Mobile and Internet Numbers for East Africa (2013 edition)

iHub Research continues to put out great research for clients. They also take time to put together the numbers for everyone else as far as what’s going on in our part of Africa.

Mobile & Internet Stats for East Africa

The most recent stats for East Africa’s mobile and internet usage have been put into an new infographic.

Mobile and Internet use in East Africa, an infographic by iHub Research

Mobile and Internet use in East Africa, an infographic by iHub Research

Here is a dump of the data used for this infographic:

Kenya Mobile Statistics
(Population: 44,037,656 July 2013 estimate)
30,429,351 mobile subscribers
16,236,583 (41%) Internet users
3.6 billion outgoing & incoming SMS
251,567 fixed lines
78% teledensity

Tanzania Mobile Statistics
(Population: 48,261,942 July 2013 estimate)
27,395,650 mobile subscribers
5,308,814(11%) Internet users
4.3 billion outgoing & incoming SMS
176,367 fixed lines
61% teledensity
7,662,504,921 voice traffic

Uganda Mobile Statistics
(Population: 34,758,809 July 2013 estimate)
18,300,000 mobile subscribers
4,800,000 (3.2%) Internet users
520 million outgoing & incoming SMS
464,849 fixed lines
52% teledensity
215,110,452 voice traffic

Rwanda Mobile Statistics
(Population: 12,012,589 July 2013 estimate)
6,039,615 mobile subscribers
903,964 Internet users
26 million outgoing & incoming SMS
42,323 fixed lines
57% teledensity
1,470,290,068 voice traffic

Burundi Mobile Statistics
(Population: 10,888,321 July 2013 estimate)
2,995,000 mobile subscribers
157,800 Internet users
80,039 fixed lines
2% teledensity
157,800 voice traffic

Sources:
http://www.telegeography.com/products/commsupdate/articles/2013/03/19/u-com-burundi-adds-mobile-banking-to-drive-customer-growth/
http://www.independent.co.ug/business/business-news/7748-airtel-warid-merger-shakes-market
http://www.independent.co.ug/news/news-analysis/7332-telecoms-gear-for-turf-wars-in-2013
http://www.independent.co.ug/business/business-news/7748-airtel-warid-merger-shakes-market
http://www.reuters.com/article/2011/07/22/ozabs-econet-burundi-subscribers-idAFJOE76L0EY20110722
http://www.cio.co.ke/news/top-stories/Africell-buys-Tigo-to-expand-in-Sierra-Leone
http://dlca.logcluster.org/BDI/logistics-services/index.html
CIA World Factbook

2011/2012 Stats and Infographic

Here’s the 2011/2012 numbers for all of the countries in East Africa, plus some bonus numbers around mobile money at that time.

2011 and 2012 East Africa mobile and internet statistics infographic by iHub Research

2011 and 2012 East Africa mobile and internet statistics infographic by iHub Research

See the old ones from 2011 in Uganda, Kenya and Tanzania. You can also see the some 2012 numbers on the iHub that they put together as well.

Reports on m:lab and Umati

This week two reports have come out of the iHub community.

m:lab East Africa after 2 years

The study which was conducted between April and May 2013 focused on 3 key activity areas at the m:lab namely:

  • Mobile entrepreneurship training
  • Pivot East regional pitching competition
  • The incubation program

The highlights are found on the iHub blog for now, the full report to be downloadable as soon as it is formatted.

Umati: monitoring dangerous speech in Kenya

The Umati project sought to identify and understand the use of dangerous speech in the Kenyan online space in the run-up to the Kenya general elections. Apart from monitoring online content in English, a unique aspect of the Umati project was its focus on locally spoken vernacular language; online blogs, groups, pages and forums in Kikuyu, Luhya, Kalenjin, Luo, Kiswahili, Sheng/Slang and Somali were monitored.

umati-dangerous-speech-kenya2

Download the full Umati report (PDF)

Launching the Savannah Fund in East Africa

I’m happy to finally be able to publicly announce the Savannah Fund, an accelerator fund focused on finding and investing in East Africa’s highest potential pre-revenue startups. It’s a partnership between Mbwana Alliy, Paul Bragiel and myself – along with a great list of limited partners (LPs) who are investing in the fund.

