University of Nairobi

School of Computing & Informatics

ICT Sector Performance Review 2009/10

Prof. Timothy M. Waema

Research ICT Africa Kenya Team Leader

16 November, 2010

Agenda

1. Research ICT Africa (RIA) and ICT research

2. Access and usage demand survey (2007)

3. ICT sector performance review 2009/10 (supply-side)

4. Regulatory environment perception survey

5. Research challenges

6. Challenges & policy recommendations

1. RIA and ICT research RIA Network is one of the research networks

originally started with funds from IDRC Network has grown from 2004 and now consists

of 18 African countries Purpose of RIA research is:

to create a rich evidence base of the ICT sector developments in selected African countries to enable comparison of policy outcomes in different countries against national strategies and sector performance influence ICT policy

Kenya team consists of 1. Prof. Timothy M. Waema 4. Prof. Meoli Kashorda 2. Ms Margaret Nyambura 5. Dr. Monica Kerrets- 3. Dr. Catherine Adeya Makau

2. Access and usage demand survey

Methodology Use of NASSEP IV sampling frame KNBS Sample 1461 HHs

Major urban – 584 (40%) Other urban – 439 (30%) Rural - 438 (30%)

HH selection Uniform sample of 24 HHs in each cluster 1st HH randomly selected in each cluster Next HH systematically determined (last HH + interval) Provision for replacements for vacant, demolished or

households whose occupants were not available after a maximum of three call-backs

Respondents selection Head of HH or next most senior member of HH

Data collection using PDA & analysis by SPSS

Key findings

HHs with computer & Internet

E-mail presence

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

K enya S outhA fric a

R wanda Uganda E thiopia Tanz ania

major urban

Other urban

R ural

Reasons for not using Internet

0

10

20

30

40

50

60

70

80

90

lac k of loc allanguagec ontent

I do notknow muc h

about how tous e the

Internet

there is nointeres tingc ontent for

me

c os t ofac c es s

the Internetis very s low

I do notalways haveac c es s to a

c omputerwith Internetc onnec tion

lac k of time other

Internet tariffs – 20 hrs/month

050

100150200250300350400450

Total Internet pric e(US $)

Total Internet pric e perc apita

Monthly Internet expenditure

51.32

41.0333.68

23.96 18.80 12.40 12.120.00

10.0020.0030.0040.0050.0060.00

3. ICT sector performance review 2009/10

Methodology Review of documents, e.g. CCK

publications Review of websites of operators, CCK,

etc. Telephone interviews with selected

persons

Key findings

Summary of telephony services Fixed telephone services

Connections been declining since end of monopoly

Slight growth in 2009 due revitalisation of Telkom Kenya following its privatization in 2007

Phenomenal growth of mobile services eaten into this market

Fixed wireless telephone services Not been growing much Expected to grow with migration to the

Unified Licensing Framework

Mobile telephone services Phenomenal growth (51.2% penetration by

June 2010) Growth can be attributed to:

the competitive effects resulting from the increased number of mobile operators

increased mobile coverage aggressive marketing through increased offers and

promotions, esp. availability of low denomination calling cards

increased affordability of handsets Increased infrastructure sharing among the

mobile phone operators Safaricom shares towers with Zain and Orange

through reciprocal arrangements Essar Telecom Kenya (Yu) also shares Zain’s

towers and base stations

Interconnection rates fixed to mobile phones (USD) (2009/10)

Mobile termination rates in US cents (Sep 2010)

2.140000105

2.730000019

3.49000001

5.610000134

5.820000172

5.900000095

7

7.019999981

7.489999771

7.53000021

8.069999695

8.489999771

8.649999619

9.430000305

11.64999962

11.69999981

16

0 5 10 15 20

Senegal

Ghana

Tunisia

Rwanda

Tanzania

Uganda

Botswana

South Africa

Cameroon

Internet users Have been growing slowly, with phenomenal

growth 2009/2010 2.90m June 2008 3.65m June 2009 (9.5% penetration) 7.83m June 2010 (20% penetration)

