South Africa - growing pains in a highly regulated market
3 March 2000
Zambian ISPs interviewed
Issu no 11
News Update 11 - Zambia COMING SOON: THE INTERNET IN NIGERIA AND MP3 IN AN AFRICAN CONTEXT What follows is an interview with the major ISPs in Zambia conducted by Zambia Online's Infotelligence. It raises the difficulties encountered by ISPs operating in a relatively small market place. Zamtel's comments on the state of the national telephone service will bring a wry smile to the face of anyone familiar with the Zambian telephone service.
If our correspondent is "off the mark" or you have factual amendments, mail them to us and we will include them in subsequent News Updates. If you'd like to contribute, write and let us know.
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If you want to subscribe to News Update, simply send a message saying I want to subscribe to firstname.lastname@example.org. Also if you no longer wish to subscribe, simply send a message saying I no longer want to subscribe to the same address. ZAMBIAN ISPs INTERVIEWED - COMPETITION, SERVICE, GROWTH RATES AND A VISION FOR THE FUTURE Interviewed below are:
Thomas Lungu (Marketing Manager, Coppernet Solutions), Daniel Mporokoso (Managing Director, Zamnet Communication Systems) and Bwalya Kasenge (Internet Manager, Zamtel Internet Services).
Infotelllgence: WHEN DID YOU START OFFERING INTERNET SERVICES?
Coppernet : 1996 as Coppernet Services under ZCCM.
Zamtel: The Zamtel Internet Services was commissioned on 5th May 1997, with a clientele base of 15 customers. The system was then running on a 28.8 Kb/s analogue gateway link into South Africa.
Infotelllgence: WHAT IS YOUR CLIENT BASE LIKE AND WHAT KIND OF GROWTH RATES HAVE YOU EXPERIENCED?
Coppernet: Something like 2700 users split into 750+ subscribers still growing.
Zamtel: Zamtel Internet Services currently has more than Six Hundred (600) customers throughout the country. The clientele includes government ministries and departments, private and parastatal companies, and Individuals. Since October last year, when the digitalized and upgraded gateway link was commissioned, our customer base has been increasing expediently. The upgraded digital gateway link now runs into Teleglobe Canada.
Zamnet : Our client base is very diverse covering all organisations, businesses and individuals alike. We've noticed annual growth rates of about 15%.
Infotelllgence: WHAT DO YOU THINK IS THE MAIN REASON WHY THE INTERNET INDUSTRY IN ZAMBIA HAS GROWN SLUGGISHLY COMPARED TO OTHER COUNTRIES IN THE REGION?
Coppernet : What is the cost of a net capable device? What is the average Income in Zambia? What is the Infrastructure for connectivity to the masses? Answer these questions correctly and you will understand exactly why!
Zamtel: This has a great bearing on the economy of the country. The purchasing levels of the people are too low to allow them to own computers. Even the cost of maintaining an Internet account is sometimes too high relative to the people¹s earning power. Furthermore, there has not been a concerted effort to disseminate information on the necessity of the Internet particularly to schools. All Schools need to be connected to the Internet and school syllabi reviewed to incorporate computer literacy and Internet training. In addition consideration should be given to waiving duty on the Importation of computers In order to make them more affordable.
Zamnet : The slow growth of the Internet industry can be attributed partly to the lack of investment for start-up of new ISP¹s. The licensing fees are also another factor, though it can be argued that for a small market like ours, a proliferation of ISP¹s may not be desirable. Lastly, I feel that lack of adequate awareness about the Internet and its benefits has been a contributing factor.
Infotelllgence: ZAMBIAN ISPs ARE OFTEN ACCUSED OF NOT WORKING TOGETHER TO BRING DOWN THE PRICE OF INTERNET CONNECTIONS ALLEGEDLY DUE TO FEUDS AMONGST THEMSELVES. CAN YOU COMMENT ON THIS?
Coppernet: How are we supposed to be working together to bring down the price. I do not understand. I thought that competition not collusion is what brings prices down. Ever heard of OPEC? Yes they collaborate to keep oil prices up. So if its pricing then it seems to me that you do not want us to collaborate but compete.
Zamtel: There could be a misunderstanding of the concept of competition such that a competitor is viewed as an enemy. We are however quite happy with the good relations we have established with Zamnet whereby we see each other as partners in the development of our nation through Internet services
Zamnet: The ISP market is still fairly new, particularly in terms of competition. Nontheless, the few active ISP¹s do consult on a regular basis and issues of more co-operation are being addressed. Whether this translates to cheaper Internet service remains to be seen.
