Data and mobile internet services are emerging as the new competition war front for telecoms


Data and mobile internet services are emerging as the new competition war front for service providers ever since the landing of undersea fibre optic cables, TEAMS and SEACOM, about a year ago.

Service providers and telecom executives have admitted that uptake for mobile connectivity and data services are rising. MTN chief executive officer, Themba Khumalo, has described it as another turning point. "This is the beginning of a data revolution in Uganda, it picks the ordinary person," said Khumalo at the launch of MTN’s 3G+ service.

The undersea cables have increased bandwidth capacity by almost double while prices have not come down. This has increased the speed and amount of data that can be transmitted on desktops and mobile handsets.

ICT analysts view the rush for the data market (especially mobile internet) as being mostly spurred on by the very crowded voice market. "12 years ago, voice was a luxury for a lucky few. Now we have the perfect match between service and pricing. If everybody can access data, the economy would be richer," said MTN's Isaac Nsereko.

Uganda has seven telecom operators: MTN, utl, Zain, Warid, Orange, Smile and I-Telecom. But competition is mainly among the first five. This competition has also mainly focused on voice, until the entry of larger data capacity through the undersea cables. According to Edouard Blondeau, Orange chief officer strategy, Orange today has 30,000 corporate and individual clients on their data service.

It is estimated that Orange controls about 70-80% of the mobile internet market with their modem plug-ins priced at sh25,000 per month (500MB) service, making it one of the cheapest on the market.

Meanwhile, MTN has presented several 3G enabled handsets and devices. The 3G provides enhanced data capacity and high speed mobile internet access. With the MTN devices, all that a customer requires is a 3G+ compatible device to gain access to a portable internet access service. The MTN mobile internet goes for as low as sh500 for 20 MB for an hour.

"The uptake has been beyond our expectations from data consumption per customer and number of customers signing up," said Nsereko.

The emergence of data as a new avenue for competition has seen telecoms paint the city with creative billboards and newspaper adverts selling their different data offers.

Uganda telecom was the first to build a 3G network in Uganda and still leads overall data market with about 80% market share. But utl's Mark Kaheru could not disclose the number of clients who have signed onto the 3G service but says clients as far as Gulu can access their 3G services.

Yaron Assabi, the chief executive of Digital Solutions Group, a private provider based in South Africa, says African markets do not yet have the right environment for widespread adoption.

"In many African markets, technology is still stifled by reasons including cost, accessibility and regulation. While in recent years, we have witnessed sizeable amounts of deregulation and investment in these markets that have created more competitive environments, cost remains a crippling variable to widespread access and adoption," said Assabi.

However, there is very visible rise in mobile phone penetration numbers across Africa that indicates a mass demand and existing potential. Internet penetration is between 2-5% compared to voice that stands at over 30%.

"We believe we can bridge the gap," said Nsereko. Experts also believe that to make mobile internet more relevant, service providers must find rich-media content and lower browsing costs.

"This will play a revolutionary role in bridging the digital divide and building African economies by connecting previously constricted communities across Africa to the rest of the world," said Assabi.

The pricing structure have stirred the data tariff war. The competition has enabled end users use their sim cards both for voice calls and internet connection. The July 11 bomb blasts forced service providers to explore new ways of service delivery. Orange, for instance, sought a regional alliance by integrating its loop with a Kenyan partner to hook onto SEACOM.