What you need to know:
- As subscribers grapple with high internet costs and sluggish speeds, telecoms are looking to invest in superfast 5G internet technology.
Telecoms hit the ground running this year with a huge promise of delivering faster internet speeds using the 5G, or the fifth-generation technology.
5G, according to Huawei, can deliver higher peak transmission speed reaching a Giga Byte every 8 seconds, which is more than 10 times faster than that of 4G network.
But even with the promise for faster internet, it’s clear that Ugandans are running out of patience over the quality and cost of internet delivered to them.
A cursory online search on various social media platforms shows daily complaints are made to telecoms via their social media handles.
The complaints revolve around data costs, speed and how quickly data gets depleted, let alone the demand for data packages with expiry dates.
“I have been working with MTN simcard for so long but your internet network is worse,” Benon Kankiriho wrote to MTN via the company’s Twitter handle on March 4.
“…accept our apologies for the slow internet. Please let us know your phone number and location so we can aid you with checks and support,” a one Ronald signed off on behalf of MTN.
Kankiriho also wrote to Airtel via Twitter: “The 25GB [monthly offer] gets done in one week if you watch 4 YouTube videos which are less than 20 minutes long. You guys should be telling us what exactly to use this data for!”
“Kindly share your number and the last data bundle you loaded to take you through your usage cycle,” Airtel responded.
Such comments have been common to a point that it drew the attention of Parliament last year.
Deputy Speaker Thomas Tayebwa, in July last year, tasked the Uganda Communications Commission (UCC) to engage telecoms to exclusively provide unlimited data and voice call bundles that do not expire.
“This issue of expiry of data and voice bundles needs to be addressed. How do you tell me that bundles have expired?” Tayebwa asked.
Tayebwa went on to explain that technology has no expiry [date], drawing examples from other countries, where one is only required to reactivate the bundle.
The discussion at Parliament was premised on the report of the Committee on ICT and National Guidance based on a petition of Kawempe Division South constituents.
“Ugandans were, and (continue) to pay heavily in their bid to access telecommunication services characterised by dropped calls, exorbitant rates on data bundles, unrealistic consumption patterns and expiry of internet bundles among others,” the report reads in part presented by the committee chairperson, Moses Magogo.
Telecom operators have made amends since the report was tabled on the Parliament floor, drawing up a range of pricing packages from time-bound bundles and, or unlimited bundles that do not expire.
However, the issue remains rife within the public sphere. UCC, and telecoms alike, have argued that data depletes fast based on how ‘generous’ a user is with sharing his or her internet connection with other users, who may have data guzzling apps.
Mobile broadband is the most common type of internet in Uganda where a mobile network transmits data through 3G or 4G services.
UCC’s Quality of Service Report published in December last year shows the average data speed to download, or open a webpage in Kampala stands at 15 megabytes per second (mbps) when using the Airtel network.
MTN network, according to UCC, has 4mbps for downloading or checking a web page, while Lycamobile stands at 10mbps in Kampala areas.
Meanwhile, averagely, a gigabyte (GB) of data costsShs5,000 which is a drop from close to Shs 10,000 three years ago. A monthly expense of Shs 50,000 can fetch between 10 – 20 gigabytes depending on the service provider.
Joseph Ogwal, an agritech entrepreneur, spends close Shs700,000 on unlimited data on a monthly basis which he considers expensive.
“I think data is cheap in other countries and internet speed actually works,” he says, noting that the same service providers provide internet at a cheaper price in other countries.
State of telecom sector
However, to get to the bottom line of high internet costs and sluggish speeds, one needs to make sense of the historical nature of how Uganda’s telecom industry is curved out.
Since the market liberalisation talk in the early 1990’s, Uganda’s telecom industry has grown in such a way that it is duopolistic in nature; only two telecoms are able thrive, and others must survive.
MTN entered Uganda in 1998 in a market dominated by two telecom companies; Uganda Telecom and Celtel.
Its launch was confirmed with an award of an operator licence.
MTN, now with the largest subscriber base of 17.2 million has curved its way as a leading telecom, closely followed by Airtel at 10.8 million subscribers.
The two telecoms almost control 90 percent of the market share leaving others to fight for the remaining share.
However, over the years, some telecoms have fallen off along the way, while new entrants have been announced barely lasting three years in the industry.
