UN’s International Telecommunication Union, ITU, estimated that there were 4.6 billion mobile phone subscriptions globally by the end of 2009 (ITU 2009b), two-thirds of them in the developing world. A quarter of a billion mobile subscribers can be found on the African continent and the number is constantly increasing as it is the region with the highest annual growth rate in mobile subscribers (ITU 2009a).
As seen in data from ITU in Table 1,
computing technologies are unfamiliar and unaffordable – internet users are few and computers in households are rare. The fixed line sector has remained stagnant since the East African countries decided to abandon government-run telecommunication systems and instead offer mobile network licenses to the highest-bidding private investors. The region’s mobile sector on the other hand, has achieved remarkable growth and expansion in the past decade and the annual growth rate in East Africa has been above the African average (Table 2)
East Africa’s mobile communications market is still relatively young, but the level of competition in the mobile and internet market has increased dramatic over the past few years. Improved regulatory structure and technology advancement has led to an unprecedented growth. However, according to the ITU statistics, overall penetration rates remain low even though mobile network coverage reaches areas far beyond that covered by fixed line infrastructure. For example, 84% of the Kenyan population have mobile coverage (CCK 2009) so there is significant room for expansion compared to mobile penetration.
Statistical data like this is not giving the whole picture though. Taking East African demographics into account, where 42–49 per cent are under the age of 15 years, gives a total different penetration rate since the use of mobiles should be per adults, not per total population. See the paragraph “Actual phone-ownership and use” for a more detailed discussion.
The recent global economic crises has affected the market and while European and Middle East telecom companies’ are slowing down their investment, Asian, mainly Indian, companies step in. The East African market will most likely become even more competitive in the few years to come, and due to the launch of several key projects and products, mobile services other than voice are expected to boom.
The competitive environment has also encouraged innovation and East Africa has emerged as a testing ground for new applications. For many end-users though, the environment is not good enough. Handsets are too expensive, airtime credit runs dry too quickly, promised service is not delivered and applications and solutions are not well known. This creates other types of innovations: unconventional ownership
models such as village phone concepts and shared handsets practices but also multiple SIM card ownership.
Decentralized prepaid payment plans and electricity constraints also creates another type of usage compared to other parts of the world.
Actual phone ownership and use The tremendous growth that the region has experienced over the past few years is linked to the improved regulatory structure and technology advancement but also to the phenomenon of multiple connections per user. Users tend to have more than one SIM card depending on a number of things like operators differences in geographical coverage, varying quality of the network, and the cheapest prepaid deal currently on offer.
Mobile penetration is defined as the number of active SIM cards divided by the country’s population. Operators use different techniques to decide their customer base and subscriber numbers are computed in a myriad of ways. Some count every SIM card ever sold while other look at active subscribers.
The latter technique is called dynamic validity: subscribers are customers who have participated in a revenue generating activity in the last 90 days. Why do some operators want to communicate that they have a high subscriber base and what is the problem doing it? Ewan Sutherland, Research Fellow at LINK Centre, University of the Witwatersrand, explains:
“Having a large number of customers looks good for mobile network operators, especially when making a case to government. On the other hand, it reduces the Average Revenue Per User (ARPU), since the total revenues must be spread more thinly, and thus it disappoints financial analysts” (Sutherland 2008).
Regardless how the operator counts the subscriber number it does not address the problem of multiple SIM card ownership. There is a clear difference between mobile subscriptions (SIM ownership) and actual ownership and use (phone ownership and access). An individual may only have one SIM card and no phone, others may have many SIM cards and one phone while others yet may have many SIM cards and many phones.
A sound hypothesis is that actual ownership of mobile phones is much lower than that of the subscription statistics in East Africa. Richard Heeks, Professor of Development Informatics in the Institute for Development Policy and Management, University of Manchester, writes in a blog post that mobile subscription
figures are overestimates of in-country mobile ownership due to a number of reasons like multiple subscriptions, short term visitors in the country, subscribers in neighboring countries. He asks:
“How big is this effect? Of course it varies, but a gratingly rough estimate is that in-country ownership is 75% of the subscription figure” (Heeks 2009).
However, one must remember that mobile subscription figures might be underestimates of in-country mobile phone access. Heeks give us two reasons: first private mobile phones are commonly shared with family, friends, neighbours, etc. Secondly, public mobile phones are accessed by many (Heeks 2009). A large proportion of the rural population in East Africa are covered by a mobile signal and through indirect access, i.e. sharing of handsets and using public phones, they too can benefit and communicate.
Heeks end his blog post by stating that “ownership might get messed up by age demographics” since a big portion of the population “might be seen as too young (10 or under) to own a mobile phone” and that “the mobile subscription per capita figures and the actual ownership per capita of adult populations could [ironically] be about the same”
Internet and submarine cables
In terms of Internet connectivity, East Africa has been among the worst places in the world, hampered by expensive satellite access and non-sufficient traditional fixed-line networks. However, international undersea fibre optic cables, some which have been in the pipeline for years, have finally landed on the East African shores. Seacom was the first submarine cable to connect in Mombasa in July 2009,TEAMS landed shortly thereafter. One can wonder why it is has taken so long to connect East Africa to the international submarine cable systems. The answer is not so much of a technological issue, rather one about lack of agreement among the African governments, companies and international institutions about tariffs, access models and other management issues. And that of pirates outside the coast of Somalia.
With the arrival of the long awaited undersea cables, major shifts in the internet service provider (ISP)business is taking place as players position themselves. Several competing wireless broadband networks and national fibre backbones are being rolled out. For example, industry top players in Kenya like Safaricom,Zain Kenya, Access Kenya, and Wananchi Group are all buying smaller ISPs in search of value buys. Landing of the cables have improved internet capacity in terms of bandwidth, speed and reliability,and it is perceived that the cost of communication will drastically reduce as competition is heating up. This will eventually lead to a rapid increase in internet penetration and open up internet to the majority in the region that still lack affordable access.
However, there is still a long way to go and despite the arrival of two submarine cables, prices for internet connectivity remains high. Most ISPs have doubled the bandwidth while keeping the same prices instead of lowering the prices. This is unfortunate since lower prices is what the region needs considering the fact that internet still remains out of reach to the majority of East Africans, especially in rural areas. Capital FM in Kenya reports that “the providers have been accused of behaving like a cartel but they have defended themselves arguing that they need to recoup their investments” and that the Kenyan government “has sent out a warning that it would be forced to step in and regulate internet connectivity charges if the prices will not come down significantly” in the near future (Njoroge 2009).
Not only do mobile operators become ISPs, when mobile phones to a larger extent are used as an internet access point and mobile usage of laptop computers is becoming more common, the role of Internet Protocol (IP) as the platform for future mobile services is being established.