ICT Policy



City Profiles

Cost before bandwidth or is it the other way around?

October 29, 2009  »  BusinessNo Comment

A recent opinion article in Rwanda’s New Times suggests that more Rwandans would go online if ISP costs were lowered, regardless of bandwidth. The author feels that many Rwandans don’t have the need for fast broadband speeds and will remain alienated by high access costs. Of course, the costs are expected to diminish as competition and technology advance (the article cites the Ugandan case; Kenya’s experiences are similar), but at best, the whole price-reduction process will take months. It’s not a matter of telecoms operators breaking even, but making a healthy profit for the investors.

The folks at Balancing Act Africa have the right idea:

The skeptics will say “But who wants all this new bandwidth? There aren’t the customers. (appropriate shrug of shoulders) This is Africa.” The alternative to this old way of thinking is to have a “low price, high volume” strategy that is about creating volume markets at yes, you guessed it, commodity prices. Then you sell the new customers services and applications on top. In the mobile field, MPesa is the best example of how an Africa-targeted service can take off.

It’s not about relying on the “same old, same old corporates” but about addressing the residential middle classes with Internet in places like Nigeria and Kenya who will provide the “critical mass” for reaching out more widely. It’s about bringing the small-scale companies and NGOs to the party and persuading them of the virtues of using the Internet to get things done more quickly. In short, it needs a strong dose of corporate vision rather than seeing the future through the rear-view mirror of history.

Disputing this sentiment, however, is a recent e-skills report of 20 African countries compiled by According to the study, anywhere from 5-15% of Africans surveyed feel they cannot afford to use the Internet. Such a low number does suggest that it is not the cost that is preventing people from going online. In reality, however, this statistic may only consider people who can’t afford to use the Internet at all. Most people can find the money (or a friend with access) to go online at least once a year. Consequently, in responding to this study, such individuals may have felt that even annual access means they could afford to ‘use the Internet’. Instead of cost, the main reasons for Africans not using the Internet is the availability of facilities and the ability to use a computer.

So, we are left with a newe problem. Most sources convincingly suggest that lower Internet costs would attract new online users. This is true. Also, it makes sense that new users would not place a top priority on connection speed. However, lower costs are no good when the facilities or training do not yet exist.