Why your local internet café is not closing

I counted the number of computers in Mr Alex Mugasho’s small internet café in Ntinda. They summed up to seven but the customers were nowhere to be seen. There was nothing unusual about such a sight.

Why is he running an internet café without expecting many customers? I thought and then asked.
“Many people do not have phones,” he responded, as if to downplay the disruption resulting from the influx of smartphones on the Ugandan market.
“But the main reason we do this café business now is to supplement the consumption of other services.” He later explained the other services to include printing, photocopying and lamination of documents.
“People come to the café to download what they want on the internet and print it,” Mr Mugasho says. The internet café attendant says the business has been open for a year now.
“We no longer have people coming in to use Facebook since Over the Top services tax (OTT) was introduced. We no longer offer social media services because we have to add in an extra amount to pay for the OTT,” Mr Mugasho says.

At that same time, I had a glimpse of the internet rates pinned to the café’s wall only to realise they would bite deep into my wallet. With Shs1,000 I would no longer buy 35 minutes in the café. I would have to part with 30 minutes instead.
“We put those rates depending on the internet bundle. Some use unlimited internet a month where customers can access anything. If you are buying data daily like here, you have to squeeze the customer so that you can benefit from the amount invested,” he explains.

Internet users
By the end of September 2017, Uganda had an estimated 18.1 million internet users translating into an internet penetration rate of 48 internet users per 100 inhabitants, according to the Uganda Communications Commission (UCC). Of these users, 14.8 million were mobile internet subscriptions. The report attributes the growing mobile broadband access and usage to increasing 4G and 3G coverage, a drop in smartphone and modem prices, and a fall in bandwidth prices.

Costs
With the dipping demand for internet services, the rising costs in internet cafés is another attempt for businessmen like Mr Mugasho to make profits.
“The cheaper the internet has become, the fewer customers we have seen in cafés because someone can use their phone to download a document and only come here to print it,” he says.
“The cheaper it gets, the more we charge because if I get my five customers a day I can survive,” Mr Mugasho explains.

Further price reductions are expected in the future and NITA-U believes as more districts are connected to the national backbone infrastructure, internet service providers such as MTN, Airtel, Africel or Smart Telecom could lower their data prices.

Five years ago, Ronald Mugisha, a computer scientist, set up an internet café in Kampala’s suburb, Kyebando. Customers spent time betting online, checking emails and using social media platforms. Today, customers are youthful educated people who are printing a document or applying for a job. Others are school going children who play computer games and want to catch up with friends on social media.

Mr Mugisha has gotten clever about the business. He has set it up alongside other services, printing, and computer repairing and literacy classes.
‘There is no money earned from internet on its own. You pay a lot of money as service fee, computers consume a lot of power so it has to be used to attract customers to these other services we sell,” Mr Mugisha says.

As the internet has progressively become a part of Ugandans’ lives using the smartphone, he believes there are people who are not tech savvy enough and still find their way to cafés.

In 2018, he thought another café fitted in neatly with his ambitions: to have a third café besides another in Kisalosalo. So he set up an internet café in Kamwokya, another Kampala suburb, only to close it after four months.

“As busy as Kamwokya is, there were no customers. If you made money, it would cover rent and internet. Most of those who came were in need of internet. They were not printing so you would work the entire day without making money,” he says.

And there is no internet package that can make him lower his internet rates now. To him, internet is not getting cheaper as he spends Shs385,000 every month. Power costs are increasing. He spends about Shs350,000 per month. This is besides having to buy newer computers whose prices are not falling either.

“In a day, if you make good money, it is about Shs25,000 from the internet. If I am to benefit from only internet, I can close shop in one day. But remember it is the internet that brings in customers for other services. If there were no customers, we would still sell 25 minutes at Shs500. In town, 10 minutes cost Shs500,” he says.

His insistence on hiking prices for a service considered of the past is not worrisome, at least according to him.
“Internet cafés have reduced because it is very costly to sustain one. But they will not go away because the more people get educated, the more they need technology services. Not everyone will be in position to buy a computer. Plus not every person who qualified to do IT will find a job. These kinds of businesses can provide money,” Mr Mugisha says.