University of Nairobi School of Computing & Informatics ICT Sector Performance Review 2009/10 Prof. Timothy M. Waema Research ICT Africa Kenya Team Leader 16 November, 2010

Agenda 1.Research ICT Africa (RIA) and ICT research 2.Access and usage demand survey (2007) 3.ICT sector performance review 2009/10 (supply-side) 4.Regulatory environment perception survey 5.Research challenges 6.Challenges & policy recommendations

1. RIA and ICT research RIA Network is one of the research networks originally started with funds from IDRC Network has grown from 2004 and now consists of 18 African countries Purpose of RIA research is: to create a rich evidence base of the ICT sector developments in selected African countries to enable comparison of policy outcomes in different countries against national strategies and sector performance influence ICT policy Kenya team consists of 1. Prof. Timothy M. Waema 4. Prof. Meoli Kashorda 2. Ms Margaret Nyambura 5. Dr. Monica Kerrets- 3. Dr. Catherine Adeya Makau

2. Access and usage demand survey

Methodology Use of NASSEP IV sampling frame KNBS Sample 1461 HHs Major urban – 584 (40%) Other urban – 439 (30%) Rural (30%) HH selection Uniform sample of 24 HHs in each cluster 1 st HH randomly selected in each cluster Next HH systematically determined (last HH + interval) Provision for replacements for vacant, demolished or households whose occupants were not available after a maximum of three call-backs Respondents selection Head of HH or next most senior member of HH Data collection using PDA & analysis by SPSS

Key findings

HHs with computer & Internet

presence

Reasons for not using Internet

Internet tariffs – 20 hrs/month

Monthly Internet expenditure

3. ICT sector performance review 2009/10

Methodology Review of documents, e.g. CCK publications Review of websites of operators, CCK, etc. Telephone interviews with selected persons

Key findings

Summary of telephony services Fixed telephone services Connections been declining since end of monopoly Slight growth in 2009 due revitalisation of Telkom Kenya following its privatization in 2007 Phenomenal growth of mobile services eaten into this market Fixed wireless telephone services Not been growing much Expected to grow with migration to the Unified Licensing Framework

Mobile telephone services Phenomenal growth (51.2% penetration by June 2010) Growth can be attributed to: the competitive effects resulting from the increased number of mobile operators increased mobile coverage aggressive marketing through increased offers and promotions, esp. availability of low denomination calling cards increased affordability of handsets Increased infrastructure sharing among the mobile phone operators Safaricom shares towers with Zain and Orange through reciprocal arrangements Essar Telecom Kenya (Yu) also shares Zains towers and base stations

Interconnection rates fixed to mobile phones (USD) (2009/10)

Mobile termination rates in US cents (Sep 2010 )

Internet users Have been growing slowly, with phenomenal growth 2009/ m June m June 2009 (9.5% penetration) 7.83m June 2010 (20% penetration) Growth in 2009/2010 largely due to: entry of mobile operators aggressive rollout of data services by mobile operators, esp. Safaricom increased access to social networking sites through mobile phones that has become popular among the youth in the country Internet penetration figures of other countries: 33.4% Mo28.9% Nig20% Ke 10.8% SA9.6% Ug5.3% Gh 4.1% Rw1.6% Tz0.5% Et

Commercial broadband bandwidth cost (Feb 2010) Guaranteed bandwidth (Kbps) CCK Avg Sep 2009 Op 1 Feb 2010 New as % of old tariff Op 2 Feb 2010 New as % of old tariff 25638,62512, , ,27623, , ,102 <$3,500 48,000 $ ,000 $ Note: Retail prices have been slow in coming down!!

4. Regulatory environment perception survey

23 Background What? A perception survey of the Telecom Regulatory Environment (TRE) in Kenya from 57 industry experts from 3 balanced sectors: Operators, consultants, CSO/public sector/researchers When? Jul-Aug 2009 (before i/connection determination #2) Why? Gather perceptions of the telecom regulatory and policy environment in the country Gauge the strengths and weaknesses of the environment Use the results to influence changes in the ICT policy and regulatory environment in Kenya Benchmark with other African countries Results ca be used as a tool for investors to assess regulatory risk in a country

24 Data collection Assessment of three sectors: Fixed services, Mobile services, ISP/VAS services For each of the 3 sectors, assessment of 7 dimensions: 1.Market entry 2.Allocation of scarce resources 3.Interconnection 4.Regulation of anti-competitive practices 5.Universal service obligation 6.Tariff regulation 7.Quality of Service For each dimension, rating the quality of the regulatory environment on a scale 1 = highly ineffective to 5 = highly effective

Key findings

Mobile services

VANS/ISP services

Regulation of interconnection

Regulation of anti-competitive practices

Quality of services

Average satisfaction rate

5. Research challenges Difficult to obtain some of the data, esp. Financial data - investment and revenue Most sector-oriented data not available Limited information in operators websites Some dont publish the tariffs on the web contacts dont work - except customer service whose directed queries were rarely answered Offers and promotions that made it challenging to establish the actual tariffs CCK information often differed from the operator data While respondents promised to respond to the online regulatory review, most did not

6. Challenges & policy recommendations ChallengePolicy recommendationTiming 1.National ICT policy not in tune with current realities Update the existing ICT policy through stakeholder participation June Regulations not supported by key stakeholders Review regulations with support of key stakeholders March High retail cost of broadband Institute a regulatory mechanism(s) to bring down retail broadband tariffs March 2011

ChallengePolicy recommendation Timing 4.ICT is not real sectors, e.g. cannot obtain aggregated socio-economic data on ICT employment, GDP contrib., products, etc.) MoIC and KNBS to engage in a process that will create a single ICT/ITES sector and mainstream it into the national planning and operational frameworks (e.g. KNBS can collect data on ICT/ITES as a sector like all sectors) Dec 2011

ChallengePolicy recommendation Timing 5.No institution has explicit mandate over ICT sector data Give legal mandate over ICT data to one of the existing institutions June ICT sector data is not accurate & up-to-date Body to regularly collect and provide accurate data on ICT sector, collaborating with KNBS Conti- nuous 7.Independence and power of the regulator Strengthen CCK to be a more independent & powerful converged regulator ?