The idea is to bring the Silicon Valley-style accelerator model to Africa, seeing what needs to be tweaked to make it work for our region. It’s a small fund at $10m, with most of the activity focused on classes of 5 startups at a time being brought on board and invested in. They’ll get $25,000 for 15% equity, and have 3-6 months to prove themselves. Those who fail either pivot or leave, those who gain traction have a chance at follow-on funding. A portion of the fund will be invested at the $100-200k range where we’ll look at follow-on funding for the startups in our program, and also at other high-growth tech companies in the region.

We’ll be looking throughout the region for these investments, from Rwanda and Tanzania to Uganda, South Sudan and Kenya. You can put in an application now, though the first cohort will not be accepted into the program until the end of the Summer (Aug/Sept timeframe).

At this stage we’ve raised half of the fund, which allows us to get moving. 35% of the fund has been raised from local investors, such as Karanja Macharia from Mobile Planet. We also have big US names on board, such as Yelp co-founder Russ Simmons, Tim Draper, Dave McClure, and Roger Dickey and Dali Kilani of Zynga.

Why I’m involved

The reason I’m involved with Savannah Fund is very simple, I’m focused on getting the foundation of our technology future in place. In East Africa, we don’t have enough mid-cap investment opportunities in tech, and the only way to change that is increase the size of the base of that success pyramid.

Some history. Over a year ago I met with Ben Matranga from the Soros Economic Development Fund who noted that there were a number of interesting small startups, but they were too small for them to invest in. If there was a smaller fund, someone focused on this space, they’d be interested in using them as a vector to stir up the bottom and help uncover more successful companies over the next 3-5 years. At Pivot 25 last year I met up with Mbwana and we started to discuss the fact that most startups here aren’t ready for VC fund and how we might be the right people to create the needed vehicle.

Fast forward to September 2011 and Paul, Mbwana and I decided to go ahead and do it. Hours and months of due diligence, pitching and phone calls later we finally are getting it off the ground.

  • My role is to help find the new companies and to connect them to the businesses in the area.
  • Mbwana’s role is to manage the fund and the startups in it.
  • Paul’s role is to connect the Savannah Fund startups to Silicon Valley businesses and investors.

As Mbwana says, “We’re a fund for entrepreneurs by entrepreneurs”. We’re here for the small guy and our goal is to find those risky tech startups with hungry, passionate founders that will do the hard work it takes to become a successful company.

Find us on Twitter at @SavannahFund

Pivot East: East Africa’s Startup Pitching Competition

Mark your calendars, buy your tickets, submit your applications!

We’re ramping up to the Pivot East pitching competition, where the best startups in East Africa come to show what they have, pitch their startup to investors, media and the judges for a chance to win the prize money.

Pivot East will be held at Ole Sereni Hotel in Nairobi, June 5th and 6th. Last year we had over 100 applications for the 25 slots, and we’re expecting even more after seeing how well Pivot25 did last year (writeups by TIME Magazine and CNN). Last year we saw startups from Kenya, Uganda, Rwanda and Tanzania, and this year we’re hoping to see some from South Sudan and Somalia as well.

WERE2011_PIVOT25-1610

Categories

As last year there are five categories, each of which will have five startups that will pitching in them. If you think you have a prototype, a deck and a business plan to wow everyone with, let’s see it. Applications are open.

  1. Financial Services
  2. Business and Resource Management
  3. Entertainment
  4. Mobile Society
  5. Utilities

Getting more information

Pivot East is put on by the m:lab East Africa, an incubator for startups in the mobile apps and services space. All profits go to support the facility. This year support comes from Samsung, and we’ll be announcing a few more big names in the coming weeks. If you’d like to be one of them, contact us.

If you have any questions, we’re having a meeting a Baraza at the iHub on Monday the 6th of February from 2.30pm to 3.30pm. If you’re a startup wanting to know more, or are media or an investor, come by and talk to the organizing team.

[Note: for more on last year’s here is my blog post retrospective.]

UPDATE:
The Pivot East Team will be coming to Uganda on the 20th February 2011 at Makerere. You can book your tickets for the event on the link below:

http://pivotuganda.eventbrite.com/

A Pivot 25 Retrospective

PivotNairobi 65

Pivot 25 was a blast! Over 100 teams from Kenya, Uganda, Tanzania and Rwanda applied to pitch their startup over a 2-day period. We named it “pivot” because we wanted to play off of the word, often used in the startup scene to denote a need for a startup to nimbly move in a different direction (plus it had a good sound). We did the event for 2 reasons:

  1. To bring attention to “what’s next” coming from the vibrant mobile startup scene in East Africa.
  2. To support the new m:lab, a mobile incubator that launched yesterday, where all profits from the event went to sustain.

