How Datanet Serves Premium Internet to East Africa

When I arrived at FangFang Hotel in East Africa I was immediately surprised at how fast their internet was. I got to Uganda expecting things to be extremely slow so when I began using the FangFang connection and I found that the rate was well above 300kbps I was floored. So I asked the clerk who was providing the hotel with such a fast connection. They told me their provider was Datanet, one of the larger…more favored ISPs in East Africa. I called to find out how much it would cost to get a similar connection. It was almost better not knowing as it’s so expensive!

Since I assume Datanet prices are public knowledge, I’ll post them here. For a 92-100kbps connection the price is approximately $400 per month, a 192kbps connection is $700 and the FangFang connection that offers speeds of up to 256kps is $900/mo! Coming from the US, I have to admit I’m spoiled on the internet and 256kbps is pretty ’slow’. 92kps is like standing still considering it’s not even twice as fast as dial-up (56kbps)! The installation fee for these fast connections is also high, just under one thousand dollars!

Something else I found out was that Datanet’s connections are burst-able, meaning during peak times you’re throttled down to (or below) the speeds mentioned above. However, during non-peak hours your connection can be up to twice as fast (more likely a third as fast). In Kampala ‘peak’ hours are the hours in which businesses use the internet, so Monday through Friday, 9 to 5. On the weekends the average casual user doesn’t even have a connection fast enough to slow down the shared network. Not to mention that internet use is not as high as it might be because consumer grade connections are indeed pretty slow. ‘Cheap’ internet here would probablly be slower than dail-up!!! So the people paying for fast access can usually get greater speed on nights and weekends when fewer people are at work. This theory held true during the many nights I spent at FangFang Hotel. Usually late at night I was benchmarking close to 400kpbs while during the day it was more like 200kbps.

Uganda has an IXP (Internet Exchange Point) that connects to a large undersea cable with an end point in Saudi Arabia. This point acts as the hub for most of the IXP’s in the region (the rest probably connect in Europe). All these undersea cables connect to form what we know as the internet by connecting all the IXPs in the world which are in turn connecting ISPs which connect personal computers. In other words, all the internet service providers in Uganda are paying to access the local IXP, which can charge a lot of money because of low demand and the high cost of set-up and maintenance. There’s also the matter of lack of competition. IF there’s only one way to get internet in Uganda, you can believe the cost to enter the market is going to be high. As demand increases, the costs associated go down. This is why the internet will cost you a fortune in Sierra Leone but very little in the United States. It’s because high demand and availability drive market prices to more affordable rates.

So Datanet might be charge a ton of money but it’s because their own costs of operation are probablly incredibly high and until they have enough paying customers (or the cost of the technology is reduced) these prices are going to stay high. Fibre for Africa, a watch group of sorts, thinks that it’s the IXPs who are artificially keeping prices high which in turn forces ISPs to charge exorbitant rates for slow speeds and poor connections.

Unless the IXPs decide to drop their prices, the only way this will change is through penetration. As more and more computers find their way into Africa, demand for internet will go up and eventually enough people will be paying for access that prices can drop to more affordable rates.