Is NOFBI a Kenyan fiber cartel?


#1

Over the last one year I have noticed a new trend, the hunger for mwitu.On average I (and probably everyone else) spend about 2k on mwitu per month which is equivalent to around 20GB. After searching around for a more “legal” source ,the closest subscription that can offer a similar monthly arrangement would be getting a fiber broadband installation,naturally this would be good news after-all they all claim to offer “unlimited” connection within the agreed bandwidth. But then after comparing most of the available packages something triggered my conspiracy alarm: there are only 5 firms with access to NATIONAL OPTIC FIBRE BACKBONE (NOFBI) namely: safaricom,telkom Kenya, jamii telecom. access Kenya and wananchi group.
How is this possible? or am I missing something?


#2

the NOFBI is a public funded project and currently operated and managed by TELKOM Kenya. Kenya National Broadband Strategy (2013) (read outdated) seems to acknowledge there is no institutional framework to manage the NOFBI. However seems an executive order no 1 of May 2016 did address this although could not find the executive order online to see If this has been addressed. Anyway, yours is a valid point. This is national infrastructure from taxpayers pockets. How are the companies selected? Even more importantly how does it ensure the rural underserved are not marginalized or left out from this investment. As for Telkom managing, operating the FOC, I imagine this means it is in charge of authorizing access? Is there an approved framework to this? Further who is accountable for the money collected? IS there an ROI to this investment? Has it been calculated? Lots of questions to answer.


#3

Thank you @Grace_ICT for the pointers.


#4

I did a little digging and found out that The Communications Authority of Kenya (CA) is mandated to license all communications systems and services in the country. In executing this and its other responsibilities, CA is guided by the provisions of the relevant statutes, including; the Kenya Information and Communications Act, 1998 and the Kenya Communications Regulations 2001.
I guess they are responsible for licensing companies dealing with the final phase which includes metro fibre broadband


#5

Elias… almost fell of my chair lol… 2001 law is 16 years ago… in this tech age… I found a much later one Kenya Information and Communications Act 2010… link here http://admin.theiguides.org/Media/Documents/Kenya%20Information%20Communications%20Act.pdf.
From my reading, CA gives 2 types of licences (Article 23) 1. to operate a telecommunication system 2. to issue telecommunication services. I would now assume TELKOM Kenya has the operating and services licence for the NOFBI. I also saw that the minister has the power to make REGULATIONS on running of telecom systems, provision of telecom services, period of provision of services, approval and withdrawal of licences, fees and other charges, documentation required to receive licences, registration of subscribers.
You hinted on why the few players in the FOC services provision. The Act has a section on fair competition which CA has to enforce/ensure. An interesting twist is that CA can assign a ‘dominant telecom service provider’ This is done when company has 25% of total telecommunication market revenue OR based on level of control OR technological advancement OR the scale of operations from the Telecomm service provider. Clearly Telkom Kenya would qualify as a ‘dominant telecom service provider’ for the NOFBI based on the control and scale of operations and % sales of telecom market (??). The Act obliges the dominant company to disclose its tariffs and prices to CA.
The Act also has the universal access fund provision, where a company can obtain a loan from CA subject to approval from the CA board. I would assume the board would reserve this for companies wishing to provide internet in far flung rural areas of the country. Licences issued also have to be gazetted


#6

thanks for the update. After going through this I still do not get why is it that only 5 firms that exist in this sector? Why are we yet to see the county level (For deployment of infrastructure within a county boundary) which is relatively cheaper to run considering the annual fees are about 0.4% of Annual Gross-turnover or KShs.160,000 whichever is higher.Still a lot mysteries


#7

Companies are awarded licences by CA and this is meant to be gazetted. The Gazette gives the list. There is also something called a register with list of licensed cos but not sure if this is public or not. I didnt get the county level or the revenue point?


#8

Refer to http://www.ca.go.ke/images/downloads/TELECOMMUNICATION/LicensingProcedures/New%20Market%20Structure%20Under%20The%20Unified%20Licensing%20Framework%20-January%202016.pdf


#9

Throwing some chumvi in this conversation… https://manypossibilities.net/2016/11/how-to-lower-costs-on-state-owned-fibre-networks-in-africa/


#10

@elias_Czar well did this licensing framework answer ur original question on why few players? (ur question.>>.there are only 5 firms with access to NATIONAL OPTIC FIBRE BACKBONE (NOFBI) namely: safaricom,telkom Kenya, jamii telecom. access Kenya and wananchi group.). My two cents… going through the framework seems the 1a 1b 1c for national network facilities providers is for mobile networks, and the rest don’t really apply to fiber optic licencing… seems to me like there is a vacuum somewhere…


#11

This is quite an eye opener I thought this was only a Kenyan problem. It does raise some major points, although I would disagree with him on this: fibre infrastructure is not a pure public good. Its actually a quasi-public good due to the semi-non-rivalness (a few people using it does not prevent anyone else from enjoying but too many and soon the bandwidth will not be enough), But as stated in the article there’s definitely a problem as to how the infrastructure is being operated.


#12

have you heard of sigmon? I cant find any more info as to who owns the company but its apparently offering quality connections.


#13

@elias_Czar No I haven’t heard of the company. 3000k per month? Zuku is at 5000k per month + tv… info on ISPs in Kenya with market segments http://www.allisps.com/en/offers/KENYA Benchmarking with Netflix services with good comment section… http://nairobiwire.com/2016/01/now-that-netflix-has-launched-in-kenya-these-are-your-best-home-internet-solutions.html Jamii telecoms strategy http://www.businessdailyafrica.com/Corporate-News/Jamii-fires-up-pay-TV-market-with-low-cost-Internet-device/539550-3076694-u8l3xxz/index.html Kenya power deal with safaricom on the fiber to home market segments https://citizentv.co.ke/business/kenya-power-to-begin-providing-internet-in-december-135588/
All in all the fiber to home market segments is ripe for pickings it seems. Back to the discussion are they/should they be licenced by CA? Seems the licencing framework you shared earlier has nothing on FOC…


#14

i agree with Grace…Safcom fibre just won my heart with their affordability and reliability