This wasn’t your ordinary conference, it was a pitching competition mixed with lively fireside chats with the regions top business and government leaders in the tech space. Larry Madowo, a TV news personality in Nairobi, did one of the most amazing jobs I’ve seen with the fireside chats, keeping them lively and (best of all) disagreeing with each other. The event with 300+ attendees was smoothly MC’d by AlKags, keeping the pace fresh and upbeat.

Each category of finalists consisted of 5 companies, with an independent panel of judges (in other words, the organizers had no say in this). The finalist pitched for 7 minutes, followed by some very pointed and tough questions by the judges. Each judge scored the presenters on their pitch, business viability and model, an average of all these scores was tallied to find that session’s winner.

The Winners

WERE2011_PIVOT25-1610

Prizes of $5,000 were awarded to the winners of each of the 5 categories, and the overall winner was picked from these and will go to pitch at the DEMO conference in California:

A massive congratulations to all the winners, and we expect to hear great things from the MedKenya team of Mbugua Njihia and Steve Mutinda when they head to Silicon Valley in September to pitch on an even bigger stage.

Big Thanks!

The real reason this event worked was due to the team behind it. Countless hours spent getting sponsors, working with the finalists and designing the space. I want to thank the guys who really put the work in behind it, making it such a huge hit: Jay Bhalla (producer), Tosh, Joshua, Ryan and Jessica, the Sprint Interactive team, the Ark for the video, plus a good dozen volunteers from the iHub community.

WERE2011_PIVOT25-1290

I’d also be remiss if I didn’t thank the guys at Afrinnovator for live blogging the event, and for CapitalFM for live streaming it to the 3000+ people who tuned in from all over the world. Zuku provided us with 100Mbs for this to happen, though we will make sure we have more, and more robust, access points next time.

Finally, thanks to Nokia, Equity Bank, Samsung, Google, Tigo and Elma for sponsoring the event and helping us pay for what was a very costly exercise.

For those who want to know, the full revenue from the event was $145k, with a cost of $110k. Leaving $35,000 to put into the m:lab.

Stay tuned for where Pivot will be next year. Thanks everyone!

Mobile Web Content in East Africa [Report]

Vodafone recently concluded a policy paper on “Broadband in Emerging Markets”, also titled “Making Broadband Accessible for All“.

The position and reason for this paper is best summarized below.

“The success story of mobiles in the developing world is well known. Yet in the case of extending data services in emerging markets, there is a real danger of some serious policy mistakes. As in developed markets, broadband strategies in developing countries have tended to focus on investment in fibre. This is too simplistic. This focus on fibre may miss an opportunity for a transformational change built on the capabilities and in particular accessibility of mobile broadband. The early evidence suggests that mobile internet is spreading as quickly, in some developing countries, as mobile telephony did originally.”

Traditional definitions of broadband have a narrow focus on bandwidth and speed. This paper uses a wider definition, as broadband policy needs to consider the entire ‘eco-system’ of internet and data services from both a demand and supply-side perspective.

Content Sections

  • Mobile Internet usage and demand in Kenya: The experience of early adopters (David Souter)
  • The potential of mobile web content in East Africa (Erik Hersman)
  • Spectrum policy and competition in mobile services (Thomas W. Hazlett)
  • Rethinking mobile regulation for the data age (Martin Cave & Windfred Mfuh)
  • Building next generation bradband networks in emerging markets (Luk van Hooft)

The Diffusion of the Mobile Web Across East Africa

Mobile web content is growing at an astounding rate. It rose 2.6-fold in 2010, nearly tripling for the third year in a row. Official Kenyan industry statistics show that mobile internet subscribers will grow by approximately 843% for the 12 months to September 2011.

What I like about papers like this is that I get to use words that normal people don’t use. I make a case for international content and platforms as “drivers of diffusion” of data across East Africa. That simply means that these platforms and content are helping to spread the use of data more deeply into the region, and allowing local players to get in at lower costs.

