Kenya special: market gets ready for cheaper bandwidth

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The Kenyan Internet market is set for a big change as the players transform their strategies to take advantage of new opportunities. With legal VoIP, they are now no longer looking at just offering Internet access. Once the long-delayed interconnect agreements are sorted out, these newcomers will start making inroads into the voice market. With the arrival of cheaper, plentiful international bandwidth in 2008, those who will flourish in a competitive market will no longer primarily sell bandwidth. With cheaper broadband offers, the number of their customers will increase and they will look to services and applications that they can sell their customers.

The market is going through a major period of re-alignment and investment. Access Kenya’s IPO was four times over-subscribed, showing the level of interest there is in the market and it has plans to expand (see On the Money) . Telkom South Africa is now the proud owner of Africa Online and is devising its strategy for both the pan-African and local markets. ATC is now firmly at the helm of Wananchi and has ambitious expansion plans. There are also losers as we understand that there are at least two ISPs that are not in the best of financial health.

Last week five governments signed a communiqué in Kigali saying that the East Africa Community “should adopt an open access policy for backbone networks”. TEAMS will be fast-tracked, promising to start in Q1 2008 and it will seek input from regional partners within 4-6 weeks. (see Internet News below). Meanwhile, a large team from the private sector competitor project, Sithe’s Seacom, was in Nairobi last week talking to potential customers. The heat is on to see who will be the first to market with cheaper international fibre.

In this Kenya special, Russell Southwood interviews John Joseph, the new CEO of Africa Online who gives some pointers about its future direction and to Kai Wulff, CEO of KDN whose recent “free access” experiment provides a fascinating insight into the potential size of the market. After the flattening out of dial-up demand, the market’s on the move again with strategies to attract new customers in what looks set to become a much bigger market.