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Uganda Telecom Industry Competition Moves to Data Market

With competition in the voice market already at its peak, telecom companies are now switching focus to the data segment, which is expected to be their next frontline for customer numbers and market share.

To boost their presence in the market, they are now investing heavily in a promising but unexploited data market, which is expected to become a major revenue stream in the coming years.

Apart from providing customer friendly services such as free daily megabytes, Facebook, email access and now Wikipedia, some telecoms have also upgraded their internet speeds to offer more user-friendly services to their customers.

For instance, a few days after Warid Telecom upgraded its internet speed to 3.75 G, a platform that is said to offer faster internet speed compared to the Third Generation (3G) platform it has been operating, Orange also announced that it had tripled its internet speed from 7.2 megabytes per second to 21mbps, a platform they say will provide users with super speed internet experience.

The 21mbps is the fastest internet in the market so far. By tripling its internet speed, Orange is trying to protect its number one position in the telecom data segment, where it seems to have identified its niche from the time it ventured into the country.

Competition to increase telecoms’ market presence and present themselves as the internet service providers of choice is informed by a promising upward trend in internet and content consumption in the economy, and falling revenues from the voice segment due to price wars that saw call rates drop from a market average of Shs380 per minute towards the end of 2010 to Shs180.

Voice price cuts are, however, no longer possible given a volatile economic environment that has increased companies’ operational costs, unless the interconnection rate – money a telecom company pays to other telecoms when callers make cross-network calls – is lowered further from Shs131 per minute.

But, figures from the Uganda Communications Commission (UCC) indicate that to date, there are an estimated 5 million internet users in the country today, having risen from 1 million by the end of 2007.

Orange Uganda chief executive officer, Mr Philippe Luxcey, said the 2,700 km long fourth cable, an extension of the of the initial Lower Indian Ocean Network that connects Madagascar to the rest of the world will provide internet users with an alternative route to the rest of the world.

“Our customers were inconvenienced while many businesses lost money during the recent outages that impacted both EASSy and TEAMS due to fibre cuts. The fourth cable will ensure that our customers get reliable and stable network all the time,” Mr Luxcey said.

National Information Technology Authority Uganda (NITA-U) executive director, Mr James Saaka, recently said that the government has plans to fund the construction of two other sea cables starting in the next financial year to ensure internet availability in cases of unforeseen cable damages.

To up its game, Warid’s chief commercial officer, Mr Shailendra Naidu, told Prosper that the telecom will continue investing in future technologies like 3.75G to ensure better internet user experience to its customers.

In an interview, Eng John Mark Ssebunnya, an ICT expert also CEO of said the upgrading of internet packages is good news though Internet Service Providers (ISPs) should ensure that they deliver what they advertise.

“If not just marketing gimmicks, the recent upgrades are good news for the Uganda internet market since theoretically Warid internet speed can now reach 14.4 MB/s downlink and 5.7MB/s uplink whereas the new Orange speeds can theoretically reach 28 downlink and 11MB/s uplink.”

He added; “But this news should be received with a grain of salt especially by users on shared links since there may not be a very noticeable transfer speed difference for many customers because factors like signal strength and coverage tend to mitigate advertised speeds.”

By Nicholas Kalungi & Faridah Kulabako
The Monitor Newspaper

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