International web content is by far the most widely available and used in East Africa. This is in large part due to the ease of finding and disseminating this content, as well as its normalized licensing schemes and reliability. International platforms also carry a majority of the content that is currently being viewed on mobile phones. The following are the types of content that are most important to consumers in East Africa, according to our interviewees:

  1. International entertainment news (sports, gossip, lifestyle)
  2. Local news
  3. Breaking news
  4. Facebook (and to a lesser extent other social network tools such as Mig33, Mxit and Twitter)
  5. Jobs
  6. Dating (chat and relationships)
  7. Religion
  8. Local video/media

The reasons are that international platforms, such as Facebook, Yahoo!, BBC, CNN, Google and Wikipedia, have already been tailored to work on the most widely used data- enabled handsets. This contrasts with local content providers, many of whom have yet to tailor their websites for mobile access. In addition, local content less available at present, not as easy to license, and often cannot be reliably guaranteed as a long-term source.

Local Content

I interviewed a number of executives from Kenya, Uganda and Tanzania. There was a clear belief that while international content, increasingly localized for the market, is currently king, local content has the greatest growth potential because it is more highly valued by consumers.

While local content developers lack scale they have advantages that the global platforms do not. For one, they understand the local tastes and culture so customers value their content more. The consumer benefits of truly local content and platforms could be large.

The Government Role

There is still a lack of concrete government policies for government services or content to be made available or accessible via the mobile in any country in East Africa, even though this is the primary channel by which citizens could access services online. There is a solid case to be made for mGovernment, instead of just eGovernment.

To underline this, the most popular Kenyan Government website (Kenyan Revenue Authority) is shown as seen on a PC screen, a smartphone (HTC Desire) and a typical 2G internet enabled handset (Vodafone 350). The website is most clear and easily accessible via a PC interface (and consumer interaction primarily is through downloadable pdf files). There are no browsing problems when accessing through a PC-based browser. The KRA website is also accessible via the native Android browser in the HTC Desire Smartphone. The HTC Desire also allows downloading and viewing of pdf files. However, the native browser on the Vodafone 350 (a basic 2G EDGE handset) does not present the KRA website in a usable format. As can be seen, the website is badly rendered and quite impossible to navigate.

Possible government services to be made available via mobile web:

  • Paying bills
  • Service delivery questions and concerns
  • Taxes – access, information and filing
  • Health – access or appointments, information
  • Public job search

An argument can be made that m-government services would have a greater impact if the focus were on supplying tools for small businesses to interact with government, rather than only making services available for citizens in general. By removing the barriers to entry for small businesses, the government would be providing a service that increased usage, decreased business costs and had a potential tax revenue increasing effect due to filing and paying on time.

Summary

East Africans are accessing the web primarily through their mobile phones. The new medium is enticing them online with the new services and content provided through a new medium. Broadband penetration rates are low enough in this region that we are not yet seeing the displacement of newspapers, radio and TV seen in other, more connected regions of the world. However, as with all network technologies, there is the potential for reaching a tipping point. This will depend on the provision of enough mobile web content that is valued by East African consumers.

The content driving East African users online is currently largely provided by international news and content sources, such as Yahoo! and the BBC, and also by global internet platforms, such as Facebook and Google’s Gmail. Even taking into account the decreasing data costs, falling data-enabled handset costs, and the increased availability of broadband, there would not be enough traction locally to get to the critical point if the content were not available.

These international content sources and global web platforms generate demand, and therefore allow the mobile network operators to decrease costs as more users come online. International content is thus providing a pathway for local content creators. While local content is in high demand and there is a rapidly increasing user base, the mobile web content space in East Africa is in its early stages, and there are no
clear leading content providers. At present the key trend is the provision of increasingly localized content by the leading global companies.

This paper has identified two important barriers to the further diffusion of mobile internet usage across East Africa: lack of m-government policies; and, more important, an absence of charging mechanisms which share the cost of mobile internet access between end-users and content providers. If governments embraced mobile-based provision of services and provided access free of usage charges to end-users (sharing the efficiency gains through payments to network operators), the potential impact on internet access could be dramatic. The challenge for governments and local developers of mobile web content is to utilize their local cultural understanding and ability to maneuver quickly to make their content more relevant and affordable to end-users.

(Note: This is summary of my section. Download the full 2Mb PDF report to read the section in its entirety, and to read the other 4 sections of the paper.)

Snapshot: Mobile Data Costs in East Africa

IMG_0073I get asked a lot about mobile data costs in East Africa, so thought I would put it in writing for everyone to find easier.

