Kui Kinyanjui
30 November 2009
Too many players in the fibre industry could herald a price war and increase instances of sabotage, analysts warn.
With an array of firms -- including Kenya Data Networks, Telkom Kenya, Jamii Telecom, Wananchi, Access Kenya and the government -- all vying for a piece of the inland commercial fibre pie, rivalry has already hit an all time high in the industry.
The entry of Kenya Power and Lighting Company (KPLC) into the telecoms market next year will only intensify the rivalry and the power distributors has noted in its latest annual report that it will sell 80 per cent of its capacity to companies as it seeks to get a piece of the lucrative internet business.
"There are too many fibres and competition is becoming stiff. We would urge the government to step in and resolve these issues to protect our national resources and investments," said Mickael Ghossein, Telkom Kenya CEO.
Already, heightened competition has seen telecom operators suffer from instances of industry sabotage -- amounting to losses of up to Sh500,000 per incident.
Telkom Kenya and Kenya Data Networks have been the most vocal about the alleged acts of sabotage, with each saying their networks are now attacked around 10 times in a month, up from around four instances six months ago.
In the next month, a three year strategic move will see KPLC emerge as an unlikely major player in the ICT sector.
"The fibre optic cable network will have a capacity of 48 fibres, and the company will utilise only 10 fibres for its operations, data and speech communications. This will leave a surplus capacity of 38 fibres which will be commercialized to generate additional revenue streams," said Joseph Njoroge, Managing Director, KPLC.
The power company has announced that it intends to build a Sh1.8 billion fibre network that will pit it against more established names in the ICT sector, signifying a significant shift from what has been its core business: the transmission, distribution and retail of electricity.
Excess capacity
It has already secured a license to enter telecoms business from the Communications Commission of Kenya (CCK), which will allow it to lease the excess capacity of the fibre to firms licensed to provide telecommunications services in Kenya or to provide transit services through the country.
The project is financed by the European Investment Bank and is being implemented by ABB of Sweden. KPLC expects the network to be complete by January next year.
Mr Njoroge said portions of the network might be available for use in another four months as it will be built progressively and released for use between August and January next year.
The fibre optic connection between Nairobi and Naivasha is in place, installed during the construction of the 220 kV transmission line in 2006.