Broadband connectivity has emerged as a major focus in Kenya, and is seen as a catalyst for inclusive economic growth and the transition to a knowledge-based economy. The country has seen a significant increase in connectivity, in particular in 2010, when three international cables were connected. The cost of connectivity fell by 80% in 2011, according to a report by the “Broadband Strategies Toolkit”, a report sponsored by the World Bank. Now, the focus has moved to developing local networks and last-mile links. Kenya’s approach is a supply-side one: pursue capacity on the expectation that demand will follow.
At this point, however, access is still limited to a small sliver of the population – 6.5% of households had a broadband connection, according to a 2013 strategy document focused on boosting access. The National Broadband Strategy seeks to raise that number to 35% in the next three years, and eventually cover the entire country so that broadband is available to all. Access to ICT was added to the country’s constitution when it was revised in 2010, making broadband deployment a priority.
Statistics
At the end of the first quarter of 2014, the most recent period for which statistics were available, there were 1.45m broadband subscriptions in Kenya, up 0.9% from the previous quarter and 1.9% year-on-year. The amount of available bandwidth was 865,714 Mbps, up slightly from 862,474 Mbps at the end of the fourth quarter of 2013.
Fixed fibre subscriptions rose 2.8% to 69,337 in first-quarter 2014, as network expansion by internet service providers (ISPs) made the premium service available to more consumers.
The number of internet subscribers is an estimate in Kenya, as the Communications Authority of Kenya (CA), the telecoms regulator, has no scientific method for making a calculation. The number is estimated by counting each mobile data subscription, multiplying every terrestrial wireless account by a factor of 10, and every digital-subscriber line (DSL), fibre-optic and satellite subscriptions by 100. On that basis there were an estimated 11.6m internet subscriptions in third-quarter 2013, or roughly one-quarter of the population. That means broadband subscriptions account for roughly 12.1% of the total.
Market Breakdown
ISPs include Kenya’s Wananchi Telecom, which had a market share of 44.7% for fixed/wireless internet subscriptions at the end of the first quarter of 2014, according to figures from the CA. Another three ISPs had a market share of over 10%: Mauritian Liquid Telecom (17.8%), incumbent Telkom Kenya (11.6%) and South Africa’s Access Kenya (11.5%). A fifth provider of note is Safaricom, the dominant mobile network operator. Safaricom has been leasing fibre from others and reselling, but has spent KSh8bn ($91.2m) on a network focused on Nairobi’s central business district, the Westlands neighbourhood and other affluent suburbs. At the end of the first quarter of 2014 Safaricom had a market share of 7.1%.
National Broadband Strategy
The National Broadband Strategy is an outgrowth of the 2010 constitution, which considers access to the internet at reasonable speeds to be a basic right for all Kenyans. With connectivity now a constitutional right, the strategy starts with a definition of what constitutes broadband, and the government has aimed to set a baseline for downloading capacity – it classified broadband internet access as a connection that is always on and delivers a minimum of 5 Mbps. Overall targets create different standards for rural and urban connections, however. By 2017 the expectation is for universal access at 40 Mbps in cities and 5 Mbps outside them. That level of service rises up in increments, as by 2030 the minimum is 2048 Mbps in cities and 500 Mbps for rural areas.
Overall, the idea is to allow for private-sector provision of connectivity where it is economical to do so. In marginal areas some incentives may be enough to stimulate private investment, and in the most remote ones the government will turn to its own resources, including the Universal Service Fund, which has been in the works since a 2009 law but only received its first funding in August 2014.
Telecommunications firms will be expected to contribute as well as the CA. The government also hopes that public-private partnerships (PPPs) will be attractive to private investors. It has a track record in this regard that it can point to, as the driving force behind The East African Marine System (TEAMS), a subsea cable landing in Mombasa and originating in Fujairah in the UAE. In that case, the government first sought a private sector partner in Etisalat, and initially took on 85% of the cost and ownership. It then privatised the bulk of its share, selling down its overall stake to 20%. Buyers were telecoms providers, and owning a stake gave them the ability to use capacity from the cable. The Kenyan government thereby retains a measure of leverage to control broadband prices without resorting to direct regulation. Though this has not been tried, in theory if the government wants to see lower prices it has the option to sell more of its stake in the cable and add its capacity into the market, thus adding to supply.
Push & Pull
The broadband strategy focuses on five areas for improving connectivity: infrastructure, connectivity and devices; content, applications and innovation; capacity building and awareness; policy legal and regulatory environments; and financing and investment. The first category includes prescriptions such as lowering taxes on computers, phones and other internet-enabled devices to promote access; organising and optimising the frequency spectrum; promoting the sharing of infrastructure, where possible, among network operators; and pushing standards through regulation, such as a uniform depth at which subterranean cables must be buried.
Under the heading of policy, legal and regulatory issues, the plan calls for a series of regulatory adjustments, some of which are repeated in its other sections. Coming changes include clarifying rights of way, monitoring against monopoly practices and pricing, addressing vandalism against infrastructure, and eliminating inconsistencies where the plan clashes with other laws, such as the Roads Act and the Building and Construction Act. A reshuffling of spectrum allocations is also envisioned, and the failure to do so is seen as a potential impediment to the plan’s success. As of mid-2014 this seemed likely to be a stumbling block for at least the short term because a plan to migrate television broadcasting from analogue to digital signals has been delayed.
Whilst the plan is focused on promoting inclusive access, Kenya’s connections to four subsea cables may have already done much to attract business, particularly in the knowledge economy and in business-process outsourcing, a sector the government has long wanted to develop.
PPP Success
The fifth of the five sections addresses cost, which is expected to be KSh250bn ($2.9bn) in the first five years of the plan. PPPs are likely to play a role in this area, although the plan does not specify precisely how, or provide a list of potential projects. Other funding mechanisms that will be considered include selling infrastructure bonds specifically earmarked for broadband, promoting the Nairobi Securities Exchange as a method for private network builders to raise funds and establishing a government-supported venture capital fund dedicated to broadband projects.
In the end, however, the plan notes that on a global basis governments are the biggest users of ICT, and Kenya is not allocating enough to this resource crucial to its own ends. Current ICT expenditure is 0.5% of the overall budget, according to the plan, and that should jump to 5%. The broadband plan also highlights the need to create an implementing agency, and also perhaps one to manage the National Optic Fibre Backbone Infrastructure network. Telkom Kenya had been managing the network on an exclusive contract that expired in June 2013.
