a public notice against Uganda Telecom over a Ushs20billion debt accumulated in unpaid interconnect fees collected from subscribers but not remitted to MTN as per contract. The ruling constitutes one of the debts MTN sued for.
The case, the first of two, was a lawsuit MTN brought against UTL for not paying fees accumulated on the Gemtel code.
MTN sued for Ushs3.48 billion and claimed interest at a rate of 19% per annum, which as of October 2008 stood at Ushs1.5billion. MTN also sought general damages of Ushs500million.
UTL in its defence said it did not owe any money as the traffic was deemed to be international traffic charged at a different rate, Justice Kiryabwire said traffic originating from MTN to UTL code +256477xxx is local traffic and not international traffic as claimed by UTL in their defence. He therefore ruled that the claim by MTN Uganda was successful.
MTN meanwhile has another case in court against UTL for the sum of Ushs7.2billion, and Court noted that the contentious issues in the second case are the same as those in the first case.
Justice Kirywabwire advised both parties to enter into a consent judgement on the grounds that the issues in contention are similar to the ones in the case just concluded in MTNs favour.
He ordered both parties to reconcile of the figures in question out of court and report back on May 23rd for hearing.
"These two cases were for the period 2008 and 2009. For the period 2010 alone we have done a joint reconciliation, and UTL has acknowledged that they owe us Ushs14.6billion for the traffic exchanged during the whole of 2010, which brings the total amount owed to more than Ushs20billion. We trust that these matters will soon be put to rest so that our subscribers are not unduly inconvenienced," MTN CEO Themba Khumalo said.
The Head of the Commercial Court, Justice Geoffrey Kiryabwire, ruled against UTL in the principal sum of Ushs3.5billion, with interest up to October 2008 amounting to Ushs1.5billion, and additional interest of 19% of the full amount until payment is made in full.
Court also awarded MTN Uganda damages of Ushs100million.
MTN last month issued a public notice against Uganda Telecom over a Ushs20billion debt accumulated in unpaid interconnect fees collected from subscribers but not remitted to MTN as per contract. The ruling constitutes one of the debts MTN sued for.
The case, the first of two, was a lawsuit MTN brought against UTL for not paying fees accumulated on the Gemtel code.
MTN sued for Ushs3.48 billion and claimed interest at a rate of 19% per annum, which as of October 2008 stood at Ushs1.5billion. MTN also sought general damages of Ushs500million.
UTL in its defence said it did not owe any money as the traffic was deemed to be international traffic charged at a different rate, Justice Kiryabwire said traffic originating from MTN to UTL code +256477xxx is local traffic and not international traffic as claimed by UTL in their defence. He therefore ruled that the claim by MTN Uganda was successful.
MTN meanwhile has another case in court against UTL for the sum of Ushs7.2billion, and Court noted that the contentious issues in the second case are the same as those in the first case.
Justice Kirywabwire advised both parties to enter into a consent judgement on the grounds that the issues in contention are similar to the ones in the case just concluded in MTNs favour.
He ordered both parties to reconcile of the figures in question out of court and report back on May 23rd for hearing.
"These two cases were for the period 2008 and 2009. For the period 2010 alone we have done a joint reconciliation, and UTL has acknowledged that they owe us Ushs14.6billion for the traffic exchanged during the whole of 2010, which brings the total amount owed to more than Ushs20billion. We trust that these matters will soon be put to rest so that our subscribers are not unduly inconvenienced," MTN CEO Themba Khumalo said.
Friday, April 1, 2011
East Africa cyber laws coming to boost e-commerce
The five member states that make up the East African Community (EAC) are drafting a harmonised cyber law that is aimed at boosting electronic commerce.
The law will focus on intellectual property rights, competition, e-taxation and information security.
The five states are all at different stages of passing country-specific laws on cyber crime. Late last year, Uganda passed the Computer Misuse Bill, the Electronic Signatures Bill and the Electronic Transactions Bill, which have since become law.
Through the EAC association of telecommunications regulators, the states have in the meantime resolved to set up Computer Emergency Response Teams (CERTs) to fight against cyber crime.
The law formulation process which is now underway by the EAC task force on cyber laws is aimed at harmonizing existing legislation like Uganda’s to come up with a law that will apply across Uganda, Kenya, Tanzania, Rwanda and Burundi.
