Why Uganda’s Internet cost is highest in East Africa

A recent study by telecom regulator, Uganda Communications Commission (UCC) put the cost of acquiring 1 gigabyte of internet in Uganda at $2.67(Shs9819).

Compared to Kenya, Tanzania and Rwanda at $2.41(Shs8863), $2.18(Shs8017) and $2.18(Shs8017) respectively, Uganda’s is the highest.

According to UCC, Uganda’s ball game at internet service provision is unfavourable in comparison to the East African counterparts.

In 2009, international fiber cables were extended by internet wholesalers to the coast at the invitation of Kenya and Tanzania.

Information from the submarine cable map indicates presence of The East African Marine system (TEAMs), a 4,900Km fiber cable linked to Kenya, Seacom’s 15,000Km cable in Kenya to India.

Tanzania was also connected through Seychelles to East Africa System (SEAS), a 1930Km fiber cable built in 2012 docked at Dar Es Salaam.

Telecoms, UCC says, are tied down to long-term commitments for right of use by the Internet providers for a stack 15 year period paid up front.

This, Mr Ibrahim Bosa, the spokesperson UCC says, puts a high operating expense to the Ugandan operators while purchasing data.

In addition, since Uganda is boxed in by her neighbours in all directions, without reach to the coast, there was need to extend infrastructure to connect internet into the country.
This also comes at an additional cost.

“The cost of internet has many dependencies, notably the cost of landing services in country from the fiber links at the coast lines, cost of backhaul through our neighbouring countries Kenya and Tanzania,” he explains.

Fiber cables, which are the means through which internet is transmitted are laid through an over 920Km route via Kenya.

However, the turbulent political environment in Kenya, and need for reliable internet services call for a redundancy, which can be defined as a back up connection.

“Backhaul routes through Tanzania are expensive from their port to the border. It is not commercially advisable to rely only on routes via Kenya due to service instability as a result of its terrain,” he expounds.

He adds that those are not costs the other East African countries incur.

The situation is also exacerbated by the low internet penetration ranked only at 38 per cent propelled in part by low smartphone penetration at only 20 per cent.

This pales in comparison with Kenya’s 91 per cent and Tanzania’s 43 per cent.
Consequently, the unit cost of data delivery is much higher for Ugandan operators than those in the other East African countries.

Mr Bosa also says despite the above challenges, operators in Uganda have continued offering competitive data prices comparable to their counterparts in the region and other destinations.

Tasked to explain why Rwanda is cheaper than Uganda yet equally landlocked, he says Rwanda’s regulator predetermines the market price threshold for the operators.

Hope for lower rates
Nonetheless, there is hope for lower data tariffs expressed by both the regulator and providers.
Uganda could realise lower data tariffs with steady internet and smartphone penetration.

In addition, an increase in the number of players could see operators bow to the forces of competition.

“As the market grows bigger, we are going to have a reduction in price by economies of scale and the more choices you have in the market, affect the price,” Mr Micheal Mukasa, the chief commercial officer, Roke Telkom says emphasizing that currently, there are about 15 companies competing in the market. This competition creates a price reduction because operators have to look for more efficiencies.

On the other hand, the regulator also believes that implementation of the national broadband policy passed in 2018 will, in the long run, result into reduced data prices.

The policy which promotes infrastructure sharing and prohibits duplication of investments is envisaged to reduce investment costs by operators thus lowering cost of service delivery that will result into lower data tariffs.

Advanced technologies
While fiber cables are currently a cheaper option than satellite that Uganda used a decade back, advancement in technological developments such as Google’s ballons are expected to revolutionalise data transmission and accessibility.