Infotelllgence: WHAT DO YOU THINK OF THE IDEA OF ALL THE ISPs IN ZAMBIA USING A SINGLE GATEWAY TO THE INTERNET SO THAT THE AVERAGE BANDWIDTH PRICE REDUCES AND THE CONNECTION SPEED INCREASES?
Coppernet: A single gateway is great particularly if it allows us to bring prices down but It must be run commercially so that the users can apply pressure on it. The best way for this is by allowing us to get bandwidth from elsewhere if the single gateway price is poor. In Kenya they have a single gateway, pricing is US$109 for a dialup account with 50 hours. The reason is that the single gateway is Kenya Telecom and they cannot apply any pressure on it by using other providers since It is a country law to use their gateway who then charge what they like.
Zamtel: That is the ideal solution. Zamtel has been working and lobbying for a common gateway for a long time now. This Is because we understand and appreciate the benefits of a reliable common gateway. In this vein, we are lobbying through platforms such as the Leland Initiative. A common gateway is a sure solution to the high price on bandwidth.
Zamnet: The use of a single gateway for Internet access would help increase the total available bandwidth and possibly increase browsing speeds for customers. However, issues of redundancy call for the use of several access paths to the Internet. Zamnet will hence utilise whatever means are available of achieving this, even to the extent of installing several of its own gateways.
Intotelllgence: AFRICA ONLINE ARE LAUNCHING THEIR SERVICES IN ZAMBIA THIS YEAR. WHAT IMPACT DO YOU THINK THEIR ENTRY INTO THE ZAMBIAN ISP MARKET WILL HAVE? WILL THEY OFFER GOOD COMPETITION TO YOURSELVES AND DO YOU FORESEE A SIGNIFICANT REDUCTION IN THE AVERAGE PRICE OF INTERNET ACCESS WHICH IS CURRENTLY AROUND $25-30 PER MONTH?
Coppernet: More competition, definite split In the market as people try and play off the providers. I cannot see them matching unlimited access but then again, who knows? Internet access, if you stick to under 20 hours is US$25-30 per month. Only one provider guarantees you US$30 per month and now we have a US$20 per month package. Watch the papers!
Zamtel: This will not affect the ISP market significantly. It remains to be seen whether their services will be more cost competitive than ours.
Zamnet: The entry of another ISP on the Zambian will help to further improve the overall quality of the service available to Zambian Internet users. The added choice of provider is also welcome. Zamnet is the best ISP and will continue to be the market leader.
Infotelligence: THE TELEPHONE SECTION OF ZAMTEL IS OFTEN BLAMED FOR INTERNET CONNECTION PROBLEMS. CAN YOU COMMENT ON THIS?
Coppernet: The quality of telephone lines determines the performance of a dial-up link. Even Zamtel would be the first to admit the quality of phone lines is not uniform country wide, even within the same town. But notice one thing; they have now spent money on exchanges all over the country and as long as this continues, who knows? We may get good quality all over the place. My bone of contention is just giving us the ISP¹s access to digital lines that allow 56K responses from the access servers.
Zamtel: Whatever this means! Firstly, Zamtel has a host of telephone lines still waiting for customers to apply for them. Therefore, if this refers to the telephone lines being limited, then the argument does not arise. So, If a customer has problems dialling into an ISP¹s access server due to congestion, the customer can as well advise that particular ISP to come and buy more lines from Zamtel. However, Internet connectivity is a factor of many parameters. One may do well to note, for example, If there Is mismatch on the specifications of the access equipment (modems and terminal servers) of an ISP, there is bound to be intermittent disconnection on the telephone link. But this Is also true if the customer¹s line is bad. Zamtel will be pleased, as we have always been, to work on faulty phone lines, and will be happy to receive a report of an occurrence of such a fault.
Zamnet: Zamtel¹s telecommunications infrastructure was designed for providing voice services. As such, there are certain cases where data services over dial-up do not perform very well. However, Zamtel have been very co-operative and provided digital trunk lines where possible to further improve the quality of dial-up Internet services.
Infotefllgence: CAN YOU COMMENT ON THE COMMUNICATION AUTHORITY'S $40,000 PRICE TAG FOR AN ISP LICENCE?
