Wednesday, April 28, 2010
THICK AS THIEVES:THIEVING TELECOMS
It is said that birds of a feather flock together. It should be added that they tend to sing the same song. The song that Kenyan telecom operators have been singing to internet customers is that despite the arrival of two sub-marine cables at the Port of Mombasa, internet costs will not come down.
The maddening line they have been feeding us is that: "We are giving you more capacity for the same cost!"
Laurent Giraud is the man who runs Telkom Kenya's carrier business. This means he sells capacity to other carriers: telecom operators and internet service providers. TKL has a stake in both TEAMS cable and EASSy. It also runs to national terrestrial fiber optic networks. It's own and the state-owned National Optic Fiber Backbone (NOFBI).
It is his day job to engage with operators eager to negotiate the lowest rates on his network.
I asked him whether telecom operators who were buying capacity before at US$2000 per MB would still continue to buy at that price if he offered to double the capacity he gives them. He said absolutely not.
Operators have insisted on an absolute lowering of rates and now buy capacity on average at US$400 per MB. By MB I mean the size of the pipe that carries the data as opposed to Mb/s which denotes the speed of transfer of data.
You see if you have a water pipe, you can either talk of its diameter or you can talk about the rate at which water flows in the pipe.
The bigger the pipe the more the water that can pass. Fiber is seen as a much bigger pipe than copper cable because no matter what speed you pass data through a small pipe, there is a limit.
Anyway, so telecom operators are not willing to be fed the same line they've been feeding customers. They have insisted on lower rates.
So why is it that when it comes to onward selling of that same capacity, they insist on maintaining their old prices ostensibly because they are giving you double the capacity?
Clearly, prices are about 25 per cent of what they were before. It is time that the Ministry of Information or the Ministry of Trade stepped in to reign in these rogue operators. Clearly, they are engaged in fleecing clients and they are doing so because there exists an asymmetric information structure in the Industry.
The consumer is not aware of the wholesale prices that is why they are getting jacked by these crooks.
CCK should step in and force the publication of applicable prices at every juncture.
The ministry should also call for the creation of a fiber operator to run the national backbone and distribute capacity at proper prices so as to undercut these pirates of the superhighway.
It should be able to sell capacity to anyone who wants it including small ISPs that can then give us bandwidth at good prices.
Let this skullduggery stop fortwith!