Internet charges to be regulated

September 22, 2009
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, NAIROBI, Kenya, Sept 22- The government has warned that it would be forced to step in and regulate internet connectivity charges if the prices will not come down significantly in the next one month.

Information Permanent Secretary Dr Bitange Ndemo said on Tuesday that Internet Service Providers (ISPs) were still making obscene profits from the high cost of bandwidth despite the operationalisation of the fibre optic cables.

“They are being mischievous. We have been talking about $6000 per Megabyte, telling us that they are lowering to $600 which from our calculation their payback would be in less than six months that is not what we want,” he stressed.

It was widely believed that with the coming live of the SEACOM and The East African Marine System (TEAMS) cable, the cost of bandwidth would come down significantly but this has not happened.

The cost of one megabyte of bandwidth locally has been going for between Sh298, 000 and Sh445, 000 ($4000-$6000) until recently when the fibre optic cables landed.

Many ISPs say they have reduced this to Sh45, 000 ($600) but the government wants this lowered to Sh15, 000 ($200).

“We have many options but it’s always good to leave the competition to push the pricing down, but it doesn’t the regulator (Communication Commission of Kenya), would step in,” the PS emphasised.

He said the argument that the providers have increased capacity for the same pricing is not valid since majority of Kenyans cannot access affordable and after internet connectivity.

“That is nonsense. If Kenyans are not able to afford, then I’m not happy because for me to ensure that the economy grows it is to make broadband available to Kenyans. But now it cannot be used, not many people have this in their homes,” he complained.

The providers have been accused of behaving like a cartel but they have defended themselves arguing that they need to recoup their investments which have been dependent expensive satellite links.

Mr Ndemo argued that by reducing the prices, the telecommunication firms would be able to get the volumes that would eventually drive internet penetration in the country. The price has to be right for millions of people to be attracted to the internet and enhance innovation, he observed.

However, he did hit out at the public for being slow in the creation of local content that will utilise the laid down infrastructure including the National Optic Fibre Backbone Infrastructure.

The debate should not move from the issue of infrastructure to the generation of content, he emphasised. The government has already led the way with the start of the process to digitize its application forms.

With the help of operators, Mr Ndemo said the government was now striving to spread the ‘last mile’ solutions to as many people as possible which he said was key to the success of its quest to deliver technology to Kenyans, create jobs and develop rural areas.

This argument has been supported by studies which show that countries that have embraced ICT have seen technological development contribute about 50 percent of their GDP.

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