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AFRIK-IT  February 1997

AFRIK-IT February 1997

Subject:

Re: Cost differences

From:

Mark Bennett <[log in to unmask]>

Reply-To:

African Network of IT Experts and Professionals (ANITEP) List

Date:

Fri, 7 Feb 1997 09:36:21 GMT

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (68 lines)

Greetings

Jeff writes:

>> In Kenya, a 64k costs about $16,000 a month, not to mention a
>> $10,000 licensing fee and an annual/renewal fee of $5,000.
>Looking more closely at Kenya telecom's price, perhaps only about
>$2500 of that $16,000 goes to actual service providers outside the
>country.  Does Kenya's telecom provide any services for the remaining
>$13,500, other than the use of the air?

I have only my experience in Zambia to go on, which includes an original
leased line service and more recently getting a VSAT service operational
with ZamNet, plus I have been investigating other costs for various regional
projects, but I think Jeff is being a little unfair to the KP&TC even if
they are discouraging growth! (I am sure Shem should know best).

If you get a leased line (from Nairobi to the States for example) it would
presumably normally go via Intelsat in which case two authorities need
paying: the remote (the US) and the local. Both then have to pay Intelsat
for their halves of the circuit. A figure of US$12,000pm + would not be
uncommon (US$6,000 to each 'half'). Intelsat is undoubtedly a little more
expensive than other options, partially because of the inter-governmental
way in which it operates. It also dominates the market!

Are VSATs allowed in Kenya (especially outside the main urban areas)? If so
then of course you have the option of using Intelsat with them or going to
another service provider, such as Panamsat.

>When I say "cost" I really mean cost of providing a service, which
>for someone putting in a VSAT anywhere really is, by some estimates,
>about $4000 a month (more if you include the building, accounting,
>customer service, etc.).  Whatever else that is paid for licenses
>and extra monthly charges to a government agency really amounts to a
>tax.

As you are aware there are a number of factors which influence ongoing VSAT
costs, including the size of the dish (the bigger the dish the lower the
cost basically). Also it is quite a bit cheaper to go for a demand access
(DAMA) circuit rather than a full 'leased line' style circuit with
permanently available bandwidth. But you can get a 64K duplex VSAT circuit
for around US$5,000 pm (2.4m antenna) via Panamsat, depending on the service
provider and where you are going to land the traffic (you may have to pay up
to $7,000). This does of course make $16,000 look pricey but of course the
capital costs are also quite a bit higher (although recoupable within a
couple of years at those prices!).

However, clearly the costs of the service to the end user (where this
discussion began) depend very largely on the size of the user base across
which the fixed costs are being shared. You expect African ISPs to start
quite small and then build up to a size where they should be able to bring
down their charges to more international standards (the charge in Zambia has
been $25pm for quite some time now and most people are quite happy to pay it
as it is a lot less than any alternative means of communication!). Some ISPs
are there, though, for the profit and will charge whatever they can get away
with. To rail against that is to rail against capitalism itself and that may
be getting outside the bounds of this list!!

Regards

Mark
===========================
Mark Bennett
Cambridge, U.K.
Tel/Fax:+44-1223-264529
E-mail: [log in to unmask]
===========================

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