Mobile data access charges have fallen drastically in the last several years in East Africa, in large part to the SEACOM undersea cable arriving and increased competition between operators. Data connectivity is the new battleground, fighting not just amongst mobile competitors, but also with traditional ISPs.

In the mobile data connectivity space, each country sells either data capped bundles (or time capped bundles in the case of Uganda) that can be loaded onto a SIM card. There are out of bundle charges, priced per Megabyte or Kilobyte, but these rates are exorbitant, so anyone who connects regularly uses a bundle of some sort.

More creative offerings come out each month by the mobile operators, making it more confusing and harder to compare against competing services, but also offering some incredibly low pricing for entry-level users, or consumers who don’t need high speeds.

No doubt, a downward trend of mobile data charges will spur the growth of mobile web usage and publisher forwards.

Kenya
In Kenya, from charging internet usage at 10 shillings a minute just a few years ago, now cyber cafes charge 1 shilling a minute for browsing. The use of mobile data has been made easier by increasingly cheaper rates. For example in Kenya, Safaricom are offering a limited 10MB worth of mobile internet usage at 8 shillings per day. Zain Kenya offers unlimited internet usage for 3,000 shillings per month. Orange Kenya on the other hand are having a 7-day unlimited offer for their 3G network at 1000 shillings.

Uganda
In Uganda costs for mobile data connectivity have been driven down by the SEACOM cable landing in 2009, and led by costs cutting by Orange. Orange was first to the market with cheap, affordable 3G service and has played a major role in driving market prices down. They were the first to institute 5,000Ush/day & 25,000Ush/week packages for Internet – finally making it accessible to the common man. MTN, the larger network in Uganda,

Tanzania
Tanzania boasts some of the most unreliable data networks with the least penetration within East Africa. Zain and Vodacom both offer 3g, while Tigo offers GPRS. Zantel and Sasatel are CDMA networks, with EVDO connectivity. All networks, no matter what the speed of the connection, charge a flat rate of 40,000Tsh for 1gb of data. Data prices have gone down, but not noticeably.

While not possible to do an apples-to-apples comparison of the rates between the three countries, here is a pricing comparison chart for 3g data on 1Gb bundles and 1Mb pay as you go costs for the leading operator in each country:

Kenya
(Safaricom)
Tanzania
(Vodacom)
Uganda
(MTN)
1Gb of 3g data
(bundle)
2500 Ksh 40,000 Tsh 49,000 Ush
USD equivalent 1Gb of 3g data
(bundle)
$30.90 $26.56 $21.63
1Mb of 3g data
(Pay as you go)
8 Ksh 120 Tsh 900 Ush
USD equivalent 1Mb of 3g data
(Pay as you go)
$0.10 $0.08 $0.40

As is true in this hyper competitive market, these numbers will change (hell, I’m probably already off on something). The overriding trend is that the costs are going down for consumers, even if slower than we’d all like to see.

[Picture courtesy of Stefan Magdalinski]

Mobile Web East Africa – Stream

[I probably won’t be able to keep this up all day, but I’ll try to blog/stream what’s happening here at Mobile Web East Africa as best I can. Refresh for updates]

It’s day one of the Mobile Web East Africa conference in Nairobi. This is a new conference, started up in South Africa to great success, and now spreading to other regions of the continent.

Paul Kukubo of the ICT Board

Paul Kukubo, of the Kenya ICT Board, is talking about the future of tech in Kenya, and how the government’s aim is to be a major hub for technology in the region. Explaining how the changes in the industry are brought into context for the government’s vision 2030. He talks about mobile payments, digitizing of government documents and processes, developing software standards and the growing tech community within Nairobi.

Paul continues with mentioning how their approach is to influence policy formulation, intellectual property, data protection, linkages to venture capital and basically catalyzing growth in the ICT sector between government, the public and business.

Rick Joubert of Yonder Media

Rick Joubert, from Yonder Media, “the mobile phone is the most ubiquitous consumer device in the world.” He goes on to talk about how the phone is now even more spread through South Africa than radios. There are 2x as many phones as TV sets. There are 6x more mobile phone subscribers than internet users (in South Africa).

Rick defines the Mobile Web this way:

  • Tier 1: The WAP internet
  • Tier 2: The mobile web application internet
  • Tier 3: Web browsing on phone

**Interruption**
PS Ndemo, who I know and like, is going to give a short address. This isn’t cool, as he’s interrupting Rick Joubert mid-talk (and a very interesting one too). Case-in-point for why government needs to get out of the way more than anything else in the technology field… [Yes, I note that this is probably the American viewpoint on equality coming out].

