Zain looks determined to venture into the 3G technological platform in an industry long held by Safaricom. Should Zain afford to pay the Kes. 2 billion (USD 25 million) for the licensing cost of the spectrum to CCK, it will become the second mobile phone operator in Kenya to roll out 3G.
The cost of setting up of 3G network infrastructure has been prohibitive for new entrants into the Kenyan market, with current statistics from CCK’s April-June 2009 report indicating that as at 30 June 2009 there were 17.4 million mobile subscribers. With this sort of growth being witnessed in the country, it is quite disappointing to note that even despite registering a growth in Internet users subscriber base, from 1.52 million in March 2009 to 1.82 million in June 2009, we are still a long way from achieving affordable Internet access as the fibre optic national infrastructure nears completion.
Most of this growth in Internet subscribers can be attributed to the new purchases of Safaricom’s broadband modem that run on 3G network. This accounted for nearly 60% of the growth, with Internet access via leased lines contributing 39% in the same period. Only one of the major data operators has dropped the price of the international bandwidth, and even offering 4 megabytes of bandwidth at the current price it is charging 1 megabyte. The other operators, in the true Kenyan capitalist spirit said they require at least 2 years to recoup the billions sank into the project.
But in my opinion, Zain (Celtel or whatever) has been always extremely slow in responding to the market trends, and mid next 2010 will be too late for them, as Safaricom keeps on getting “better”.
Well, the 2bn ($25mn) is a lot to pay... then add annual licensing fees... and all this BEFORE you start building a 3G network...
ReplyDeleteZain would be down Kes 2.2bn even before they are out of the gate!
A better model would have been a lower upfront payment ($1mn) with annual (higher) licensing fees &/or a tax on revenues... with minimum terms & conditions regarding deployment & infrastructure expenditures.
Let the 2.0bn be spent on infrastructure roll-out including subsidizing modems or equipment installation for customers. Use an escrow account that forces the expenditure on infrastructure within 2-3 years.
This would force the firm to expand its reach under a use or lose it (2bn cash) scenario. The competition would allow Kenyans to benefit from more providers + lower costs.
The GoK would get annual licensing income & higher taxes (usage of data &/or subscribes would increase exponentially for a few years) from the actual use of the spectrum.
Lower internet costs for businesses means increased products/services aimed at consumers.
e-manamba.com uses internet access + M-Pesa to provide a service that eases transactions. This means less 'waste' in running around to buy tickets. The seller benefits, the buyer benefits... the loser (the messenger or middleman) can be deployed to better use. Or my time (say 1 hour to buy the ticket) is saved for better or more profitable pursuits...