Kenya - Consumers are disappointed by prices which have not fallen, despite new undersea cables

[daily nation] Internet consumers remain a discouraged lot over the non-reduction of prices despite the going live of three undersea fibre optic cables.

In information and communications technology, the Government was to invest in fibre optic networks, to lower the cost of doing business across industries, by providing cheaper connectivity to the rest of the world.

While the projects, East African Marine System (Teams) and the National Fibre Optic Backbone Infrastructure (Nofbi) are already running and some in the process of being rolled out, experts say internet costs still remain comparatively high.

Players seem to have remained defiant in keeping prices high, in what a number of analysts term as conspiracy against consumers to continue milking them.

The pricing formula remains unclear, with many consumers saying that while speeds have increased, charges remain significantly high.

However, the government's failure was its inability or unwillingness to make service providers to significantly reduce internet connection charges across the country.

The most affected are individual internet consumers and small-and-medium enterprises, which cannot afford $500 per month, the current price for a dedicated one megabyte link.

A few years ago, a megabyte was selling at between $4,000 and $6,000 a month but currently for wholesale arrangements the price has been reduced to about $500, more than 10 times less.

Although internet service providers (ISPs) currently buy the same capacity at $500 a month, many have not come out openly to reduce end-user tariffs.

Operators remain accused of behaving like a cartel to fleece Kenyans but they counter that they need to recoup their investments first.

Mr Caleb Musau, a consultant with PKF Consulting Ltd says high internet prices are stifling growth of the nascent industry, and since affordability is one of the ways to enhance universal access, it will be interesting to see how the government intervenes in the next financial year.

Many Kenyans will be looking up to Uhuru Kenyatta, when he delivers the budget speech, for measures to compel players to pass on the benefits of increased bandwidth to consumers.

Internet is just one among the many on the wish lists for the 2010/2011 budget, there are other many issues. Dr Waudo Siganga, the chairman of the Computer Society of Kenya says taxes on software should be scrapped completely.

"It is slowing down the growth of the ICT industry. It does not make much sense to have hardware zero-rated for duty and VAT while software for the same hardware attracts taxes. Therefore there needs to be rationalisation of taxes," Dr Siganga says.

Mr Alex Gakuru, the chairman of the ICT Consumers Association says, "The importance of ICT to the economy could never be emphasised enough. Like the nerve system is to the body, so is ICT to the body of the economy. When information and communication flow suffers, the entire nation becomes paralysed. Consumers at the edges are the best feelers and movers of the body economy and their protection is, thus, an economic development fundamental. We look forward to an ICT consumer's friendly budget."

To boost competition and consumer protection, Mr Gakuru says the government could facilitate the realisation of community telcos operated on the (co-operative) or along the community broadcaster's models.

The intellectual property legal environment and implementation also need to be overhauled, primarilyintent to protect local ICT innovations not foreign interests.

Players are also pushing for the elimination of taxes and duties on all digital content production equipment and facilities, for example, digital cameras, audio recording equipment, and studios lights to protect traditional knowledge and local content online.

Kenya: Internet Costs Still Way Up