Coppernet: The price is very steep but having said that, you need the Comms authority because imagine what it would be like without a Comms authority. People would be given a licence and only give you coverage where and how they like. Look at mobile phones. They only work in certain areas. The Comms authority will apply pressure to get them to work in more areas. But this Is what makes the CA a good thing. You mention Zamtel in the previous question well the CA is the only authority that can question their authority.
Zamtel: We do not have any difficulties with the price tag. Judging by the number of emerging ISP¹s the price does not appear to be prohibitive. Ideally the money collected should be channelled to the promotion of the Internet expansion throughout the country.
Zamnet: The $40,000 CAZ ISP licensing fee, we feel, is designed to discourage too many ISP¹s on the market. This has a tendency to ensure that only well funded companies provide Internet services and it is hoped that this, in the long term, will translate into service of high quality. The existing ISP¹s benefit as they are able to put more effort into provide better service to their customers as opposed to fighting sales/marketing battles.
Infotelligence: WHAT IS YOUR COMPANY DOING TO PROMOTE THE GROWTH OF THE INTERNET INDUSTRY IN ZAMBIA?
Coppernet: Well we are expanding firstly and showing people how to use the technology. Our pricing policy is a definite encouragement and our new payment plans should encourage more people to participate. At least the corporates.
Zamtel: Zamtel has embarked on the Internet Expansion Program to extend coverage to the entire country. We are, very soon, putting a Point Of Presence (POP) on the Copperbelt so that customers in this area can enjoy a faster quality speed In addition to paying a local call charge for Internet connection. In addition to the efforts directed at the Copperbelt, we are undertaking the expansion of the Lusaka POP. We are also lobbying for a common gateway so that Internet traffic of all ISP¹s is carried by one gateway, preferably Mwembeshi Earth Station. This in itself will work greatly towards promoting Internet growth In the country, as it will culminate in reduced ISP costs. By the multiplier effect, this cost reduction will spill over to the customers.
Zamnet: We have plans to promote the use of the Internet by the business community, where the largest Impact of introduction of Internet services is expected. We are also working actively to promote the use of the Internet in schools.
Infotelllgence: WHAT IS YOUR VISION OF THE FUTURE OF THE ZAMBIAN ISP INDUSTRY? DO YOU HAVE AN EXPANSION PROGRAMME?
Coppernet: We are here to invent the future. The future of the Zambian Internet market will be as we invent It. We have some very ambitious expansion programmes and are about to introduce technology that most people around think Is only available "out there". The only limit is capacity to spend beyond which you should expect everything that is on the net and more. Look out for happenings on the Internet but made in Zambia!
Zamtel: Through the Internet Expansion Program that Zamtel has embarked on, it is envisaged that every Zambian be able to afford Internet connection. Our vision is to enhance e-business and e-commerce in Zambia.
Zamnet: Our vision is for the Internet to be available in every business, every school, organisatlon and as many homes as possible. We have an expansion programme that will ensure that our vision is achieved.
Infotelllgence: DO YOU FORESEE A SITUATION IN ZAMBIA WHERE INTERNET ACCESS WILL BE FREE? HOW SOON DO YOU THIN THIS WILL HAPPEN?
Coppernet : Well let me give you the full spiel on this. Advertising is what gives free Internet accounts In other countries and also note that Freeserve (a UK company), the first to provide it has never made a profit yet. So I cannot see free access becoming a world-wide phenomenon just yet. How many companies advertise heavily in Zambia? Also there are certain people in the industry capable of doing It but who lack the vision for It. Perhaps we are capable of doing it but not just yet. We would need something else In place which is not under our control to be able to do so.
Zamtel: Free Internet access is definitely coming to Zambia, but this may take time. This will be possible If many corporate bodies are connected to the Internet. The introduction of e-commerce and e-business is another driver.
Zamnet: Nothing is for free.
Infotelllgence: WHAT DISTINGUISHES YOUR COMPANY FROM OTHER ISPs IN ZAMBIA? WHAT'S YOUR BIGGEST SELLING POINT?
