News Column

Telecoms Jostle for Data Market

July 28, 2014

Flavia Nassaka

A lady surfs the internet on her smartphone. The popularity of mkbile internet has pushed telecom companies to change strategies . INDEPENDENT PHOTOFacebook, Whatsapp send voice calls, SMS to the back seat

Edward Mubiru, a marketer at MK Publishers Ltd, says with the coming of WhatsApp and Ziber, he just buys an internet bundle of Shs 1,000 to communicate with his clients all day and he spends very little on phone air time to make just a few calls.

Micheal Niyitegeka, an IT expert, says the voice segment is no longer generating as much revenue, which is why telecom companies are now focusing on data because it has a more ready market. With the increasing availability of smart phones; Facebook, Twitter and Whatsapp have particularly made communicating over the Internet cheaper and more convenient.

With data on one's smart phone, one can cheaply stay in touch all day without making a single call or sending a single SMS. Niyetegeka says people communicate via social networks because it is cheaper to communicate for longer. For example, one SMS costs Shs 130 yet one can send over 100 emails with only Shs 500 worth of data.

But as data has gained in popularity, there has been a drastic decline in revenue on the voice and SMS segments but the companies are not complaining. By June 30 last year for instance, MTN's SMS revenue had declined by 14.6%, while that of data increased - boosting the company's overall performance. Consequently, MTN's revenue increased by 15.4% supported by a strong data revenue growth.

Apparently, customers are opting for newer data-driven social media platforms to communicate, which has led to an increase in internet browsing, according to the company. MTN says mobile data revenue increased by 57.4% and companies are looking for more opportunities to cash in. According to the International Telecommunications Union (ITU), internet subscription is growing at more than 100% per year. At least 97% of all the connections are mobile. Some 16.2% of Ugandans had access to internet by 2013, according to ITU.

Data bandwangon

Telecom companies have had no option but to jump on the bandwagon by providing the internet packages that customers demand. With the declining average revenue per user on the voice segment, telecom companies have had to rethink their strategies and are now taking their tariff wars to the data arena. Recently, MTN Uganda launched a suite of multimedia solutions for businesses, which can be accessed via wired and wireless terminals, and will deliver voice and video communications, including video collaboration, over IP (Internet Protocol).

Among the solutions is MTN web phone whereby one can be able to call back home over the internet at fixed line rates while travelling. This is intended for one not to miss important business calls while away from office. The app can also synchronize the mobile phone contacts to allow one to easily access the contacts while calling from abroad. On its part, Airtel's new innovations include Internet 'Beerako' where customers are able to borrow up to 100MB and surf at no extra fee and 'Data Me 2 U,' which allows users to apportion an amount of their volume to another user.

Arindam Chakrabarty, the acting managing director of Airtel Uganda, said their focus is on ensuring Internet affordability, accessibility and availability. Gone are the days when one was forced to buy monthly amount of data even when it was not necessary. Now, one can only pay for the amount of data volume one would like to use for a particular activity. "Our customers have realized the importance of the Internet and that has given us the morale to invest more in the segment," he says.

Uganda was one of the first countries in sub-Saharan Africa to gain full internet connectivity. Being landlocked, the country depended entirely on satellite for its international connectivity until 2009 when several international submarine fiber optic cables landed on the African east coast.

Uganda is now connected via a national fibre backbone extending to its borders, implemented by Uganda Telecom and MTN Uganda. By 2013, prices for international bandwidth had fallen to a fraction of their original cost, but retail pricing of broadband services is still relatively expensive, compared to other countries (purchasing power parity).

In June last year, Uganda became the first East African country to roll out a 4G network. Earlier, 3G networks revolutionized internet access when companies like Orange introduced them in Africa several years ago, prying users out of cramped cyber cafes and stealing a tremendous amount of business from fixed wireless operators. Many SMEs have appreciated mobile internet because the dongles are relatively cheaper.

Niyitegeka says that businesses also have to rethink their marketing strategies in order to stay relevant in this era of social media and almost constant online activity. Indeed, many companies are now taking to online marketing by being very active on social media. According to Niyitegeka, large corporations are likely to still need the reliability of fixed wireless broadband, and with more and more fibre-optic cable being laid on the continent, these services are likely to grow alongside networks such as 4G.

For more stories covering the world of technology, please see HispanicBusiness' Tech Channel

Source: AllAfrica

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