July 14th 2009
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FROM THE ECONOMIST INTELLIGENCE UNIT
Kenya is likely to benefit from cheaper phone and internet connections with the start-up of a number of submarine cables. This could help boost economic growth too.
The prospect of cheaper and quicker telecommunications is moving closer after two of three planned submarine fibre-optic cables landed in Kenya. The East African Marine Systems (TEAMS) cable—a US$130m joint venture between the government,local private telecoms firms and Etisalat of the United Arab Emirates (UAE)—came ashore in June and is now undergoing several weeks of testing before a possible start-up in September. Running between Mombasa and Fujairah in the UAE,the cable is the shortest of the three,at 4,500 km. It also has the least capacity—of 40 gigabytes—although there is scope for expansion.
The second cable,being laid by SEACOM,a Mauritius-based private-sector initiative,is longer (13,700 km),bigger (1,280 gigabytes) and costlier (US$650m),and will link South Africa with both Europe and India,with waypoints including Kenya. The South Africa-to-Kenya section is now complete,although work on the India section has been delayed by a month due to the on-going threat of Somalian piracy,which continues to present serious problems in one of the world’s busiest shipping lanes,notwithstanding efforts to increase the capability of African navies to enforce maritime law. (Indeed,the International Maritime Bureau reports that pirate attacks off Somalia are significantly higher in 2009 than in 2008.)
SEACOM now hopes to start initial services at the end of July. The third cable,the East African Submarine Systems (EASSy) cable,running 10,800 km from South Africa to Sudan (and Europe),is scheduled to start operating in mid-2010.
The new cables will end Kenya’s reliance on costly satellites for international connections,and may cut bandwidth costs for consumers by 50-90%. This will give a significant boost to internet take-up,of broadband in particular,and to local outsourcing firms that aim to capture a share of the call-centre business (although the downturn in Europe will make this task more difficult). It should also have a broader—and positive—economic impact. Notably,a recent World Bank report (Information and Communications for Development 2009: Extending Reach and Increasing Impact) suggests that there is a 1.3% increase in economic activity for every 10% increase in high-speed internet connections.
The latest data from the International Telecommunications Union show that Kenya’s mobile-phone sector continues to grow at a rapid pace,with subscriber numbers climbing 43% to 16.2m people in 2008 (as against just 600,000 in 2001). This equates to 43 per 100 people and exceeds the African average of 38.5 per 100 people. However,fixed-line connections declined by 5% to 252,000 in 2008,while growth in internet usage remains relatively weak,rising by 12% to 3.4m people (equivalent to nine users per 100,just under the African average of 10 per 100).
The Economist Intelligence Unit
Source: ViewsWire