Daily Nation - Business_Week
Tuesday, March 27, 2001
ISPs seek licence for exchange
By WASHINGTON AKUMU
Kenya's main Internet service providers last week changed tact in their
fight for a controversial local Internet exchange when they applied to the
Communications Commission of Kenya for a licence.
But the real struggle for the ISPs may just be beginning, as Telkom Kenya is
likely to mount a strong opposition to the application.
And it will be interesting to see how CCK will handle Telkom's protest in
light of Director-General Samuel Chepkonga's undertaking last year to
register the exchange "if they (ISPs) applied in the right procedure."
Telkom has a major stake in the Internet sector, where it provides backbone
services through its Kenstream and JamboNet services, and the licensing of
the exchange would have far-reaching implications for its revenue base.
In a Kenya Gazette notice published last Friday and dated March 21, Mr
Chepkonga acknowledged the application and invited presentations from the
public, as is normal practice during the 60-day "exposure period."
An exchange of the type sought by local ISPs acts as an information
'clearing house' among member ISPs, reducing the time and cost required to
send and receive electronic mail locally. With the service, local messages
do not have to go through international exchange routes as happens at
present even if the mail's destination is literally across the street.
Inter-ISP connections attain the same speed as intra-ISP ones, while there
are also potential savings in bandwidth and the development of new revenue
The international routes sometimes involve exchanges in more than one
continent, forcing ISPs to use the more expensive JamboNet circuits when the
much cheaper Kenstream digital link would suffice.
Last year, the ISPs – operating under the umbrella of industry lobby
Telecommunications Service Providers of Kenya (Tespok) – had taken the
hardline view that they did not need a licence to operate the service and
went ahead with installations, sparking acrimonious exchanges with the
They argued that since the technology used on the Cisco-installed exchange
was no different from a Local Area Network connection used in most company
networks, they did not require a licence.
But the Mr Chepkonga stood his ground arguing that the exchange fell under
the classification "Value Added Services" in the Communications Act and was
subject to a Sh100,000 licence fee. Telkom, he said, had no monopoly in such
In December, CCK moved in on Kenya's pioneer Internet exchange facility,
disabling it amid protest from an industry that felt the move was
high-handed, hasty retrogressive and sympathetic to Telkom's continued
stranglehold on the industry.
A source who spoke to BusinessWeek said the new strategy to seek a licence
was adopted following talks between CCK and Tespok. The latter is understood
to have appealed to the CCK Tribunal in January.
A meeting on Monday last week between the two sides reportedly paved the way
for the belated application.
In a major shift, the licence is now being pursued by a commercial venture
as opposed to last year when the original facility was fronted by Tespok
The ISPs promoting the venture have formed the Kenya Internet Exchange Point
Ltd, a consortium that brings together ISP Kenya, Africa Online, Swift
Global, Kenyaweb, Insight, NairobiNet, InterConnect, Wananchi Online and
Access Kenya. At present, it is a loose structure which is however expected
to transform itself into a fully-fledged company if granted the licence.
In an environment where cheaper access technologies such as VSAT (Very Small
Aperture Terminals) and fibre optic connections are lacking, the exchange
was seen by the ISPs as a viable option to reducing the cost and increasing
the reach of the Internet in Kenya.
Kenya has a thriving Internet trade, but many analysts believe its full
potential has been severely constrained by regulatory hitches. As a result,
the number of people with Internet connections is still under 40,000 in
spite of the presence of more than 40 registered ISP in the market.