PS Ndemo is talking through how there were 3.5 million internet users in Kenya last year. Now, with the cost of laptops dropping, we now see 500 laptops sold per day (there were only 20k per year sold before).

Kenya also has the digital villages project (Pasha) with the World Bank is seeing long lines of individuals in far off places coming in to try the internet, get on Skype and figure out how to set up email and other services.

PS Ndemo, ever the gracious person, has at least apologized for the interruption and made amends to the speaker and the conference as a whole. There’s a reason I like him… :)

**Back to our scheduled program**

“The Apple iPhone is the number one handset on every continent in the world, except… Africa”. The Nokia 3110 and Samsung E250 are the two biggest phones on the continent. The fact of the matter is, the real money is being made in the inexpensive DVD/Nollywood areas, not in the mobile web yet. Services that play to USSD, Voice and SMS are where the real opportunities lie.

Driving forces:

  • Growth in data networks and coverage
  • Mobile data access charges
  • Local content
  • Better quality handsets shipping at the cheapest possible price
  • Mobile wallets, mobile commerce, mobile banking

Business models and monetization routes:

  • Commerce
  • Transactions and financial institutions
  • Content
  • Advertising

Rick projects that the “size of the prize” in mobile advertising is approximately $8 billion per year in Africa.

Rick finishes showing a video from LynxEffect on how consumers see mobile web, the seductive side of it.

Eric Cantor of AppLab Uganda & Grameen Foundation

I wrote about AppLab and their work with MTN and Google last year. Eric wants to talk about a critical look at a critical space, the 95% of the African population that doesn’t own a smartphone.

(Get the full presentation of Eric Cantor’s slides as a PDF)

“There are more people having conferences and running too many pilots around the use of social mobile work than there is real practical applications and scaling of the products in the market.”

Technology: Be Patient
SMS is not the only way. It’s very challenging and very expensive to work with SMS. One way to adjust this focus is into voice – people like people, and want to talk with each other.

Handsets need to evolve. Nokia 1100 vs Java 1680 ($20 vs $60) – we’re waiting on the $40 smartphone.

Eric reminds us that we need to get back to the Four-Ps of marketing. We can’t forget user experience, the services might be serious, but still need to be fun to use. At the AppLab they don’t believe what they hear (because everyone says “yes, this product will be great in our market”). They try to dig deeper, learned from Google, on what customers really want and see what people are really using.

Question time

I’ve asked the question for Eric Cantor about why we’re not seeing very simple data hooks built into some of the USSD and SMS applications running in Uganda. (more on this here: “Should we be building SMS or internet services for Africa?“). Eric agrees that there is a lot of upside in that space, and that they’re trying to push more towards the data channel, but until we start seeing more data-enabled handsets in ordinary people’s hands out in the villages, it’s just not a main priority yet.

Robert Alai asks what is driving advertising growth in South Africa? Is it the large companies, or smaller organizations?
Rick responds saying that it’s large companies trying to reach their customers, from banks to Coca Cola and everyone in between. Businesses build grow in this space to find solutions for that, and that’s primarily small innovative companies (like his own), small nimble startups.

Agatha Gikonda of Nokia East Africa talks about the Ovi Store and the opportunities for local developers to create applications and put them on the store to make money.

Peter Arina of Safaricom

What are we going to do to drive interent usage in Kenya? Some stats:

Mobile users are estitmated at 19.05m subscribers. Kenya population estimated at 40m with 22m being the addressable market (15yo or older).

70% of mobile data users spend less than 20ksh on a monthly basis. Industry data enabled handsets estimated at 5m or 26% of GSM users. Cost of a 3G handset is 3x higher than that of a non-data enabled handset. Computer prices are way too high compared to the disposable income of majority of Kenyans.

“The cost of devices that access the internet is the biggest barrier to entry for ordinary Kenyans.”

Cost of broadband (price) is prohibitive due to infrastructure investment.

Local content – the most popular sites accessed on the Safaricom network is Facebook and YouTube. Limited content which is highly priced, is also a barrier locally. There’s a need for high quality data enabled handsets to get good experience.

Conclusion
Mobile data users estimated to reach 10m in the next five years subject to availability of affordable devices, increase awareness, local content development and drop in data prices. Safaricom is trying to work directly with the manufacturers to get more data-enabled devices into normal Kenyan’s hands.