Coppernet: The fact that we will invent our future. We are not a "find out what they are doing In the States and try and do It in Zambia" company. Neither are we particularly interested in comparing ourselves with others. We are never satisfied with what we have and on a personal note, I cannot wait till my Internet access becomes at least as good as JANET (a UK academic network), which is what I got used to before I used the Internet In Zambia. We are not limited by our environment and are open to ideas that most people would view as blasphemy in business. Some of the schemes we are planning would be questioned by everyone but when looked at in depth, you see a well thought-out pattern. I mean ask yourself this: Why would you move from a faster service to one that is rumoured to be slower? The answer to that question is the power of Coppernet. Remember we are yet to finish our Lusaka implementation. When that happens you will see who we really are!! Just the most brilliant, innovative and futuristic ISP In Zambia.
Zamtel: The quality of service Is our strongest point. Our system is congestion-free while the connection and gateway speeds are incomparable. This is no brag. Check it out and get the feel! Also, our Internet Services Department is equipped with a well-trained team of Customer and Technical Support staff that is always eager to attend to customer requests. No mention be made of our equitable pricing. The only feature we have forgotten on our Internet services Is a high price tag.
Zamnet: Zamnet is the biggest and it Is the best.
Zambia Online's excellent Infotelligence can be found on: http://www.zambia.co.zm/infotelligence/
LATEST RESEARCH FINDINGS ON SOUTH AFRICAN INTERNET MARKET The year 1999 saw more than half a million new users arriving on the internet in South Africa, to bring the total number of internet users in South Africa to 1.82 million. This was the key finding of the 4th South African Internet Services Industry Survey 2000, the latest version of the survey conducted annually by Media Africa.com since 1997.
The survey divides the internet access market into three categories:
* dial-up users accessing the internet via modems;·
* academic users gaining access at educational and research institutions; and
* corporate users gaining access through company networks.
One of the key findings of the research is that the total number of South Africans gaining access through dial-up modems via internet service providers at the end of 1999 was found to number at least 560 000. This figure, up from 366 000 at the end December 1998, amounts to 194 000 new users, representing growth of 53% in 1999 (growth in 1998 was 86%). However, dial-up growth for 2000 is expected to slow down further, with the internet dial-up user base growing at only 40% for the year to reach the 782 000 mark. This slowdown in growth is expected to continue at least until a second telecommunications operator is allowed to roll out a full service offering in competition to Telkom, possibly by 2003. Nevertheless, the growth in absolute numbers remains strong. By the end of 2003, it is projected, the total should have reached 1 560 000.
The number of South Africans gaining access to the internet through corporate networks - linked to the internet via high-speed digital leased lines - continues to grow as large corporates accept the internet as a crucial communications tool. However, growth in leased line connectivity is less rapid than in the past, indicating greater saturation of the market and slowdown of access to infrastructure. The survey showed that more than 4 900 (3 500 in 1998) digital leased lines have been installed for companies and corporations in South Africa - growth of 40% over the preceding 12 months.
Over the four years during which this survey has been conducted annually, the most appropriate estimate for leased line usage has settled at an average of 200 users per leased line. This approach has been taken since the second survey, and has received general acceptance from industry analysts as tallying with their own observations. Consequently, this survey uses the same formula. This brings the number of corporate users in South Africa to 980 000 (700 000 in 1998).
Once again, cautious implementation of connectivity among corporate white-collar workers, brought on especially by the virus threat, and delays by Telkom in making infrastructure available, indicates that growth in users (as distinct from leased line connections) during 2000 will not exceed 30%, pointing to a total by the end of 2000 of 1 274 000 corporate users. While a significant proportion of corporate users also have access at home, research indicates that an even higher number of home dial-up accounts represent more than one user in that household. Consequently, this "double-counting" of home and corporate users is more than evened out by the multiple usage of home accounts.
The total number of internet users was boosted more strongly in 1999 than in any previous year by the growth in schools' connectivity. Previously, the academic portion of this survey focused entirely on the connectivity provided to academic institutions through the research and academic network, Uninet, which provides access to most research and tertiary educational institutions in southern Africa, as well as to more than 200 schools. However, as more and more schools go it alone, through privately funded connections via ISPs, it has become impossible to ignore them as a separate contributor to user numbers. For the first time, we include privately funded schools access as a separate total under the academic portion of this survey. The total student population Uninet serves - and therefore potentially has access to the internet - is more than 600 000. While a majority of these still do not use their access, e-mail has become a vital research and communications tool for more students than ever before. Based on feedback from university network administrators, the probable minimum for students actually using this access is about 250 000. Privately funded schools connectivity probably accounts for a further 30 000, bringing the total academic user base to 280 000. It can be expected to grow to around 360 000 by the end of 2000. Totals
Taken together, these three categories amount to 1 820 000 internet users in South Africa at the end of December 1999. The survey also found that internet access via telecentres and other such initiatives in townships and informal settlements only contributed to 3 000 registered users. Media Africa.com managing director, Arthur Goldstuck, commented that this lack of digital penetration into disadvantaged communities was a disappointment. Research indicates that it would be safe to forecast the number to grow to around 2.4 million by the end of 2000.