The taskforce, which has been meeting in Kenya’s coastal city of Mombasa, hopes to finalise on the draft cyber laws and submit them for adoption by respective institutions.
The Mombasa meeting is a follow up of the phase one cyber laws discussions, endorsed by the EAC Council of Ministers last November, that covered electronic transactions, e-signatures and authentication, data protection and privacy, consumer protection, and computer crime.
Lack of harmonisation of cyber laws by regional member states is not only stifling electronic commerce, but has also created a loophole in curbing computer related crimes, data and consumer protection.
“Developing country officials are increasingly aware of the need to adapt and harmonise legislation to take into account the Internet economy and the potential of both e-commerce and m-commerce for boosting domestic and cross-border business,” read a statement from the United Nations Conference on Trade and Development (UNCTAD).
“The intent is to finalise the draft and submit it for adoption by relevant EAC institutions.”
The task force meeting has reviewed progress in implementing the Cyber Law Framework’s Phase I, which covers electronic transactions, electronic signatures and authentication, data protection and privacy, consumer protection, and computer crime.
UNCTAD supports activities to build the capacities of developing countries in the Information Communication and Technology (ICT) field.
In East Africa and other regions, it has helped lawmakers prepare cyber laws that protect both consumers and businesses, and encourage economic growth.
East Africa has a combined population of about 120 million people and is now a single market as it moves towards a political federation.
Cyber crime in Africa is growing faster than on any other continent with estimates saying that about 80 percent of personal computers (PCs) on the African continent are already infected with viruses and other malicious software.
The more worrying news for cyber security experts is that broadband Internet access has become a reality, which means more users would be able to access the web, translating into more viruses and SPAM from online fraudsters in Africa.
A few countries like Tunisia and Nigeria have made some headway by way of legislation on cyber security initiatives.
Most African countries though have no legal regulations in place to stop or prosecute online crime, thus providing a safe haven for cybercriminals.
Aside from Uganda, the other EAC member states are each at different stages of developing country-specific cyber laws.
The law will focus on intellectual property rights, competition, e-taxation and information security.
The five states are all at different stages of passing country-specific laws on cyber crime. Late last year, Uganda passed the Computer Misuse Bill, the Electronic Signatures Bill and the Electronic Transactions Bill, which have since become law.
Through the EAC association of telecommunications regulators, the states have in the meantime resolved to set up Computer Emergency Response Teams (CERTs) to fight against cyber crime.
The law formulation process which is now underway by the EAC task force on cyber laws is aimed at harmonizing existing legislation like Uganda’s to come up with a law that will apply across Uganda, Kenya, Tanzania, Rwanda and Burundi.
The taskforce, which has been meeting in Kenya’s coastal city of Mombasa, hopes to finalise on the draft cyber laws and submit them for adoption by respective institutions.
The Mombasa meeting is a follow up of the phase one cyber laws discussions, endorsed by the EAC Council of Ministers last November, that covered electronic transactions, e-signatures and authentication, data protection and privacy, consumer protection, and computer crime.
Lack of harmonisation of cyber laws by regional member states is not only stifling electronic commerce, but has also created a loophole in curbing computer related crimes, data and consumer protection.
“Developing country officials are increasingly aware of the need to adapt and harmonise legislation to take into account the Internet economy and the potential of both e-commerce and m-commerce for boosting domestic and cross-border business,” read a statement from the United Nations Conference on Trade and Development (UNCTAD).
“The intent is to finalise the draft and submit it for adoption by relevant EAC institutions.”
The task force meeting has reviewed progress in implementing the Cyber Law Framework’s Phase I, which covers electronic transactions, electronic signatures and authentication, data protection and privacy, consumer protection, and computer crime.
UNCTAD supports activities to build the capacities of developing countries in the Information Communication and Technology (ICT) field.
In East Africa and other regions, it has helped lawmakers prepare cyber laws that protect both consumers and businesses, and encourage economic growth.
East Africa has a combined population of about 120 million people and is now a single market as it moves towards a political federation.
Cyber crime in Africa is growing faster than on any other continent with estimates saying that about 80 percent of personal computers (PCs) on the African continent are already infected with viruses and other malicious software.
