First, why now? Really, it's been a long time coming. The mobile phone market in Africa is exploding, and for the first time we're seeing real competition among Internet providers.
Some staggering facts:
- In the last 10 years, the number of mobile phone subscribers in Kenya has ballooned by roughly 100,000%.
- Mobile penetration in Ghana in September was 67% and is expected to hit 80% by year end.
- Today, nearly 2 in 3 Kenyan households have mobile phones, twice as many as have running water.
This disruption has been further exacerbated by the introduction of significant, new physical infrastructure around Africa. When the Internet was first introduced to West Africa, for example, the only way to connect was via satellite, a solution both inefficient and highly expensive. In 2001, the first underwater cable, SAT3, landed, and for the first time, provided the opportunity for fast, cheap web connectivity. But as economics would predict, the markets didn't play out exactly that way. With satellite as the only competition, the owner of SAT3 only had to undercut the extremely expensive alternative. Things remained this way for quite some time. In fact, it wasn't until just this summer that a second underwater cable, Main One, launched, spurring fierce disruption to the market. By September, broadband prices in Ghana had been slashed in half. And with the upcoming entrance of a third submarine cable, Glo-1, the former SAT3 monopoly is all but history. Similar dynamics have been taking place in East Africa as well, with the launch of three submarine cables since just 2009.
What's more, telecom providers are starting to realize the power of lower prices. Vincent Wang’ombe, a marketing manager from Kenya Data Networks went on record saying, "From our experience, a reduction in internet prices increases usage, and this is why we will be lowering our prices before the end of October, so as to utilize both our international and local capacity. We have un-utilized capacity that we are paying for whether we use it or not." At last, people are beginning to talk sense.
Finally, how does Google fit into this? To put it lightly, my colleagues and I are very much encouraged by recent developments. Google's goal in Africa is to help spur a sustainable, thriving Internet ecosystem. And as I noted in my recent post on barriers to access, cost is still a huge obstacle. So we'll see how it goes from here. We at Google believe that if we can build compelling products and services, the more people there are on the Internet, the more people will be using them. It's an exciting time to watch this all play out.
Some links about these recent events:
- Kenya mobile price war cuts calling costs
- Safaricom of Kenya Slashes Mobile Text-Message Cost by 94% Amid Price War (Bloomberg)
- Safaricom slashes SMS tariffs as price war hots up (IT News Africa)
- Zain introduces low-cost vouchers as price war intensifies (IT News Africa)
- Kenya Data Networks announces 30% price cut; Safaricom WiMAX acquisition finally approved (TeleGeography)
- Bandwidth prices slashed by over half (Ghana News)