For full report: www.boot.co.za/news/may00/survey24.htm
Letters HITS VS USERS PT 2
Let me tell you how Woyaa can increase the number of hits on their page to meet their goal: they can simply put ten more images on each of their pages and whenever a person accesses any of those pages, it will be recorded as ten extra hits (hence, they will get 3 million hits per month)! As you rightly pointed out, each file loading is counted as a "hit", this includes image files (.gif, .jpeg, etc) and frames and banners on the page. Even the "hit-counter" itself is counted as a hit!
In fact, some web sites think that they are growing exponentially with time when actually the increase in hits could simply be reflecting the fact that they are adding more files on their pages to improve the aesthetic features of their site, or simply adding more pages to their web site. A news story that is published on one page, for instance, will record one hit, but its hits can be doubled by simply dividing the story into two pages instead of one!
Experienced advertising agencies,therefore, do not ask for hits, they ask for more instructive statistics.
You wrote: Nearly all web sites (including yours) measure how well they are used in terms of "hits."
It was rather presumptious, if not condescending, of you to state that so confidently! Obviously, the reason I submitted that question was because our website does not use hits (total file loadings) to measure or demonstrate its popularity; we use "user sessions," obtained by using software called webtrends. An individual can go from our homepage and visit several other pages on the web site before logging out, and that will be recorded as 1 user session. If we simply use file loadings, each of the pages that person accesses and each image that he sees will be counted individually as hits, because they are all files, resulting in a highly inflated figure.
"User sessions" does not necessarily show the number of "unique visitors" who came to the site but it shows the total number of times that these visitors came to the site. We do have statistics for unique visitors as well, an even smaller number than user sessions. Webtrends is also able to show us which countries our visitors came from, how long (on average) each visitor spent on the site, and even how many of those visitors visited the site only once (or more than once). It is impossible to exaggerate or "mimic" such statistics.
Incidentally, if we go by the conventional "hits" that you are talking about, then Zambia Online has already exceeded the number of hits that both WoYaa and AfricaNewsNow, the "leading" African portals, receive every month. However, if those statistics are in fact user sessions or unique visitors, then the two portals need not worry about increasing their popularity: they are already among the most popular sites in the world!
I advise that you get this issue settled quickly before you get disappointed when it is demanded that more standard benchmarks are used to test the validity and credibility of some of the claims submitted to your increasingly popular newsletter.
News Update replies: Humble apologies to Zambia Online that currently is getting 2000 visitors a day and advertises its visitor level not the number of hits it gets. Nonetheless there is a relationship between hits and usage. What do others think?
SOUTH AFRICAN COMPETITION?
Some points in response to last issue's letter from Ian Grant of African Telecosm from the the original article's author Bretton Vine.
"Ian Grant makes the point that the Government is to blame for the lack of competition not Telkom. Agreed in principle, but at the same time Telkom hasn't exactly stepped back and allowed an open market to exist. Their interpretation of the laws is to their own benefit financially and in terms of market share. They have done little to help the overall market, only to help the Telkom market."
The point was made that Telkom is working very hard to build an IP backbone network that sits on an ATM/SDH infrastructure and that it has heavily invested in digital satellite bandwidth. "The general industry opinion appears to be that Telkom's technology and pricing strategy is outdated and misguided. For example I was told at an ADSL demo that ADSL would be more expensive than ISDN services due to the huge investment Telkom had already made in ISDN. From a user perspective this doesn't make sense, especially since an ADSL rollout would cost considerably less than other technologies and make many services more accessible to a much greater area. However it seems as if Telkom doesn't want everyone to have cheap ADSL services for whatever reason. Personally I hope they rethink their strategy :-)
News Update is a free e-letter covering African internet content and infrastructure developments published by Balancing Act. The latest issue and all previous issues appear on the Kabissa.org web site (www.kabissa.org), which is a Balancing Act pilot project. For further information about Balancing Act and its pilot projects, contact Russell Southwood on email@example.com. All material is copyright but can be used if permission is sought.