Friday, August 26, 2011

Study identifies Kenya ICT access gaps


Kenya's Ministry of Information & Communication
Permanent Secretary , Bitange Ndemo (with  mic)
, CCK officials and consultants from Aolo Consultoria:
72% of the population lacks access to broadband

The Communications Comission of Kenya (CCK) has released the results of a study on ICT access gaps in Kenya. Commissioned in mid 2009 and carried out by Apoyo Consultoria, the study seeks to provide accurate and reliable data on the availability and accessibility of various information and communication facilities in the country. The launch was held Tuesday at Nairobi’s Ole Sereni hotel and was attended by acting CCK Director General, Francis Wangusi and Permanent Secretary in the Ministry of Information and Communication, Bitange Ndemo.

The study especially tackles the Universal Service Fund (USF)  which was established in the amended Kenya Communication Acts of 2008. The USF is funded from licensee levies , allocation by Parliament , principal and interest payments on advanced loans and investment by funds and endowments. The interest comes from loans of which can be applied form the funds.

Mobile operators however so far posed opposition to the USF saying that it amounted to extra taxation that would logically be passed on to their customers. This lead to a partial compromise where the operators would establish digital villages in an effort to bridge the access gaps.

The report was compiled from data collected in the 2009 national census and information obtained from stakeholders in the ICT sector.”In the past five years, we have carried out studies on the Internet market, the telecommunications network costs , postal and courier market , competition, among others, “ says Wangusi.

The study sets out to determine the appropriate framework to achieve universally available and affordable ICT service . High cost areas that may not be covered by operators and might require support of the USF are then identified. Options to provide support for high cost areas are also identified and assesed together with a proposed implementation plan. Finally, the study also looks at extending the reach and utilization of the National Optic Fiber Backbone Infrastructure network (NOFBI) and the total magnitude of the required investment to bridge the ICT gaps.

Study Findings

The study reveals that while mobile phone penetration stands at more than 50% of the population , some sub-locations in Nairobi , Kiambu and Nyeri had more than 70% usage while several sub-locations in the Northern and North-Eastern areas of the country had less than 20% penetration.

The study pegs Internet usage at 5 % of the population with most counties having a usage below 10% . Recent estimates from operator filings with CCK however indicate an Internet penetration of 10%.

Broadband is defined at access to Internet at the speed of 256 kilobits per second (kbps) or higher. The study maps base transceiver stations (BTS) in the country as of June 2011 which reveals that 4,480,137 people (11% of the population) in 1,119 (16%) sub-locations occupying a total of 385, 651 square kilometres. Those who did not have access to broadband were at 29,483,790  (72% of the population) in 6,256 (88%) of sub-locations occupying 562, 872 (97%) of the country.

Contributing factors to the voice and data access gaps were found to low population in affected areas, lack of road infrastructure  and lack of electricity. Commenting on this, Ndemo said that despite the high cost of providing electricity to Northern Kenya, at about KES 3 billion, solar energy should be used as an alternative  form of energy.

There are 115 private mail and parcel operators in additional to the Postal Corporation of Kenya (PCK). While all counties have access to at least 3 post offices, only 677 (9.5%) of sub locations had post offices while 6,472 sub locations (90.5%) lacked post offices.

Study recommendations

The study recommends covering of the these access gaps through establishment of new base stations covering 10 kilometres and femtocells covering 0.5 km to address the voice gaps. The data gap is to be tackled through upgrading of  base stations in sub locations with voice coverage to 3G base stations in the 2100 MHz range. For sub-locations with both a voice and data gap, new base stations would be established in the 900 MHz band.

Base stations in the 900/850 MHz band cover 6 km in urban areas , 10 km in rural areas for voice and  4km in urban, 6 km in rural areas for data. The 1800 MHz band  covers 1 km urban , 4 km rural for voice and 1 km urban, 3 km rural for voice. the 2100 MHz band covers 1 km urban and 2 km rural for data.

Meanwhile, Ndemo says that the government is still pursuing plans to roll out a national LTE network (Long Term Evolution). The P.S. says that the network should be in lace in the next 8 - 10 months.

Three strategies have been proposed to close voice and data gaps .
A first-come first-served scheme: the objective is to waive spectrum fees to operators that  compromise to expand services in access gap areas.

Private initiative scheme: the objective of this scheme is to promote private operators to present universal access projects and benefit from doing it. One of the main advantages of this scheme is that it reduces the administrative a costs of designing universal access project by giving this task to private operators. Operators presenting UA projects will have a bonus when participate in the bidding contest

Lowest-subsidy auctions: the objective of this scheme is to design a universal access project that will be partially funded by the Universal Access Fund. The main advantage of this scheme is that it is executed to provide voice and/or data services to non covered areas following the priorities of the USF.

Ndemo says that the Postal Corporation of Kenya must improve as the study shows it to be the only sector in decline. Kenya  with 2.4 letters per person per year has a higher mail average that other countries in Kenya’s GDP range  who have 0.83 letters per person per year. The study however recommends that the figure is not sufficient level to sustain a nationwide postal network.

Alternatives recommended for the Postal Service include new departmental Post Offices with PCK employees. This would provide a wider range of services but would be less flexible. A second alternative seeks to increase sub-post offices with licensees. This would have a lower cost but result in a narrower range of services. A third model suggests a subsidy arrangement with private operators.

Among facilities suggested for funding by the USF include ICT training centres, telecentres, E-health facilities, ICT facilities in public offices, school IT labs, research projects and content initiatives. The last two are to be wholly funded.

Policy recommendations

The study recommends that CCK have a USF department with additional staff.

Voice and data are to be tackled through waiving of spectrum fees for USF projects, obligation of data projects to connect public facilities, continued support of neutral competition , promotion of national roaming and promotion of network sharing particularly for transmission systems.

Recommendations for the postal sector urge for liberalization of the sector. This is in addition to pricing guidelines , defining of parameters for interconnection between operators and PCK and review of the PCK contracting process  of sub-post offices.

Implementation

The study recommends closing of the voice gap in 889 sub-locations in the next 5 years and closing of the data gap in 4,374 sub-locations by 2030.

In the first scenario, with a USF levy of 0.5% targeting communication licensees and CCK contribution of 25%, it would take 10 years to close the voice gap and 47 years to close the data gap at a cost of between KES 1,250 million and 1,625 million. This would include between KES 375  mil. and 500  mil. from the levy and KES 875  mil. to KES  1,125  mil. from CCK.

A second scenario closes the voice gap in 7 years and the data gap in 36 years at a cost of between KES 1,625  mil.and KES 2,125  mil. This includes a 1% USF levy of between KES 750  mil. and 1,000  mil.and a 25% CCK contribution of between KES 875 mil. and KES 1,125  mil.

The above scenarios exclude the Postal Corporation. A third scenario with a 1% USF levy and 100% CCK contribution takes 4 years to close the voice gap and 15 years to close the data gap. This scenario also includes capacity building for PCK. The USF levy contributes from  KES 750 mil. to KES 1,000 mil and CCK from KES 3,500 mil. to 4,500 mil. to congribute a total of between KES 4,250 mil. and 5,500 mil.

National Optic Fiber Backbone Infrastructure

31 county headquarters are served by NOFBI against 16 that are not. US $ 6.8 mil. is required to cover all county headquarters with NOFBI.



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