The more worrying news for cyber security experts is that broadband Internet access has become a reality, which means more users would be able to access the web, translating into more viruses and SPAM from online fraudsters in Africa.
A few countries like Tunisia and Nigeria have made some headway by way of legislation on cyber security initiatives.
Most African countries though have no legal regulations in place to stop or prosecute online crime, thus providing a safe haven for cybercriminals.
Aside from Uganda, the other EAC member states are each at different stages of developing country-specific cyber laws.
Tuesday, March 22, 2011
African domain operators take on DCA’s Bekele
AfTLD, an organization of African country-code top-level domain operators, has announced its intention to apply to ICANN for the .africa TLD.
The initiative appears to be different to and competitive with the best-known .africa applicant to date, Sophia Bekele’s DotConnectAfrica. Considering that Bekele has been pushing for the dotafrica inititative – having received endorsements from the African Union, the Economic Commission for Africa (ECA) and other, the fact that AfTLD has jumped in this late in the process will muddy the waters.
AfTLD has said that it plans to seek a mandate for .africa from the Commission of the African Union. It also expects to discuss forming a company to manage the bid at a meeting in Ghana next month.
Vika Mpisane, AfTLD’s chairman and general manager of South Africa’s .za ccTLD, said in a press release:
“We are not just interested in .africa only, but we want to also take on .afrique, which is the French version of .africa.
“It’s only natural for us to do this because at least 50% of Africa speaks French. We also intend to have an internationalised version of .africa as well because we have significant Arabic Africa population, but we will start definitely with .africa first.”
Considering that some of the TLDs have not done a good job at running country-specific names and governments are looking to take back domains like .ug from the private interests that manage them afte realizing they are critical resources, one wonders which direction this will drive the .africa quest.
The release said AfTLD shortly intends to announce a “leading registry services provider” to run its back-end, but indicated that in future it would expect to run the registry from within Africa.
The current version of ICANN’s new TLDs Applicant Guidebook sets the bar for a .africa bid very high, in practice possibly requiring near-universal governmental support.
A bidder for this kind of protected geographic term would require letters of support from 60% of the nations concerned. For Africa, as the Guidebook defines it, that’s about 34 countries.
However, crucially, if more than one African government were to object in writing to any given .africa application, that bid could be killed off.
AfTLD has 24 ccTLD registry members. They’re not all government-run TLDs, so that doesn’t necessarily follow that it already has 24 countries on board.
A key question is whether endorsement of a bid by the African Union could be interpreted as blanket approval from all of its 53 member governments. I don’t think that’s a given, under the letter of the Guidebook.
But if it is, DotConnectAfrica may already be there. It has a signed letter from the African Union Commission chairman Jean Ping, dated August 2009, that endorses its specific bid.
The initiative appears to be different to and competitive with the best-known .africa applicant to date, Sophia Bekele’s DotConnectAfrica. Considering that Bekele has been pushing for the dotafrica inititative – having received endorsements from the African Union, the Economic Commission for Africa (ECA) and other, the fact that AfTLD has jumped in this late in the process will muddy the waters.
AfTLD has said that it plans to seek a mandate for .africa from the Commission of the African Union. It also expects to discuss forming a company to manage the bid at a meeting in Ghana next month.
Vika Mpisane, AfTLD’s chairman and general manager of South Africa’s .za ccTLD, said in a press release:
“We are not just interested in .africa only, but we want to also take on .afrique, which is the French version of .africa.
“It’s only natural for us to do this because at least 50% of Africa speaks French. We also intend to have an internationalised version of .africa as well because we have significant Arabic Africa population, but we will start definitely with .africa first.”
Considering that some of the TLDs have not done a good job at running country-specific names and governments are looking to take back domains like .ug from the private interests that manage them afte realizing they are critical resources, one wonders which direction this will drive the .africa quest.
The release said AfTLD shortly intends to announce a “leading registry services provider” to run its back-end, but indicated that in future it would expect to run the registry from within Africa.
The current version of ICANN’s new TLDs Applicant Guidebook sets the bar for a .africa bid very high, in practice possibly requiring near-universal governmental support.
