University of Nairobi School of Computing & Informatics

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

2. Agenda Research ICT Africa (RIA) and ICT research Access and usage demand survey (2007) ICT sector performance review 2009/10 (supply-side) Regulatory environmentperception survey Research challenges Challenges & policy recommendations

3. 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

4. 2. Access and usage demand survey

5. Methodology Use of NASSEP IV sampling frame KNBS Sample 1461 HHs Major urban – 584 (40%) Other urban – 439 (30%) Rural - 438 (30%) HH selection Uniform sample of 24 HHs in each cluster 1st 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

6. Key findings

7. HHs with computer & Internet

8. E-mail presence

9. Reasons for not using Internet

10. Internet tariffs – 20 hrs/month

11. Monthly Internet expenditure

12. 3. ICT sector performance review 2009/10

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

14. Key findings

15. 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

16. 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 Zain’s towers and base stations

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

19. Mobile termination rates in US cents (Sep 2010)

20. Internet users • Have been growing slowly, with phenomenal growth 2009/2010 • 2.90m June 2008 • 3.65m 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% Mo 28.9% Nig 20% Ke • 10.8% SA 9.6% Ug 5.3% Gh • 4.1% Rw 1.6% Tz 0.5% Et

21. Commercial broadband bandwidth cost (Feb 2010) Note: Retail prices have been slow in coming down!!

22. 4. Regulatory environmentperception 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: • Market entry • Allocation of scarce resources • Interconnection • Regulation of anti-competitive practices • Universal service obligation • Tariff regulation • Quality of Service • For each dimension, rating the quality of the regulatory environment on a scale • 1 = highly ineffective to 5 = highly effective

25. Key findings

26. Mobile services

27. VANS/ISP services

28. Regulation of interconnection

29. Regulation of anti-competitive practices

30. Quality of services

31. Average satisfaction rate

32. 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 don’t publish the tariffs on the web • Email contacts don’t work - except customer service email 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

33. 6. Challenges & policy recommendations