Telecom Providers Less Than Thrilled About SEACOM

About to run to the airport to take that sweet, sweet direct Air Uganda flight to Zanzibar, but couldn't resist blogging my friend Joe Powell's recent piece in The Independent. Its simply an intrepid piece of journalism, helping us answer questions about how 'open access' SEACOM actually is.  In my interview with SEACOM executives, they maintained that wholesale prices would be identical for Infocom and other providers.  Joe's piece shows that the feeling in the telecom industry is that this is simply not the case.

Is Infocom's control of the SEACOM cable in Uganda fair?

Infocom's grip over Uganda's use of SEACOM cable is further strengthened as they have been appointed the hub provider for the country, what is known as the 'backhold provider'.  This means that companies seeking to buy bandwidth will have to negotiate with Infocom, currently the only company to have a contract with SEACOM.

What thinks the competition?

Infocom has been fortunate that rivals such as MTN and UTL have invested in an alternative submarine cable EASSY, which is running behind schedule and will not go live for at least a year. Both MTN and UTL have a superior fibre and copper network countrywide buy without a deal with SEACOM are in danger of being left behind..

The third submarine cable, TEAMS, has docked at Mombasa and is now undergoing final testing. TEAMS has significant investment from the Kenyan government. Sources have confirmed that telecom companies in Uganda are now scrambling to buy bandwidth from SEACOM and TEAMS directly, with one senior executive telling The Independent anonymously that there is no way they would tolerate working through Infocom.

summer east africa fragments

move 2 years of life in boston to a basement, flight to nairobi to conference with ministry of finance, ratty nights in downtown nairobi, lions sleeping fitfully after thrashing a water buffalo in nakuru, 3AM shadows at kenya-uganda border, the emaciated face of a police office is kisumu, a full mouthful of bujagali road dust while mountain biking, tattooed, nervous looking russians playing high stakes poker, sunset glints of the nile after running 20km.

the denouement: 10 days of good books, bad swahili, fishing and photo projects in zanzibar starting tomorrow, hopefully without the tropical illness-laden haze of last time.

SEACOM | This is What 'Open Access' Looks Like!

At least the way they portray it in movies, whenever my parents generation got together to protest something, they would always been a drum and chant ‘This is what democracy looks like.’ At the SEACOM fibre cable launch last week in Kampala, I wanted to stand up and chat, a geekier tech policy mantra: “This is what 'open access' looks like!"

 
A few years ago, when plans for east Africa's first fibre cable were being put in place, technology policy geeks of all stripes starting beating the drums of 'open access' [I join in in a piece in Princeton's Journal of International and Public Affairs], a policy framework that ensures that every ISP, anywhere, will get access to the wholesale bandwidth at the same price, ensuring more competition and ultimately more options and better service for consumers.

Judging from my interview yesterday at the yesterday's cable launch with Uganda director Fred Moturi, project manager John Mathwasa and investor Kevin Kariuki, SEACOM is bringing 'open access' to Africa for the first time. What does SEACOM's version of open access look like in practice?  I'm writing a piece for Africa Business Daily, but here some of the key points:

• Wholesale and Retail Cost-  SEACOM sells only directly sells large tranches of bandwidth, no smaller than STN 1 [155mb], presumably mostly to network providers, who then in turn sell it both wholesale to other ISPs and directly to consumers.  While we don't know the price for consumers yet, the wholesale costs come out to $150 mb/month. Assuming a 100% markup for consumers, this comes to $300 mb/month.  This price makes much of Kampala's bandwidth using population giddy, considering we are currently paying $900 for 192kb/month. 

• The 'PoP to PoP' Model- SEACOM is committed to delivering fair prices everywhere in the network.  They are partnering directly with KDN [in Kenya] and Infocom [in Uganda] to build out the land fibre. However, they are offering the same price at their point of presence (PoP) in Kigali, Kampala and Nairobi.  This means that, unlike SAT-3 in West Africa, SEACOM is not competing with its customers, and further, new ISPs can emerge to deliver more connectivity to more obscure places as demand grows.

Update:  I learned from a colleague last night that the picture may not be as rosy as it seems. Apparently, the other telcos are worried about a possible Infocom monopoly until the other submarine cable touch land.  I'm told they are refusing to buy from Infocom and want to deal directly with SEACOM. I'm on the hunt for more information.