A bidder for this kind of protected geographic term would require letters of support from 60% of the nations concerned. For Africa, as the Guidebook defines it, that’s about 34 countries.
However, crucially, if more than one African government were to object in writing to any given .africa application, that bid could be killed off.
AfTLD has 24 ccTLD registry members. They’re not all government-run TLDs, so that doesn’t necessarily follow that it already has 24 countries on board.
A key question is whether endorsement of a bid by the African Union could be interpreted as blanket approval from all of its 53 member governments. I don’t think that’s a given, under the letter of the Guidebook.
But if it is, DotConnectAfrica may already be there. It has a signed letter from the African Union Commission chairman Jean Ping, dated August 2009, that endorses its specific bid.
Friday, March 18, 2011
Uganda to call time on mobile phone price wars
A precedent in the very competitive and fast growing African telecommunications sector could soon be set should the Ugandan Communications Commission (UCC) move ahead with guidelines for minimum phone call tariffs.
Uganda's rapidly expanding telecommunication sector has been hit by a raging price war going back to 2010. Competition among operators for new phone subscribers is digging into profit margins and reports have indicated this will also affect government taxes.
If the regulatory move goes through, UCC will be stepping in unchartered waters as it could be the first regulator in the East African region and indeed the entire continent to practically regulate a sector that is today characterised by low tariffs. The UCC has issued a notice seeking public opinion on the regulation of telecoms call rates.
The move is in response to an ongoing price war in the telecom sector, which started in the second half of 2010 -- sparked off by Warid Telecom when it introduced near-free calls, and has stretched into 2011.
According to UCC, the new guidelines, expected to come into effect at the end of the month are aimed at curbing anticompetitive tendencies, encouraging new investments, enhancing tariff transparency and protecting consumers.
"By the end of this month we hope to come out with a position on the call tariffs," Isaac Kalembe, a public relations officer with UCC said. "Consultations are still going on with the operators and then we will invite users to a stakeholders' meeting."
The price wars have mainly been instigated by new players such as Warid Telecom, which is owned by the Essar Group of India.
For example, Warid has been able to grow its subscriber base to 2 million in a space of three years, having launched operations in January 2008.
Put together, telecom operators have a subscriber base of 8 million users according to figures by UCC at the end of June 2010.
Warid has racked up those user numbers after introducing offers that have allowed users near-free calls all day within its network on top of other exciting offers over the last 12 months.
Airtel (formerly Zain) followed Warid when they launched similar offers to increase their numbers as well as keep its subscribers from jumping to the cheaper options.
The price wars have raised concern among the bigger players that have been around longer, like MTN Uganda and Uganda Telecom, which were dragged into the fight for fear of losing subscribers, forcing them to slash their prices too.
Twelve months ago, the Uganda telecom sector average mobile call rate was Ush11 (0.004 US Cents) per second, which fell to Ush5 (0.002 US Cents) and then to Ush3 (0.001 US Cents) per second.
Orange Uganda, Airtel and Warid had promised to keep their rates at three shillings per second but should UCC put the price ceiling above these prices, they will have no alternative but to change them.
Warid Telecom recently lowered the rate even further down with its offer of Ush1per second from 6:00am to 6:00pm while MTN has reduced calls within its network by a shilling up from three shillings per second.
For the short message service (SMS), Airtel is offering unlimited short messages to its subscribers for Ush200 (0.086 US Cents) per day and Ush50 (0.021) to other networks.
These rates are a far cry to the mid 1990s when the mobile phone was introduced in Uganda by Celtel (now Airtel). As a monopoly at the time, Celtel charged rates in US Dollars and handsets were costing more than Ush1 million ($434).
That monopoly was later turned into a duopoly with the entry of MTN Uganda in 1998. The duopoly led to a gradual decrease in prices. When Uganda Telecom entered the market in 2001, an oligopolist market was created when the three players operated in the market and charged users high tariffs.
With the entry of WARID and Smile Telecom in the Uganda telecom sector in 2008, and Orange in 2009, a perfect competitive market situation was created.
While the reduced telecom prices resulted in a reduction in general price inflation because of the importance of communication services, operators have suffered a fall in revenue as users who owned a single mobile phone were forced to hold two and spread their expenditure on telecom services among the operators.