The most recent casualty was Smile Telecom whose operations in the country remain unclear after going off the network.
Smile started its operations in Uganda in 2009 providing voice and data, however, by 2013, the company had transitioned to providing only data packages.
In early February last year, the company released a statement, indicating its customers were experiencing slow internet speeds, or even had no access to the company internet services.
Smile, by May last year, had made it clear that the cause of its service outage was fundamental and arose from a dispute between Smile and one of its critical suppliers.
Africell, which took over Orange’s operations in 2014 in the hope of riding on the digital economy to provide data services, had by last year ceased operations.
Meanwhile, Warid, which was eventually taken over by Airtel, had offered the biggest threat but later caved in.
For many, their operations ended in premium losses beleaguered by a saturated small market.
South Africa’s Vodacom only lasted for three years, while others such as Smart left silently, and K2, which is backed by the Buganda kingdom, has heavily relied on Airtel for survival.
Uganda Telecom (UTL) is still fighting its way out of administration, after being reclaimed by government, but it is yet to be seen how it will revive its lost glory.
UCC records show Uganda has 30 telecom operators, however most largely offer Business to Business services, and are only spread at regional level, leaving the burden to the two major telecoms.
Such is the state of affairs of the telecom sector in Uganda, leaving Ugandans to rely on the few data service providers who wield their influence on the market.
Telecoms envisage that the current cost of data will drop once they invest in superfast 5G internet technology.
People close to the matter at Airtel attribute the high internet costs to the high fixed costs incurred in maintaining and operating masts, spectrum and fibre.
UCC’s public and international relations manager, Rebecca Mukite also argues that telecoms incur heavy costs in maintaining masts using generators in areas without electricity - a cost factored in service pricing.
Take last year for instance, MTN’s direct network operating costs topped its expenses at Shs284b.However, the number of users remains inversely proportional to the huge cost of investment.
For users, it is largely attributed to the low smartphone penetration in the country.
Mr David Birungi, the Airtel public relations manager, argues that making the internet affordable will be dependent on the number of users which is directly proportional to device usage, which remains low and is highly taxed.
Uganda has 10.9 million smartphone monthly users out of the 35 million devices on the network, according to UCC’s 2022 statistics.
Telecoms view internet data as a lifeline revenue stream, but can only achieve more revenue with growth in smartphone usage.
MTN, in its 2022 financial results earned Shs511b from data, and has 6.7 million active data users, out of the 17.5 million subscribers on the network.
The ongoing growth in demand for the data services has forced telecoms to deepen partnerships with various mobile device companies to fast-track smartphone usage.
However, telecom operators say the figure is low, and largely affected by high taxes informed by Value Added Tax, Import Duty, Withholding Tax and Infrastructure levy.
For instance, MTN, in its financial results noted that its engaging authorities on the reduction of taxes charged on smartphone devices to increase smartphone affordability and access.
Uganda Revenue Authority records show that the taxes levied on smartphones are dependent on the type of smartphone and the country of origin.
The authority notes that Import Duty attracts a 10 percent levy, VAT at 18 percent, Withholding Tax at 6 percent and Infrastructural Levy at 1.5 percent, giving a total of 35.5 percent.
The 5G promise
Telecoms - MTN and Airtel - have already submitted applications to UCC expressing readiness to deploy the latest technology.
However, to make economic sense of the technology, MTN’s Chief Technical and Information Officer, Mr. Ali Monzer says, they focus on key strategic locations that have capable 5G devices and large business concentration.
“5G internet is a game changer because it gives 100 times higher internet rates. It can also accommodate one million devices per square kilometre compared to 4G is limited to 100,000 providing benefits to those in the entertainment, healthcare, education, transportation and energy sectors,” he says.
Airtel on its part has made key tests and trials especially in Kampala city, and considers that technology will be crucial in several applications such as; news and video conferencing/broadcasting, remote patient monitoring, and machine monitoring and process automation in manufacturing.
About 13 out of 53 countries in Africa had an active 5G network as at end of 2022, according to the Economist market Intelligence including major markets such as South Africa and Kenya.
However, to make 5G a success, policymakers will have to explore measures such as infrastructure-sharing to reduce costs or reviewing telecom levies to make the network affordable to the end consumer.