{UAH} MAY BE YOU SHOULD HAVE STARTED WITH CREATING JOBS THAN THE INTERNET?

 

Low incomes hamper mobile Internet usage

The East African - 5 hours ago
By ALEX NGARAMBE Rwanda Today
Posted Saturday, June 21 2014 at 12:07


A mobile phone subscriber surfs the Internet. By 2017, 3G technology
will outstrip 2G to become the region's dominant form of mobile
connection. Photo/FILE Nation Media Group

IN SUMMARY
Currently, six million Rwandans out of 11 million own mobile phones
and a huge majority possess manual handsets, which limit mobile
Internet usage. According to an Ericsson mobility report released this
year, mobile Internet use is doubling year-on-year, with usage
expected to increase 20 times in the next five years in sub-Saharan
Africa.

Rwanda and other small economies in sub-Saharan Africa will struggle
to achieve set mobile Internet usage and penetration targets because
of the size of their economies and their citizen's low disposable
incomes.

According to an Ericsson mobility report released this year, mobile
Internet use is doubling year-on-year, with usage expected to increase
20 times in the next five years in sub-Saharan Africa.

By 2017, 3G technology will outstrip 2G to become the region's
dominant form of mobile connection.

Ericsson also predicts 930 million mobile subscriptions in sub-Saharan
Africa by the end of 2019 and 557 million smartphones and 710 million
broadband subscriptions.

Blanket projections

However, the targets in the report are based on blanket projections
for sub-Saharan Africa with different economic dynamics for different
countries.

In an effort to increase mobile Internet usage in Africa, Ericsson is
introducing "cheap smartphones" ranging between Rwf27,000 to Rwf33,000
($40-$50) for low-end users in rural Africa.

With Rwanda being one of the smaller economies but fastest growing in
sub-Saharan Africa, it is not clear how many people in rural Rwanda
can afford to spend Rwf33,000 on a smartphone.

Rwanda's GDP per capita rose to $644 in 2012 increasing from $593 in
2011, placing it in the low income category although the target is to
achieve $1,200 by 2018.
Although the country is fast becoming an ICT hub in the region given
investments in infrastructure, Rwandans are still among the least
spenders on telecom products in the continent and this could affect
Ericsson's ambitious plans in the country.

Currently, six million Rwandans out of 11 million own mobile phones
and a huge majority possess manual handsets, which limit mobile
Internet usage.

"The government needs to prioritise ICT products and make them key
essentials for consumers like it is for other products in others
sectors," said Shiletsi Makhofane, head of marketing and strategy at
Ericsson.

Rwanda's average revenue per user (ARPU) is $2 per month the lowest in
the region, while Kenya leads with $6.2; Tanzania is at $4.4 and
Uganda is at $3.5.

Low-end subscribers

The low ARPU means that the majority of mobile phone users in Rwanda
are low-end subscribers, whose propensity to spend on mobile value
added solutions is low; thereby depressing the effective rate of
revenue realisation per minute for operators.

READ: Low ARPU hurting Rwandan telecom firms

"The economy of the country relates to the ARPU in terms of the
disposable income of an individual and although the average GDP per
capita is almost the same across the region, the cost of living is
higher in Rwanda," said Tongai Maramba the chief executive officer of
Tigo in an earlier interview.

The Ericsson report shows that in 2014, phone users accessed 76,000
terabyte (TB) of data per month, double the 2013 figure of 37,500TB
per month. In 2015 the figures are expected to double again with
mobile phone users accessing 147,000TB per month.

The rise of social media, content-rich apps and video content accessed
from a new range of cheaper smartphones has prompted the rise.
Consumers in Kenya, South Africa and Nigeria are also increasingly
using video TV and media services from their smartphones.

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