Phone users today spread their expenditure on phone calls to avoid the high tariffs that are charged on calls across networks they are not subscribed to.
"When inflation declined significantly in October 2010, it was because of airtime. When you make a shift or a jump, you reduce inflation because the income that would have been spent on air time is saved," a report by the Uganda Bureau of Statistics then said.
A price war similar to the one in Uganda has been raging in the Kenyan market, where Airtel has been out to erode Safaricom's dominance of voice revenues.
However, Kenyan regulators are yet to propose anything resembling minimum tariffs.
But with the telecoms market in Uganda headed for price controls, the rest of the region will be looking to see whether the regulator's hand will come into play to improve the players' margins.
Uganda's rapidly expanding telecommunication sector has been hit by a raging price war going back to 2010. Competition among operators for new phone subscribers is digging into profit margins and reports have indicated this will also affect government taxes.
If the regulatory move goes through, UCC will be stepping in unchartered waters as it could be the first regulator in the East African region and indeed the entire continent to practically regulate a sector that is today characterised by low tariffs. The UCC has issued a notice seeking public opinion on the regulation of telecoms call rates.
The move is in response to an ongoing price war in the telecom sector, which started in the second half of 2010 -- sparked off by Warid Telecom when it introduced near-free calls, and has stretched into 2011.
According to UCC, the new guidelines, expected to come into effect at the end of the month are aimed at curbing anticompetitive tendencies, encouraging new investments, enhancing tariff transparency and protecting consumers.
"By the end of this month we hope to come out with a position on the call tariffs," Isaac Kalembe, a public relations officer with UCC said. "Consultations are still going on with the operators and then we will invite users to a stakeholders' meeting."
The price wars have mainly been instigated by new players such as Warid Telecom, which is owned by the Essar Group of India.
For example, Warid has been able to grow its subscriber base to 2 million in a space of three years, having launched operations in January 2008.
Put together, telecom operators have a subscriber base of 8 million users according to figures by UCC at the end of June 2010.
Warid has racked up those user numbers after introducing offers that have allowed users near-free calls all day within its network on top of other exciting offers over the last 12 months.
Airtel (formerly Zain) followed Warid when they launched similar offers to increase their numbers as well as keep its subscribers from jumping to the cheaper options.
The price wars have raised concern among the bigger players that have been around longer, like MTN Uganda and Uganda Telecom, which were dragged into the fight for fear of losing subscribers, forcing them to slash their prices too.
Twelve months ago, the Uganda telecom sector average mobile call rate was Ush11 (0.004 US Cents) per second, which fell to Ush5 (0.002 US Cents) and then to Ush3 (0.001 US Cents) per second.
Orange Uganda, Airtel and Warid had promised to keep their rates at three shillings per second but should UCC put the price ceiling above these prices, they will have no alternative but to change them.
Warid Telecom recently lowered the rate even further down with its offer of Ush1per second from 6:00am to 6:00pm while MTN has reduced calls within its network by a shilling up from three shillings per second.
For the short message service (SMS), Airtel is offering unlimited short messages to its subscribers for Ush200 (0.086 US Cents) per day and Ush50 (0.021) to other networks.
These rates are a far cry to the mid 1990s when the mobile phone was introduced in Uganda by Celtel (now Airtel). As a monopoly at the time, Celtel charged rates in US Dollars and handsets were costing more than Ush1 million ($434).
That monopoly was later turned into a duopoly with the entry of MTN Uganda in 1998. The duopoly led to a gradual decrease in prices. When Uganda Telecom entered the market in 2001, an oligopolist market was created when the three players operated in the market and charged users high tariffs.
With the entry of WARID and Smile Telecom in the Uganda telecom sector in 2008, and Orange in 2009, a perfect competitive market situation was created.
While the reduced telecom prices resulted in a reduction in general price inflation because of the importance of communication services, operators have suffered a fall in revenue as users who owned a single mobile phone were forced to hold two and spread their expenditure on telecom services among the operators.
Phone users today spread their expenditure on phone calls to avoid the high tariffs that are charged on calls across networks they are not subscribed to.
"When inflation declined significantly in October 2010, it was because of airtime. When you make a shift or a jump, you reduce inflation because the income that would have been spent on air time is saved," a report by the Uganda Bureau of Statistics then said.
