Kenya’s Government goes ahead with partnership to build out LTE infrastructure

Mergers, Acquisitions and Financial Results

The government expects consumers and smaller operators to benefit from the formation of a new private/public organisation that will build and manage Long Term Evolution (LTE) infrastructure, commonly known as 4G.

The move by the Ministry of Information and Communication is seen as an admission of flaws in the licensing and allocation of 3G spectrum, where operators have been unable to fully roll out infrastructure because of expensive licence fees ($15 million or Sh1.4 billion) and high capital expenditure.

Currently, Safaricom has the most extensive 3G infrastructure with 1,500 base stations on 3G compared to about 2,500 base stations country wide. Telkom Kenya has 220 sites on 3G while Airtel is currently testing its 3G network.

Globally, technology has moved to LTE, which is seen as an answer to connecting rural and under-served areas though the cost of rolling out the infrastructure is prohibitive for operators who are yet to take 3G out of major towns to rural areas.

The expense and slow roll out even by bigger operators prompted the government to invite bids for public private partnership to build, operate and maintain a national open access network, which will bring together operators and equipment vendors.

In the public-private partnership, the government hopes to set a global precedent, where operators can share both active and passive components in the network.

"This will be a first in the world where operators will share both passive and active infrastructure, the benefits will be passed on to the consumer in form of cheaper broadband," said Dr Bitange Ndemo permanent secretary in the Ministry of Information and Communication.

Ideally, an open access platform will benefit small and big companies that will have an opportunity to provide services without worrying much about expensive licence fees or the capital expenditure of rolling out the network.

"In principle, having a single (large) network should not be a problem, normally the concern arises around who is going to manage or maintain it and how will it be managed," said Mr Dobek Pater, senior telecoms analyst at Africa Analysis, an ICT consultancy firm.

There has been discontent in the industry over the advert requirement that the private partner must be tier 1 network operator, 20 per cent Kenyan owned and ability to roll out to 47 counties within a year.

Some players feel that the requirements were skewed in favour of the largest mobile network but Mr Ndemo sees the move as a savior to smaller ISPs which have been unable to compete with mobile networks.

"This is the only way to salvage Internet Service Providers owned by small businesses to be able to compete; people need to understand open access and shared infrastructure," said Mr Ndemo.

Globally, there is no uniformity on the spectrum band for use in LTE. For instance, Safaricom is testing LTE on its GSM band, which may interfere with other services already on offer like voice, 3G and 2G.

Globally, LTE is optimised for 2.6GHz but Kenya faces a bigger trick because that spectrum is currently being used by the military.

The Communications Commission of Kenya has been in discussions with the military to migrate its services to fibre and release the spectrum, even though CCK has also maintained that there are other available mechanisms like utilising the analogue spectrum, which will be released by the television stations, once Kenya migrates to the digital platform. The spectrum, commonly known as digital dividend is on 700 MHz band, is expected to be reallocated on a competitive basis.