There is a need for more local content that is relevant at affordable rates. Need for reduction in frequency costs, a creation of daily usage habits among users and a need for the government to remove VAT on modems.

Questions
@Kahenya is asking a question. Safaricom is trying to become more affordable, it’s still the most expensive network in Kenya. It’s still has no fixed rate for the mobile data network access. It doesn’t work for small and medium sized business, is Safaricom doing anything to change this?

Peter Arina says they are trying to be cautious. They’re trying to focus on quality (bull$%@& as they have the worst network connectivity in Kenya). He says that they have plans to reduce the cost of data as well, but he has no details on it.

The Safaricom rep says that their main goal is to provide services to the Wananchi (the ordinary/mass Kenyan). The question remains then, why is the cost so high for all of their services?

Paul Kukubo asks when Safaricom will open up their network for value added services for developers and other companies. He’s wondering why the revenue share is so high here (currently if you partner with Safaricom, they’ll take about 60% of revenues), meanwhile elsewhere in the world, like Japan, give 70% to the developer.

Paul asks about the issue with the networks taking advantage of the developers who are out there who come to them with ideas and new products.

The Safaricom rep states that this is not the case any longer. They partner with MobilePlanet and Cellulant (as examples, but it’s a poor one because they’re established companies now). He says that at first they start off with a big chunk of the revenues, but as the product does better, then the developer will get more of the share.

Basically, we get no straight answers from Safaricom and only promises of better things in the future with no details.

Jose Henriques, Executive Head: Online Product Management, Vodacom South Africa

6.65% of the African population currently uses PC internet. The top ten countries make up 85% of that.

Some more stats:

  • Africa represents 15% of the world population, but only 3.9″% of the world’s PC internet usage.
  • Africa’s PC Internet users have increased by 1359% from 2000 to 2009.
  • The global service revenue generated from subscriptions to mobile internet access are forecasted by Informa Telecoms & Media to rise from $57 billion in 2008 to $120 billion in 2013.
  • Mobile ad revenue is estimated to be at $2 billion by 2014. Total value of marketing spend on mobile to be around $6 billion.
  • Mobile subscription rose from 54 million to almost 350 million between 2003 and 2008.
  • On average there are 60% mobile penetration in the world. In developing countries the figure stands at 48% , which is 8x bigger than in 2000.
  • Lack of fixed-line access will drive huge mobile internet usage and revenues.
  • Vodacom generates 49 million ad impressions per month in South Africa (big opportunity).

(Full presentation by Jose Henriques from Vodacom South Africa)

Questions
What has been defined as a smartphone, is not what we define one as today. How would you define it?
Cheapest data enabled devices are about 2000Ksh in Kenya. Safaricom thinks that these are smartphones.

Mpesa… Why is Safaricom unable to cooperate with and provide third-party access (opening their APIs) to developers in Kenya for Mpesa?

The Safaricom rep says that they are willing to do this, and that they’re hungry for people to come in with ideas and products. No specifics given on this. @TMSruge, the moderator, asks her to provide details on how they are actively trying to seek out and help grow this as there is no API or SDK.

@wanjiku says she’s heard Safaricom saying that they have a tendency to do well with big companies, but holding smaller company money for 3-4 months, hurting their cash flow.

Steve Vosloo asks what types of local content are people really willing to pay for?
The Safaricom rep is out of touch… she states that, “no one is willing to pay anything for mobile content”. This is bunk.

Rick Joubert comes in to state facts on how much money there is being made in South Africa in mobile content, $540 million is the real number just in SA. It’s not whether people will pay or not, it’s whether they find value in local content.

A question was asked of Safaricom, why they don’t open up the ability for third-party service providers to bill consumers? The answer by Safaricom is that they are. (I can’t confirm this)

We have Zap, Mobile Pay, Mpesa, etc… when are we going to have an agnostic system to send/receive money? by @kahenya

MTN rep says to come to Uganda to see this working. It’s there working on the MTN system. It’s a serious issue of not having your payment system to go beyond your own network.

Mpesa is a wall gardened. Kahenya and Teddy Ruge ask when there will be a need to NOT walk around with 3 handsets to send money within each one.

Safaricom states that they can already do this within their system. They lay the blame at the regulators feet for why it hasn’t happened.

