EAST AFRICA’S INFRASTRUCTURE: A REGIONAL PERSPECTIVE $7.36 in 2009. In 2009, the price of ADSL in Kenya declined to one-sixth of its 2005 value, from around $220 to $37 per month. Tanzania has also experienced a decline in prices, albeit on a less dramatic scale than Kenya. ADSL prices in Uganda and Rwanda remained high in 2009 and 2010 but are expected to decline once service providers connect to the submarine cable over land.

In addition to connecting to the submarine cable, Kenya has taken additional steps to open up the region’s telecommunications market. It has led the way in East Africa in establishing gateways with licenses for multiple mobile operators—Kenya now has over 10 international gateways in an open market, and international call tariffs are cheaper as a result (World Economic Forum 2007).

**Table 4.6 . ICT pricing trends for EAC countries, 2005–10 (US$)**

|2005|2006|2009|2010|
|---|---|---|---|
|_Monthly prepaid mobile basket_||||
|Burundi<br>11.51|...|...|...|
|Kenya<br>14.60|15.93|7.36|7.36|
|Rwanda<br>11.64|11.31|6.16|5.39|
|Tanzania<br>13.46|10.40|9.32|9.28|
|Uganda<br>8.08|9.60|8.32|8.32|
|_Monthly postpaid fixed basket_||||
|Burundi<br>...|2.63|...|...|
|Kenya<br>10.42|14.23|...|...|
|Rwanda<br>4.84|7.69|...|...|
|Tanzania<br>12.43|10.82|...|9.65|
|Uganda<br>12.96|12.49|...|10.25|
|_ADSL monthly service charge_||||
|Burundi<br>...|...|...|...|
|Kenya<br>...|220.44|37.51|37.51|
|Rwanda<br>...|...|86.38|86.38|
|Tanzania<br>...|38.87|29.74|29.74|
|Uganda<br>...|300.00|300.00|300.00|
|Source: AICD.||||

As evident in East Africa, prices for _Monthly postpaid fixed basket_ Internet services were lower than in the rest of Burundi ... 2.63 ... the community thanks to connections with the Kenya 10.42 14.23 ... international cables. Prices for long distance Rwanda 4.84 7.69 ... (interregional and international) were among Tanzania 12.43 10.82 ... the highest in the region, however, because Uganda 12.96 12.49 ... monopolies control several international long- _ADSL monthly service charge_ distance services. Even though Ethiopia has a Burundi ... ... ... Kenya ... 220.44 37.51 monopoly in access to the international data Rwanda ... ... 86.38 gateways, government subsidies have reduced Tanzania ... 38.87 29.74 the price for access to the Internet. Prices for Uganda ... 300.00 300.00 telephone services in the rest of EAC are <u>Source: AICD.</u> governed by the levels of competition in longdistance services. Internet prices generally remain high due to lack of access to the submarine cable.

# **Box 4.3 . A shared model for backbone infrastructure development in East Africa**

A challenge faced by most incumbent operators in Africa has been the sheer difficulty of building and operating networks that meet the needs of the market. A partnership between the public and private sectors has been formed to develop a stronger backbone infrastructure in East Africa. Under this approach, existing private operators have formed a consortium and built and operated networks in underserved areas. Governments have also provided financing to ensure that cost-oriented wholesale prices are offered and to ensure regulatory protection.

This shared model of ICT infrastructure development has been used in the Eastern Africa Submarine Cable System (EASSy), an undersea cable project established by 20 telecommunications operators, mostly from East and Southern Africa, and partially financed by a few international financial institutions.

The system has been designed to minimize the problems associated with the lack of competition and regulation in the region. This is done through a special purpose vehicle that makes it possible to sell network capacity in any market in the region on an open-access, nondiscriminatory basis, enabling other members of the consortium to compete. The agreements that established the special purpose vehicle require members to pass through to customers any cost savings arising from increased traffic volumes. These mechanisms for competition and pass-through of cost reductions are intended to lower prices and increase access.

<u>Source: Information and Communications for Development 2009.</u> 54