Kung Fu Baby and the SEACOM Cable Launch

The widely known technique for watching YouTube videos in Africa is to immediately pause the video when it starts, wait 20 minutes (or much more) until the video fully loads, and then watch. Today I’m at the ceremony launching SEACOM, submarine fiber cable stretching from South Africa to Mumbai and London, passing landing stations in Maputo, Dar, and Mombasa, and in land to Kampala and Kigali.

In the corner of a conference room, Peter Moreton, a procurement manager for SEACOM, beckoned me over to a display computer with YouTube queued up. We launched Kung Fu baby and for the first time in Africa, I saw a YouTube video load completely and play in 6 seconds. We ran a speed test and showed 1.8mbps, 10x what we have in the Appfrica office. 

I also had the opportunity to do an exclusive interview Fred Moturi, Uganda director for SEACOM, and a couple of major investors. We talked about what the new international infrastructure will mean for competition amongst ISPs and what the cable will mean for rural users. I can't write that right now, because I'm waiting for the launch event to start, surrounded by a bunch of tech geeks, giddy as school girls, video-skyping friends in Europe for the first time.

When People Die of Hunger

The Elephant in the Room, by Banksy

Its been a dry rainy season in East Africa. Traveling last month in Kisumu, Kenya, I read about a Kenyan women who died of hunger while giving birth to surviving twins. Last week, newspapers in Uganda reported that 35 people died of hunger in northern Uganda. Ken Banks asks us about the elephant in the room of global poverty. To me, this is it.

Technology, Obama and Rural Africa

Tonight, I'm participating in a podcast organized by the Peace Corps Africa Rural Connect project, on how the Obama administration can leverage digital technology to deliver social and economic gains to rural Africans. I'm going to make two points:

Let Aid Recipients Tell Donors What They Want

Technology can change the foreign assistance industry by allowing recipients, via mobile phones, to tell donors what their need on their own terms. Philanthropic groups such as Global Giving are already experimenting with linking donors and projects via an online marketplace for aid.  Further, Global Giving is experimenting with mechanisms to ask recipients exactly what they need from donors. One such experiments allows people to dictate donor funds in their community via mobile phone. The new USAID coordinator should put in mechanisms that allow recipients to tell us what they need.

Convince Telecoms of ‘The Economics of Abundance’

It may seem as though we are in a golden age of mobile innovation: Google is delivering farming information to rural Ugandans via SMS and Safaricom has a low-cost mobile money transfer service for Kenyans. However, the truth is that telecom companies are holding back to a trickle what should be cascade of innovation. The typical value-added SMS (anything besides person-to-person messages) costs 10 US cents in Uganda. 

This means that new innovations that would contribute to economic or social growth will not be deployed, not because of engineering challenges, but because of artificially high costs. The truth is, lower SMS prices mean both more users and revenue for network providers and more access to services for rural poor. Luckily, the [unfilled] State Department Coordinator for International Communications and Information Policy position exists to lobby foreign governments and telecoms on technology policy issues like this. 

driving my (temporary) benz in africa

  "Welcome to K'la City, where the food is delicious but the roads are shitty."

Like Chris Blattman, I also recently learned the perils of driving on Africa's mean streets. Unexpectedly, one of our Ugandan friends loaned us his Benz. As I took the keys from him, I immediately had flashbacks of turning into oncoming traffic and driving over medians: the adventures of my first day driving in America as a 16-year-old.

That night in Kampala, I had to adjust to both the perils of driving in Africa, and the challenge of orienting myself, British style, on the left side of the road.  Somehow we made it home, after rocking the chassis with a few deep pot-holes and almost knocking over a cyclist with a wide load of sugar cane.

The best part about driving in Africa?  When you are lost, you just ask a few children playing on the side of the road for directions, and they will jump in the back of the car and drive with you there.

Dreams of His Father

A president's first trip to Africa:

So I believe that this moment is just as promising for Ghana - and for Africa - as the moment when my father came of age and new nations were being born. This is a new moment of promise. Only this time, we have learned that it will not be giants like Nkrumah and Kenyatta who will determine Africa's future. Instead, it will be you - the men and women in Ghana's Parliament, and the people you represent. Above all, it will be the young people - brimming with talent and energy and hope - who can claim the future that so many in my father's generation never found.

A speech full of rousing rhetoric, unique in the directness of its call to hold African leaders responsible.  Yet the mechanics of Obama's policy in Africa: USAID director and Assistant Secretary of State for African Affairs, have yet to be put into place.

