SHAKE-UP COMING IN ZAMBIAN ISP MARKET - MWEB HEADS NORTH AGAIN

8 November 2002

Top Story

ABSA’s free internet service stopped Mweb’s pan-continental expansion plans in their tracks. Now ABSA’s service is history and News Update can reveal that Mweb is on the move again with plans to open in Zambia. Russell Southwood talks to Thomas Lungu, Acting Chief Executive Officer, CopperNET Solutions about the coming shake-up and the state of the Zambian ISP market.

 

How did you start the company?

 

The Zambian copper mines were being privatised. We decided to buy some of the assets and decide our own future. We bought Zambian Consolidated Copper Mines’ ICT assets and started out of that in 1999.

 

We were helped by certain things. Someone approached us to do a media centre for an AIDS conference. It was the first time that DSL was used in Zambia to deliver the internet from Kitwe to Lusaka, a 400 Km DSL link. It was also the first time ever that wireless had been used. It was possible to link the conference centre to our own building in Lusaka with wireless. The company is an experimenter at all costs!

 

What’s the ownership of the company?

 

It’s owned by 16 ex-ZCCM employees and the bank. Cavmont Merchant Bank owns 45% of Coppernet and the rest is owned by the management buyout team. We invested money from our pensions and the bank gave us the rest of the equity finance.

 

How many ISPs are there in Zambia and how many subscribers does each have?

 

There are about 7,000 paying customers and they break down as follows:

 

Zamnet

           

 

c 3.500

 

Coppernet

           

 

1,800

 

Zamtel

           

 

1,500

 

There are then smaller companies like Microlink and UUNet who have subscribers in the hundreds. Zamnet was the first ISP and is therefore the incumbent. Zamtel is owned and managed by the incumbent telco.

 

Mweb have just got a licence and are about to start. They’re planning to do a portal and offer a dial-up service.

 

Who will that affect most in the market?

 

They will compete in the urban areas where the existing market is. We want to increase the market in the rural areas. The biggest loser will be Zamtel. We’re the biggest in the corporate market and that pays for everything else.

 

What are the rate differentials between the ISPs?

 

Coppernet including tax is US$30 including tax. Zamnet is US$23 including tax for 80 hours and the others are pretty much similar to Zamnet?

 

So why can you charge a premium?

 

We provide a full service. We visit our clients if there are problems and have a support network with more engineers.

 

How will you increase your market in rural areas?

 

We have what the call the e-Link project and this is designed to bring broadband to rural areas. If you’re in Chipata you would pay US$430 an hour to have internet access in phone charges alone. Therefore there are not many dial-up subscribers. We want provide internet access on a single local numnber to bring the cost down. No-one’s currently doing that so we’ll be going to those areas to pick up new customers.

 

We’re doing a pilot in Choma to prove the concept. We have done a wireless link from our broadband network using connectivity leased from a cellular phone provider. We think we can pick up an extra 50-100 subscribers in provincial centres and therefore generate an extra US$5,000 per month.

 

You were telling me about a fibre network that’s opening soon?

 

CEC, the energy company has just built a fibre network in the mining areas and it’s due to open shortly. It will open up what can be delivered and provide new opportunities at lower costs. As a third provider of connectivity after Zamtel and the cellular companies, it will be good for competition and we’ll see a drop in prices.

 

All connectivity is by satellite?

 

Yes. It costs us US$13,000 for a 2 mb downlink and a 1 mb uplink using IP Planet. When we wanted to change providers to IP Planet, we needed to change equipment. IP Planet provided the equipment up-front on repayment terms which was brilliant. Prices are essentially high because of the high costs of satellite access.

 

Is Zambia anywhere near a fibre cable?

 

There’s a 70 Km gap from Livingstone to Kazangula on the Botswana border. And there’s also a fibre cable at Kariba in Zimbabwe. We could really reduce access costs if we could connect to that fibre cable. Current regulations mean that it will be difficult. As an ISP, we can’t build an international line.

 

There does not seem to be an ICT policy from Government to address the size of the market. There’s a lot of duplication of services. If there was a fibre network down the middle of the country, we’d have better prices and services but it needs to be driven by policy.

 

What’s the position on VOIP?

 

There’s no legal instrument or statute that either accepts or forbids it. Self-regulation has thus far controlled this market. The Communications Authority of Zambia has made no statement.

 

Is Zamtel going to be privatised?

 

Indications are yes but we have no idea of when or how. There’s also the question of whether it will be sold as a single entity or unbundled.

 

You’ve got no ISP association?

 

Yes and we probably need to have one. Peering is done by agreement between Zamtel, Zamnet and Coppernet. The reason we’ve not got one is probably because one company - Zamnet - dominated the market for a long time. Competition is a relatively new thing and we had to get used to it. The current market is now competitive and ISP association would be more viable.

 

ISSUE 135: CORRECTIONS AND RESPONSES

 

In issue 135 - Thinking the Unthinkable: an agenda for African regulators in the 21st Century, the Senegalese phone company should be SONATEL not SENTEL. Various people have pointed out that SONATEL’S efforts to control the VOIP market have resulted in a "legal" VOIP market and a continuing illegal market because prices have not come down enough yet. Also we should make clear that the survey by TaTedo was of the wealthier rural areas in the North of Tanzania.