Death of internet cafes: Who saw it coming?

Not until a few weeks ago, it had not struck me that locating an Internet café in Kampala was as hard as finding a needle in a garbage bin.

A friend, who had last been in Kampala in the early 2000s, wanted to download some document but after hours of searching, she sought my help, but just like her I was awe struck by how I had not been observant on the goings-on in this business.

As we combed Kampala for an internet café questions kept running through my mind wondering what might have happened to a business that had been marked by many as a micro-investment destination in the early 90 and late 2000s.

Did we see this coming?
One might wonder whether the eminent death of internet cafes was long written on the wall or a sudden happening that many in the industry never saw coming.

Back then during my university days at Uganda Christian University, I used to use a café for much of my research and from the look of things this man, Eric Aliu seemed to be making some good cash, considering that at least he had a visit-per day of more than 200 people, especially students.

But in 2004, I noticed drastic changes in the charge structure for a standard 30-minute access, albeit moving southwards.

The café that was almost a monopoly then, started with a standard charge of Shs1,500 for every 30 minutes access but was reduced to Shs1,000, before falling further to Shs500.
Perhaps this (Shs500) was Aliu’s last charge because as far as am concerned now, the café has been reduced to a photocopying and printing shed.

After a drastic fall in visitor numbers, not considering the low charges, Aliu cut his costs by closing off the entire café section, before moving into the building’s shed.

When sounded out, Aliu told us: “The café is no longer profitable. You would hardly get 20 or so people in a day but rent and other costs were constantly on the increase.”

But from the look of things, Aliu had realised that costing on something that was not bringing in expected returns was a bad investment that could eventually fold with him.

However, just like Aliu, Elizabeth Atwine who runs a café in Wandegeya is yet to give up as she has come up with survival plans to keep her with an income.

“Things have changed but that does not mean I will go back to the village. At least I can bank on students who bring their course work for typing and photocopying,” she says

What really happened?
According to Uganda Communications Commission (UCC), Internet penetration has in the last two decades exhibited tremendous growth, growing by 79.3 per cent by 2014.

As of June 2014, according to the status of Uganda’s telecommunications report, more than 5.2 million people had access to the Internet compared to about 1.5 million in 2012.

The growth, which has exhibited an evolution in Uganda’s telecommunications sector, has, according to the report, been organic with a steady penetration in rural areas but with symmetrical movements in the country’s peri-urban and urban areas.

Before internet cafes started showing signs of folding, to some of us they were the only gateway to the online world as we sought to surf through our social media pages (albeit still a luxury then) and checking on our pen pals’ status through Yahoo mail.

But the entry of telecoms must have been the game changer as focus shifted to internet ‘on the go’ with telecoms providing modems and dongles for Internet access.

However, the real deal seemed to have arrived at the close of the 2000s with the arrival of the smartphones, which analysts suggest account, and are still accounting for much of Internet cafes’ troubles and their gradual collapse.

The last stroke
The entry of Chinese phones must have been the last stroke in Internet cafes’ troubles as their loss of fortune seemed to have worsened.

Considering their cheap pricing, Chinese phones and relatively cheap hardware have, in the last decade, driven up Internet access by about 30 per cent, even though no known figures have been quoted to be exact. However, their contribution, including the arrival of the fibre optic cable and investment, cannot be minimised.

But why didn’t internet cafes befit from growing Internet penetration?
According to the 2014 UCC report, out of the 5.2 million people, 4.1 million people access the internet through mobile devices compared to 106,900 who use internet fixed devices.

The above movements, Micheal Niyitegeka, an IT expert at international Computer Driving Licence notes should have catalysed diversification, considering that market dynamics had for a long time shown signs for a move-away from the usual – fixed internet.

“Internet is now ‘on the go’, people can no longer afford to sit for long hours in cafes waiting to access services in seemingly slow internet cafes since they subscribe for slow and unreliable services as they try to minimise costs,” says Aron Dyke, who formerly worked with telecommunications infrastructure firm – Ericsson in Poland.

“If you realise mobile handsets have better and cheap Internet access. I would bet if people, with the way life has become so versatile, still have the patience to sit and stare as they wait for the slow Internet, that characterises most cafes world over, to get their money’s worth,” he adds in an email exchange with this newspaper.

Similarly, Eric Kamara, who works with global technology firm, ThoughtWorks says: “Their time is done unless they reinvent themselves and get ideas from their customers on what else drives them to cafes and concentrate on that otherwise, Internet bundles are becoming cheaper than cafes.”

Telecoms exploit the situation
Indeed, telecoms have exploited Internet cafés’ troubles showing their intention of taking over with billions of shillings sunk in easing mobile Internet access.

The move has certainly been a wise bargain considering that many of them have turned mobile internet access into a new cash cow and a high price point for all operators.

For instance MTN Uganda for the year ending December 30, 2014 mobilised total revenue of Shs1.3 trillion with data contributing Shs332b.

The context

Although more than 4.5 million Ugandans have access to the Internet through mobile devices, majority of these use mobile phones. Mostly, people use mobile phones to access social media sites and check emails.

However, other mobile devices including, modems and dongles among others, have been utilised as they are more efficient and user friendly. They are believed to easy carry thus making Internet cafes irrelevant at a time when mobile communication is gaining relevance.