**Lunch**

Brett StClair of AdMob

Brett starts by asking, “what is mobile internet?” It’s a website that is built for mobile handsets. Admob puts banner advertisement on these sites. They server 12-14 billion advertisements into this network each month. The man on the street can earn revenues start advertising today. There’s a 60% payout to publishers.

Have access to 53 countries in Africa. Monthly ads serves is 750 million in Africa alone.

African Mobile Web currently has South Africa, Nigeria, Libya, Egypt and Kenya as the top 5. Data prices do have a huge effect on the advertising revenues available in Africa.

Nokia 3110c is the most pervasive phone in the market (3.8%), Samsung E250 is at 3.7% penetration. Top smartphones are the Nokia N70 at 10.8% and then Nokia 6300 at 10.3% and then the iPhone at 8.2%.

Top reasons why South Africa is working:

  • 5 million fixed line internet vs 10 million mobile internet users
  • Strong operator billing infrastructure
  • However, mobile money is not mature yet
  • Early adoption by premium traditional publishers
  • consumers traditionally have had a fast adoption rate
  • Due to vast competition for impressions average CPC pricing grew from $0.03 to $0.27 in a year.

Is Africa next? The rest of the world thinks it is, but we need to get the local people to understand this.

Cheapest inventory in the world is in Africa… global accesss average is $0.03, in Africa it’s at $0.01. Local contet providers will benefit as they understand the local African consumers.

Key to making this work:

  1. 3g network coverage
  2. Cheap data pricing
  3. GPRS enabled handset penetration

What are the opportunities in Africa?
Strong tend to follow the West and South Africa. Paid for content, reliant on operator billing. Free content, which is ad funded. The top publisher types are communities, portals and downloads. The top categories are music, religion (15%), games and brands.

African traffic is made of 54% Nokia handsets, then 18% Samsung handsets. iPhone requests make up 18 million impressions in Africa.

Reactions to SEACOM Going Live Today

People all over East and Southern Africa have been awaiting faster internet speeds for a LONG time. I, for one, won’t miss hearing the infamous, when the cable comes… quote that plagues so many of our conversations. It’s here. Now.

Seacom MapSEACOM has done a good with PR and reaching out to people via their blog and Twitter accounts. SEACOM’s media team was also uploading video in real-time to their YouTube channel, so click there if you want to hear really bad audio of the speeches… :) They have their new press release out here, if you’re looking for the “official” talk.

SEACOM in Tweets and Blogs

(note: if I missed one, link it in the comments below and I’ll add it here)

Kung Fu Baby and the SEACOM Cable Launch by Joshua Goldstein (Uganda)
“We launched Kung Fu baby and for the first time in Africa, I saw a YouTube video load completely and play in 6 seconds. We ran a speed test and showed 1.8mbps, 10x what we have in the Appfrica office.”

“1.28 Terabits per second-now that’s what I call digital heaven! Seacom, dare I say I love you? Now, don’t make the Africans pay too much!” by @zanibots

Seacom is here but don’t be surprised if nothing changes by Kachwanya (Kenya)
“Shockingly the people at Seacom think that revealing the names of their clients (ISPs) will jeopardize their relationship with others which are not yet on board. May be I am not getting something here but ISPs will only buy the bandwidth from the Seacom if they have somewhere to sell it.”

SEACOM broadband speed test“This is one small MB for my laptop, one giant TB for Africa …” by @Akianastasiou on Twitter

How fast can you read this article? by Arthur Goldstuck (South Africa)
“However, the most dramatic indication of the power of SEACOM was the quality of live video links to Kenya, Uganda, Tanzania and Mozambique. Addresses by, among other, a range of dignitaries, executives and the President of Tanzania, were carried live to large screens at simultaneous events in each of these countries.”

“This is turning to be another major hoax. Why is the internet so slow as ever? Why is it Seacom not telling us which ISP’s are enrolled?” by @KenyaFocus

“The President of Tanzania envisions having a “Silicon Valley” in Africa – This could have only be imagined thanks to #Seacom” by @SeacomLive

Oh Kenyans, we have been duped again by TrueKenyan
“According to the information already on the public domain, Safaricom have said that the cost of internet will reduce by upto 30-33% over the next five years. Access Kenya still remains mum since it’s charges are exorbitant compared to other ISP’s. Recently UUnet CEO Tom Omariba claimed that cables will only bring down costs by 20-30 percent.”

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