Kenya - lack of fixed infrastructure limits triple play options

[business daily] Kenya risks losing out on the benefits of converged communications unless players in the ICT sector step up their investments in fixed line broadband, experts warn.

They blame the growing preference for mobile communications and wireless internet connectivity in developing countries, which they say has resulted in a decrease in fixed line communications infrastructure.

This means that the country will not have sufficient fixed line broadband, especially in homes, to roll out triple play services -- telephone, Internet and television --in what is referred to as next generation networks.

The country risks losing out on reduced costs for consumers and service providers through consolidated communications infrastructure through which multiple services can be provided. In addition, consumers will miss opportunities to save money through investing only in multi-purpose digital machines as opposed to several gadgets (television, computers, and telephone systems) as is the current case.

A recent ICT report by the United Nations Conference on Trade and Development (UNCTAD) says that in developed countries, existing fixed telecommunications infrastructure is increasingly leveraged for the introduction of triple play services over Internet Protocol (IP) platform.

"By contrast, the low diffusion of fixed telecommunications infrastructure in many developing countries will seriously delay the transition to these next generation networks (NGNs)."

Mr Muriuki Mureithi, the CEO of Summit Strategies, an ICT consultancy firm, said the growth of fixed broadband will be slow, adding that homes offer telecoms firms an opportunity to expand their revenue options.

"Fixed fibre connections to businesses will take precedence over connections to homes. But with dwindling revenues from falling prices of data and voice services, provision of television and other entertainment content to home subscribers is a fresh revenue stream," he said.

A widespread fixed broadband infrastructure will see more players offering multiple services through the same backbone, with voice calls being a value added service.

Currently, only Wananchi, an internet service provider, has been offering internet and online television content simultaneously in various bundles for home subscribers. The firm, however, is planning to add voice calls to the menu of solutions that will make its products a complete triple play offering. "We have the data and television component and voice is on the way," said Mr Wallace Kantai, a consultant for Wananchi. Mr Kantai said that bandwidth is just one of several issues in converged services.

"Several other players are planning to offer triple play services. The main differentiating factors will be the quality of television content and price of service bundles," he said, adding that competitors can match each other in terms of bandwidth. The firm offers bundles of TV and internet services from Sh2,000 a month.

Kantai said demand for the company's products grew substantially in the last quarter of 2009, adding that managing cost of airing premium TV content is a delicate balancing act.

Next generation networks are said to maximise use of infrastructure, resulting in more efficiency, reduced costs, and value added services to consumers. But statistics show the country is still far from realising these benefits. Overall, fixed broadband connectivity stands at less than two per cent, with home connections at 0.5 per cent. Recent developments point to slow growth in the spread of fixed line infrastructure.

Though fibre-optic cables -- the ideal backbone for triple play services -- have arrived, the high cost of extending lines to homes has been a major barrier, with wireless technologies like Wimax, Wifi, and dial-up modems being deployed more.

Property owners, for instance, have been reported to ask internet service providers for as much as Sh300,000 in annual payments for buildings to be wired with fibre optic cables.

Though more commercial buildings may soon have dedicated broadband connections, private homes may take longer to be wired up. While wireless internet may be adequate for communication solutions like e-mails, browsing, and file transfers, they may not offer a robust platform for triple play services.

For the medium term, analysts say that these technologies have and will continue to bridge the huge gap left by the poor penetration of fixed line platform. However, as diverse communication models get digitised and converged through the internet, inadequate fixed line infrastructure to carry them will deny consumers benefits of the service.

Kenyans May Lose Out on Benefits of ICT Convergence