A price war similar to the one in Uganda has been raging in the Kenyan market, where Airtel has been out to erode Safaricom's dominance of voice revenues.
However, Kenyan regulators are yet to propose anything resembling minimum tariffs.
But with the telecoms market in Uganda headed for price controls, the rest of the region will be looking to see whether the regulator's hand will come into play to improve the players' margins.
Friday, March 11, 2011
MTN bring Android-powered Smartphone to Uganda
MTN Uganda has launched onto the Uganda market an Android-powered Smartphone that retails at Ush340,000. Manufactured by Chinese technology giant, Huawei Technologies, the phone, the phone looks like a mini-iPhone. I did a short interview with the MTN Uganda CEO, Mr. Themba Khumalo and below are excerpts.
Q: First of all, tell us about this growing relationship between MTN Uganda and Huawei Technologies?
A: To maintain our leading position in the telecommunications sector we have over the last fifteen years worked with the best service providers available. We are always looking for ways of serving our customers better, and we are continually involved in developing innovative services which enhance the way our people operate and live. All this is achieved through smart partnership with vendors like Huawei Technologies amongst. Huawei is today our second main vendor with Ericsson in the lead. Our partnering with global vendors such as such as Huawei guarantees to Ugandans that the services and products they receive from MTN Uganda are of world class quality.
Q: Why is MTN bringing to the market an Android Smartphone when there are smart phones based on other platforms already on the market?
A: First of all, Android Technology is important for Africa, and indeed Uganda, because it allows our own software developers to come up with locally grown applications and programs that are locally grown and can be used by more of the local populace. Other platforms are also going in this direction but Google has done a lot of work in getting local software developers to build applications for Android phones. We know there are already a large number of brilliant Ugandans working on mobile phone applications and programs. Introducing Android technology gives them the opportunity to place themselves on the global map of software developers.
But development aside, when we have more smart phones such as the IDEOS available in Uganda running Ugandan built applications; more and more people in Uganda will be enabled to use our high speed 3G+ network to access information and internet-based services. This is another reason we partnered with Huawei, the entry price of the IDEOS is very affordable to many ordinary Ugandans at less than UShs350,000.
Q: Is this an exclusively Uganda market product or all of MTN's Africa operations will launch the same at some stage? If that is the case, what is MTN’s thinking behind launching these Android phones across your African operations?
A: The IDEOS offer we have launched here is specifically for the Ugandan market, I do believe the business case is there and most of Africa operations are broadening their smart phone portfolios to stimulate data usage growth. Without commenting much on the broader strategy it suffices to state data is a key component of the long term strategy in MTN. We know very well the power of communications in emerging markets and the catalytic role it has in economic development. Our company is continuously seeking opportunities to support sustainable revenue growth.
Q: Smartphones are known to be expensive because of the technology on which they are based, how much will one of those phones go for?
Through the partnership with Huawei Technologies, we have managed to keep the cost of the phone affordable. It is currently on the market retailing at about Ushs344,500 only - which is less than US$200. This offer is not for the phone alone, it is bundled together with monthly internet access packages. This is certainly affordable, considering that grey/imitation mobile phone are retailing for around the same amount of money but do not provide the benefit of quality after sales support.
Q: You say this particular phone will enable Ugandans take advantage of MTN’s 3G+ network, what will be made possible from as far as MTN is concerned as well as the user?
MTN 3G+ is not any mere Internet solution – it is a well-rounded data communications solution that will enable our customers to access fast, affordable and accessible data services. The MTN high speed 3G+ network allows users to make full use of the internet - with most ordinary data networks in Uganda you cannot use popular sites and services such as content streaming services (which include YouTube) and the websites hosted by most news organisations. You will also find it hard to conduct content uploads, which limits our capacity as Ugandans to share locally generated content with the rest of the world. In India and China, for example, business outsourcing is thriving because their communication networks can handle the upload and download of vast amounts of data - and that is a whole new industry that has bolstered their economies.
We are now living in the information age, and the control of information has been decentralised. Now, anyone with access to the main communication network - the internet - can inform, educate and influence decisions. This is why the 3G+ network and devices that are compatible with 3G are so important - they allow more and more mobile Ugandans to learn more, but more importantly, share more.
