Why is data expensive? Because we’re terrible capitalists – Safaricom

Usually telcos are quite guarded with the truth. Announcements and statements are filled with PR nonsense about aiding the greater good, but Safaricom’s new Chief Innovation Officer has been surprisingly honest.

“I don’t want to sound like a terrible capitalist, but I am a terrible capitalist,” said Safaricom’s Chief Innovation Officer Kamal Bhattacharya.

Bhattacharya was talking about the price of data and connectivity in Africa. Data tariffs might not seem expensive to us in the Western markets, but remember we have considerably more disposable income. Compared to monthly wages, data is expensive in Africa, but Bhattacharya has been surprisingly honest.

“It comes down to a commercial decision; I charge what I can,” said Bhattacharya.

What might be worth noting is that Bhattacharya is new to the job. He’s been Chief Innovation Officer for six months, and this is his first post in the telco space, having worked for IBM previously. This honesty might come at a cost or it might be seen as a refreshing change.

Either, nothing will happen because people don’t pick up on it. Or there will be public backlash as Bhattacharya has effectively admitted to holding the Safaricom customers to ransom. Or the industry will respect the own-it attitude Bhattacharya is showing. Safaricom is a commercial business, and it is focused on making money.

Let’s be honest, every telco executive probably holds the same attitude as Bhattacharya, they’ve just been media trained to give off the impression of the third rising of Jesus. They all want to make money they are just afraid to admit it.

So that’s one angle. Data is expensive because telcos want to be profitable. But why else? Operational and network efficiencies is one explanation. Another could be the tendency for customers to have a preference for prepaid plans. Both of these reasons could be down to market maturity. Networks will get better, and as data consumption becomes normalized across the continent, more will move to the more cost effective postpaid contracts.

What we have here is your typical chicken/egg situation; do the telcos wait for demand to increase before decreasing prices, or do they stimulate demand by decreasing prices. It’s an interesting question.

The telco business has changed over the last couple of years. Revenues attributable to voice and SMS have been slashed by the emergence of OTTs, and making money off data is tricky. Demand is increasing meaning more will have to be spend on the network, but the price is only going to head one direction. It sounds like a lose-lose situation.

The price will probably stay as it is for the moment, until a disruptor enters the game and changes the rules; the race to the bottom we’ve seen in more mature markets. This has led to the majority of telcos heading towards the role of utility, but there are a few operators who have made it work. Take T-Mobile US for example.

Data in Africa is still expensive right now, and the operators are keeping it that way. So either they want to keep profits high, or they are afraid of failure. Greedy or cowardly? We’ll let you make up your own mind.

Huawei to Help Kenya’s Safaricom Rapidly Deploy an FTTH Network to Greatly Shorten ROI Period

Huawei announces that it is working with Kenya’s Safaricom to deploy a fiber to the home (FTTH) network. Safaricom adopts Huawei’s end-to-end (E2E) FTTH solution to rapidly deploy the FTTH network and expand its capability to new home broadband services.

Kenya has a steadily developing economy, but its fixed broadband penetration rate is lower than 1%, failing to meet the network requirements of home and enterprise users. Safaricom plans to enter the home broadband market. However, it faces many challenges, including scattered user distribution, high network construction costs, and low early phase service provisioning rates and revenues.

For precise investment, based on the idea of value-oriented network construction, Safaricom uses analytics to determine network rollout in line with customer demand as its first step. And then, Safaricom deploys Huawei’s E2E FTTH solution to achieve efficient network construction and operation.

For fast network construction, through infrastructure synergy and engineering innovation, Safaricom can fully utilize existing metropolitan area network (MAN) optical cables and preferentially use aerial cables. Through the synergy of fixed broadband optical distribution networks (ODNs) and mobile backhaul networks, Safaricom can deploy mini optical line terminals (OLTs) and wireless base stations in the same cabinet, realizing fast deployment and centralized home access, and greatly decreasing network construction costs.

In terms of efficient operation, Huawei’s lightweight mini operations support system (OSS) helps Safaricom to reduce the system integration period and complete deployment within only three months, down from 18 months. Huawei also provides a smartphone App that integrates installation, maintenance, and operations, supporting on-site service provisioning and acceptance, shortening service provisioning period from two weeks to less than 48 hours, and doubling installation rates.

Thibuad Rerolle, Safaricom’s Director said, “By using Huawei’s E2E FTTH solution, we can quickly build the FTTH network. We are keen to broaden the development space for new fixed broadband services.”

Jeff Wang, President of Huawei’s Access Network Product Line, said, “Emerging markets place strong demands on FTTH network services. The top challenge that operators face is shortening the ROI period. To solve this challenge, Huawei released the E2E FTTH solution. It features precise investment, fast network construction, quick service provisioning, and efficient O&M, enabling operators to greatly shorten the ROI period and achieve business success.”

Broadband networks are the foundations for a smart society. Huawei, a world-leading ultra broadband (UBB) network solution provider, is committed to providing innovative future-oriented solutions for operators in the long term. To date, Huawei has provided UBB access services for 500 million home users around the world. In the future, Huawei will continue to work with global operators and industry partners to drive the sustainable development of the UBB industry and build a better connected world.

About Huawei

Huawei is a leading global information and communications technology (ICT) solutions provider. Our aim is to enrich life and improve efficiency through a better connected world, acting as a responsible corporate citizen, innovative enabler for the information society, and collaborative contributor to the industry. Driven by customer-centric innovation and open partnerships, Huawei has established an end-to-end ICT solutions portfolio that gives customers competitive advantages in telecom and enterprise networks, devices and cloud computing. Huawei’s 180,000 employees worldwide are committed to creating maximum value for telecom operators, enterprises and consumers. Our innovative ICT solutions, products and services are used in more than 170 countries and regions, serving over one-third of the world’s population. Founded in 1987, Huawei is a private company fully owned by its employees.

 

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