Why Bandwidth Prices Won't Fall Too Fast in Africa

Engineering News reports on the SEACOM submarine fibre cable:

The increase in pirate activity during April and May 2009, in terms of intensity and geographical coverage, has necessitated a change in undersea cable system Seacom’s cable installation plans, which has 
resulted in a delay in the ready-for-service date from June 27, 2009 to July 23, 2009.

Its hard to tell how much bandwidth prices will drop in East Africa with the arrival of the SEACOM. However, this article points to a more general problem: reliability.  How often will outages occur, either due to cable cuts or other problems? Since no one knows the answer to this question, most ISPs will have to maintain their costly satellite connections (at least as back up) until the reliability question is answered.

Steve Song on the Philippines, SMS Pricing and the Economics of Abundance

Last week I asked what arguments would convince network providers in East Africa to stop fixing SMS prices artificially high. Steve Song answered with the 'economics of abundance' argument, where carriers earn more by having more users at lower costs. This is a familiarand powerful argument in the telecom policy world.  Steve explains how the argument worked in Phillipines, resulting in 1 cent SMSs (the global average is 10 cents):

Regarding what sort of pressure it would take to get operators to voluntarily drop their SMS rates, I think they need to be convinced of the economics of abundance. They need to believe that if they halved their SMS rates, that their SMS traffic would more than double. I have given the example of the Philippines where they send roughly a billion SMSes a day as compared to roughly 25 thousand per day sent in South Africa. The cost of an SMS in the Philippines is less than 1 US cent as compared to 7.5 US cents in South Africa. If you double South Africa's population (and resulting SMS revenue) to roughly match the Philippines, they are still generating more than 3 times the revenue at less than 1/7th of the price.

Amassing evidence that lower pricing leads to more revenue is the first step. The second step is finding someone in the Kenyan or Ugandan telecom sector with the gravitas and positioning to make the argument to the network providers

I'm an Appfrica Labs Fellow!

Just over a month ago, when I arrived in Kampala via bus from Nairobi, I immediately started spending time with Jon Gosier, founder of Appfrica Labs, a for-profit incubator and software development firm in Kampala. Sensing that this fantastic company was growing both its bottom line and its international prestige (Jon was just named a TED Fellow), I immediately agreed when Jon offered me an opportunity to work on business development.

This week, we finally announced that I will spending the rest of the summer (at least) as an Appfrica Labs Fellow. I'll mostly be working on status.ug, a internet-mobile social network portal for Uganda (more on this soon).

Why Appfrica Labs? Since I left Uganda close to three years ago, both my research and private sector work has mainly been around two connected questions: What is the effect of digital technology on society; and, what communications policies will best promote innovation and growth in emerging market technology sectors-- both with a regional focus on Africa.

Appfrica Labs gives me a perspective on these questions from one of the leading innovators in East Africa. Not to mention, after meeting the amazing Ugandan developers that Jon works with [check out the great list of ongoing projects], I'm confident that he has the right business model to succeed. I'm happy to be on board!

Should Governments Force Providers to Lower SMS Prices?

Earlier this week, Google, Grameen Foundation and MTN Uganda launched a premium SMS service aimed at delivering health tips and critical agriculture tips to the poor. A debate erupted when it was mistakenly thought that MTN was charging users 220UGX to use this service.

nota bene: In Uganda, sending a person-to-person SMS costs 110UGX. Sending a premium SMS (primarily when businesses target potential customers) costs at least 220UGX.

When it was clarified that the service costs only 110Ugx, the debate turned to whether network providers are fixing prices artificially high, and if so, whether the government should set a price ceiling in order to both stimulate innovation and lower the prices for the poor.

Two thoughts:

(i) This is the lowest price ever for a premium SMS service in Uganda.

I was talking about this debate to a director of one of most prominent software companies in Uganda. He reminded me that this is the first time in the industry's history that a premium service has gone for less than 220UGX. This is a good first step, but most likely not a deal that anyone besides Google could get immediately. Many of the premium SMS services [usually targeting the rich] are adding their own fee (usually around 60UGX) onto the 220UGX base and making a killing

(ii) What kind of pressure would it take to get network providers to lower SMS rates voluntarily?

In Uganda, the best things are done without government intervention. Think about how amazing it is that an NGO, an Internet company and mobile company got together to launch this program without government intervention (contra programs run by, say, USAID or UNDP). Often when the public pressures an industry to reform, the industry comes together to create voluntary restrictions. This recently happened when the Internet industry came under fire for violating human rights in China. Is this concievable with the mobile industry in Uganda? If so, it would have to start with pressure from companies that are innovating in the SMS information space.