Q: What advise do you have for software developers considering that with Android, localized apps can be created and utilised through this platform?
This is the time to get your name out there. Develop more localised applications so that they are put onto the Android marketplace for download. We are going to explore partnerships with learning centres such as universities to support more localised software development. Everyone holding an IDEOS Android in Uganda is a potential consumer of the applications you develop.
Q: First of all, tell us about this growing relationship between MTN Uganda and Huawei Technologies?
A: To maintain our leading position in the telecommunications sector we have over the last fifteen years worked with the best service providers available. We are always looking for ways of serving our customers better, and we are continually involved in developing innovative services which enhance the way our people operate and live. All this is achieved through smart partnership with vendors like Huawei Technologies amongst. Huawei is today our second main vendor with Ericsson in the lead. Our partnering with global vendors such as such as Huawei guarantees to Ugandans that the services and products they receive from MTN Uganda are of world class quality.
Q: Why is MTN bringing to the market an Android Smartphone when there are smart phones based on other platforms already on the market?
A: First of all, Android Technology is important for Africa, and indeed Uganda, because it allows our own software developers to come up with locally grown applications and programs that are locally grown and can be used by more of the local populace. Other platforms are also going in this direction but Google has done a lot of work in getting local software developers to build applications for Android phones. We know there are already a large number of brilliant Ugandans working on mobile phone applications and programs. Introducing Android technology gives them the opportunity to place themselves on the global map of software developers.
But development aside, when we have more smart phones such as the IDEOS available in Uganda running Ugandan built applications; more and more people in Uganda will be enabled to use our high speed 3G+ network to access information and internet-based services. This is another reason we partnered with Huawei, the entry price of the IDEOS is very affordable to many ordinary Ugandans at less than UShs350,000.
Q: Is this an exclusively Uganda market product or all of MTN's Africa operations will launch the same at some stage? If that is the case, what is MTN’s thinking behind launching these Android phones across your African operations?
A: The IDEOS offer we have launched here is specifically for the Ugandan market, I do believe the business case is there and most of Africa operations are broadening their smart phone portfolios to stimulate data usage growth. Without commenting much on the broader strategy it suffices to state data is a key component of the long term strategy in MTN. We know very well the power of communications in emerging markets and the catalytic role it has in economic development. Our company is continuously seeking opportunities to support sustainable revenue growth.
Q: Smartphones are known to be expensive because of the technology on which they are based, how much will one of those phones go for?
Through the partnership with Huawei Technologies, we have managed to keep the cost of the phone affordable. It is currently on the market retailing at about Ushs344,500 only - which is less than US$200. This offer is not for the phone alone, it is bundled together with monthly internet access packages. This is certainly affordable, considering that grey/imitation mobile phone are retailing for around the same amount of money but do not provide the benefit of quality after sales support.
Q: You say this particular phone will enable Ugandans take advantage of MTN’s 3G+ network, what will be made possible from as far as MTN is concerned as well as the user?
MTN 3G+ is not any mere Internet solution – it is a well-rounded data communications solution that will enable our customers to access fast, affordable and accessible data services. The MTN high speed 3G+ network allows users to make full use of the internet - with most ordinary data networks in Uganda you cannot use popular sites and services such as content streaming services (which include YouTube) and the websites hosted by most news organisations. You will also find it hard to conduct content uploads, which limits our capacity as Ugandans to share locally generated content with the rest of the world. In India and China, for example, business outsourcing is thriving because their communication networks can handle the upload and download of vast amounts of data - and that is a whole new industry that has bolstered their economies.
We are now living in the information age, and the control of information has been decentralised. Now, anyone with access to the main communication network - the internet - can inform, educate and influence decisions. This is why the 3G+ network and devices that are compatible with 3G are so important - they allow more and more mobile Ugandans to learn more, but more importantly, share more.
Q: What advise do you have for software developers considering that with Android, localized apps can be created and utilised through this platform?
This is the time to get your name out there. Develop more localised applications so that they are put onto the Android marketplace for download. We are going to explore partnerships with learning centres such as universities to support more localised software development. Everyone holding an IDEOS Android in Uganda is a potential consumer of the applications you develop.
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