Kenya internet costs go down

October 14, 2009
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, NAIROBI, Kenya, Oct 14 – A section of telecommunications service providers say they have started to feel the effect of the undersea fibre optic cables.

Agosta Liko the Chief Executive Officer of Verviant Consulting Services told Capital Business that their internet costs had gone down by about 50 percent in the last three months while the speeds have also increased significantly.

“Compared to three months ago, our internet costs have gone down by half and the quality has gone up by about 200 or 300 percent. If I wanted, I can reduce the amount of internet to 500 kbps (kilo bytes per second) and we would be fine,” he said.

Davis Waithaka the CEO of Elimu Holdings that creates websites for learning institutions across the country concurred with Mr Liko adding that with many of the GSM companies connecting on the cables, they have been able to access the cheaper internet through mobile phone.

“When we started the initiative and we were running the workshops in places outside Nairobi, we had a lot of problems trying to get internet to the venues of the training. But now, we are having a much easier time because we can use the phones to run a whole workshop,” Mr Waithaka told Capital Business.

Debate has been raging on whether The East African Marines Systems (TEAMS) and SEACOM would significantly reduce the connectivity charges. Some people have argued that internet users might not necessarily see a reduction in the prices although they would experience increased capacity and speeds for the same pricing.

Critics however see this as a ploy by the operators to collude and make obscene profits at the expense of the local internet users. This state of affairs has driven the government to warn that it will control prices if the costs do not come down to about $200 (Sh15, 000) per Megabyte.

Mr Liko however dismissed these threats saying such a move is unwarranted.

“Even if they reduced the price to about $200 (per MW), someone will come and say, wait it should be $50 so I don’t see what the noise is all about,” he said.

If such decisions were implemented, he argued, they would hamper the growth of ICT related businesses such as software development and outsourcing.

“If they want to put price controls, they know investors won’t come. One of the reasons why outsourcing works is because of open markets. Someone should have the right to move their products or services anywhere they find good a price,” Mr Liko said.

He argued that the market should be left to its forces as it will correct itself as more cables arrive and more users start utilizing them.

“When SEACOM came, prices went down, when TEAMS was switched on, the prices went down again. EASSy (East African Submarine Cable System) is coming next year and will drive the costs further down,” he enthused.

“As a businessman, I cannot sit here and wait for a perfect day when internet prices will be down or when there will be no traffic jams. I have to work in the current conditions,” the CEO added.

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