Growth in 2009/2010 largely due to: entry of mobile operators aggressive rollout of data services by mobile

operators, esp. Safaricom increased access to social networking sites through

mobile phones that has become popular among the youth in the country

Internet penetration figures of other countries: 33.4% Mo 28.9% Nig 20% Ke 10.8% SA 9.6% Ug 5.3% Gh 4.1% Rw 1.6% Tz 0.5% Et

Commercial broadband bandwidth cost (Feb 2010)

Guaranteed bandwidth (Kbps)

CCK Avg Sep 2009

Op 1 Feb 2010

New as % of old tariff

Op 2 Feb 2010

New as % of old tariff

256 38,625 12,500 32.4 12,000 31.1

512 72,276 23,000 31.8 24,000 33.2

1024 282,102

<$3,500

48,000

$600

17.0 48,000

$600

17.0

Note: Retail prices have been slow in coming down!!

4. Regulatory environment perception survey

23

Background What?

A perception survey of the Telecom Regulatory Environment (TRE) in Kenya from 57 industry experts from 3 balanced sectors: Operators, consultants, CSO/public sector/researchers

When? Jul-Aug 2009 (before i/connection determination #2)

Why? Gather perceptions of the telecom regulatory and

policy environment in the country Gauge the strengths and weaknesses of the

environment Use the results to influence changes in the ICT policy

and regulatory environment in Kenya Benchmark with other African countries Results ca be used as a tool for investors to assess

regulatory risk in a country

24

Data collection Assessment of three sectors:

Fixed services, Mobile services, ISP/VAS services

For each of the 3 sectors, assessment of 7 dimensions:

1. Market entry

2. Allocation of scarce resources

3. Interconnection

4. Regulation of anti-competitive practices

5. Universal service obligation

6. Tariff regulation

7. Quality of Service

For each dimension, rating the quality of the regulatory environment on a scale

1 = highly ineffective to 5 = highly effective

Key findings

Mobile services

VANS/ISP services

Regulation of interconnectionRegulation of Interconnection

-2 -1 0 1 2

Mozambique

Tanzania

Cameroon

Senegal

Namibia

Kenya

South Africa

Regulation of anti-competitive practices

Regulation of anti-competitive practices

-2 -1 0 1 2

Botswana

Tanzania

Tunisia

Kenya

Uganda

Benin

South Africa

Quality of servicesQuality of Services

-2 -1 0 1 2

Ivory Coast

Tanzania

Cameroon

Senegal

Uganda

Kenya

South Africa

Average satisfaction rate

5. Research challenges Difficult to obtain some of the data, esp.

Financial data - investment and revenue Most sector-oriented data not available Limited information in operators websites

Some don’t publish the tariffs on the web Email contacts don’t work - except customer service

email whose directed queries were rarely answered Offers and promotions that made it challenging

to establish the actual tariffs CCK information often differed from the

operator data While respondents promised to respond to the

online regulatory review, most did not

6. Challenges & policy recommendations

Challenge Policy recommendation Timing

1. National ICT policy not in tune with current realities

Update the existing ICT policy through stakeholder participation

June 2011

2. Regulations not supported by key stakeholders

Review regulations with support of key stakeholders

March 2011

3. High retail cost of broadband

Institute a regulatory mechanism(s) to bring down retail broadband tariffs

March 2011

Challenge Policy recommendation

Timing

4. ICT is not real sectors, e.g. cannot obtain aggregated socio-economic data on ICT employment, GDP contrib., products, etc.)

MoIC and KNBS to engage in a process that will create a single ICT/ITES sector and mainstream it into the national planning and operational frameworks (e.g. KNBS can collect data on ICT/ITES as a sector like all sectors)

Dec 2011

Challenge Policy recommendation

Timing

5. No institution has explicit mandate over ICT sector data

Give legal mandate over ICT data to one of the existing institutions

June 2011

6. ICT sector data is not accurate & up-to-date

Body to regularly collect and provide accurate data on ICT sector, collaborating with KNBS

Conti-nuous

7. Independence and power of the regulator

Strengthen CCK to be a more independent & powerful converged regulator

?