“People are more reliant on data services”, What’s App and Uber really making waves, say Ben Roberts, Liquid Telecom
14 October 2016
Kenya is one of Africa’s bellweather markets where you see early adoption and innovation. What’s App and Uber are making really large waves at the moment. Russell Southwood spoke to Ben Roberts CEO for Liquid Telecom’s Kenya operation and CTO for the group.
Q: What have the big changes been in the Kenya market over the past few years?
A: People are more reliant on data services and the quality of the service is absolutely key. If you mess up, your customer will go. There’s competition even though it’s still the same players.
Consumer behavior has changed quite a lot in terms of OTT services and people are using things like What’s App, ShowMax and Netflix and as a result are using higher and higher amounts of bandwidth.
High speed broadband is stalled. 4G is only provided by Safaricom and from what I can see, the coverage is not that good.
KPLC (the local power utility) has been rolling out electricity through its rural electrification programme. It’s connecting 1 million households a year and that starts to open new markets for broadband.
We haven’t seem much investment in new software and systems but that’s starting to change with investment in the cloud and the data centre.
Q: What’s happening with your data centre?
A: We’ve always built in a modular way and we’ve developed 2 floors. The phases have different levels of “moderness” as the technology moves on. We’ve done lots of skills building with the team, visiting global data centres to look at best practice. We’ve been working with the Uptime Institute and we’ll be announcing Tier 3 status soon.
We’ve built our own sub-station on site and this has cut the cost of power enormously as it gets us on to the medium voltage grid. We also made various other upgrades.
Q: Who are the data centre customers?
A: We have all the international carriers and local carriers. We’ve got the local Internet Exchange point and there is a very good TESPOK Initiative, GRX, Global Roaming Exchange which is designed to keep mobile roaming data in Africa. This fits into our overall big push in the data centre to keep African data in Africa and to ensure that African mobile data is converging on the data centre.
The other big customers are banks and financial services. We’re also beginning to see cloud provider start-ups, offering services for small businesses.
We've filled up every phase of expansion and we’re now working on phase three and the sub-station is part of that phase.
Q: What has happened to Safaricom’s market dominance?
A: Nothing’s changed and they’re strong in what they do best: Voice and mobile data. Their strength in that is impressive and they’re making a lot of money. But we see them branching out into other sectors into things like taxis (through Little Cabs, a local Uber competitor invested in through its VC fund Spark).It’s not natural for mobile phone companies to be taxi companies.
Q: What has happened to the ISP market?
A: The ISPs that started out in the beginning are more or less all still there. But those that don’t have infrastructure are behind the curve.
There’s also an underground ISP market in the high density, low income sector. They are operating below the radar without a licence but making business and getting subscribers. They might call themselves a carpet business and distribute 100 Mbps in the neighbourhood. They’ll never be able to move above the line. They’re making a living but they won’t be able to sell the business.
Then there are the remaining infrastructure providers: ourselves Liquid Telecom, Telkom Kenya, Jamii, Access Kenya, Wananchi/Zuki and Safaricom. Airtel have infrastructure but not so much in the Internet segment.
Q: If we’re moving towards a largely data driven market, who has the most interesting hand to play?
People will have to change their (business) models.
Mark Zuckerberg came to Nairobi a few weeks ago. Facebook have not yet invested in anything except for the satellite (the Amos 6 which exploded during the SpaceX launch). Others have invested hundreds of millions of dollars. Apps need infrastructure and drones are not going to do it.
Q: What’s innovative in the Kenyan market?
A: Most are trying to ride on mobile money. The sports betting stuff (Sports Pesa, Betway). Uber are in the process of founding a great service that rides on mobile data and mobile money.
But there are people coming up with good ideas that are not getting take-up from customers. There’s a reluctance to pay for things they don’t need with the exception of betting. Most people now have more disposable income and there are 2-3 million Kenyans you could call middle class.
But there’s a lack of market data about anything. In insurance, there’s no actuarial information on car crashes. There’s a lot of innovation working on those types of issues. We sponsor bandwidth for the Nairobi Garage which has two start-up spaces.
Q: How far have you rolled out?
A: We’ve rolled out in the cities and in 41 counties. We’ve done metro builds in Siaya, Homa Bay, Kilifi, Kwele and Garissa. In some places we’re offering Wi-Fi hot-spots, usually in partnership with the county governments.
Q: What innovations have had the biggest impact?
A: Undoubtedly mPesa. The Internet is changing people’s lives. What’s App is changing how people behave. There was a statistic recently that 95% of Kenyan families have a What’s App family group.
Uber is amazing. In Dar es Salaam I caught a taxi out to the Peninsula with a conventional taxi that cost TS25,000, the Uber taxi cost TS6,000 on the way back. It’s not just the price, it’s the reliability and you know where the driver is. And they’re not driving beat-up cars.
And as I said earlier, sports betting is changing behavior. But overall there are not so many things that are life changing. Scaling up seems to require working with big companies: for example Little Cabs with Safaricom.
You also see people doing text based services because not everyone has a smartphone but the mobile operator still takes 80% of the revenues.
Q: In your CTO role, what technologies will be big over the next five years?
A: There will be a massive role for the Internet of Things and it’s not just Smart Cities for IoT. The flower growers will probably use sensors and they can be connected to problems like cattle rustling.
Cloud apps have started so they’ll be much going on there.
But we need more skills in the tech space and a higher level of skills.
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