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Steve Song recently wrote a great post on 3 reasons why M4D may be bad for Development where he says that:

Mobile operators have entrenched themselves with development agencies as the saviours of access and give generously to m4d development programs. Development agencies have rushed to embrace mobile operators.

While the latter is surely true, mobile phones are all the rage at USAID, I do not see the mobile operators "entrenched" with development agencies, nor do I see them giving "generously" to M4D programs. At least I don't see them involved with the implementers of aid agency programs. In fact, with the exception of Nokia and Vodafone, none of the major mobile line operators (MTN, Safaricom, Airtel, Glo, etc) seem to even notice the development sector.

When juxtaposed with the efforts of technology companies like Intel, Microsoft, and Cisco to support the development industry, the disengagement of the mobile operators is even more striking. I propose there are 3 reasons why mobile phone companies are not entrenched and not giving generously to M4D implementers:

1. Mobile technology doesn't need donors
   The startling rise in mobile phone adoption has primarily been consumer driven - built on millions of micro scratch card transactions without many donor dollars amongst them. So mobile phone companies (handset manufactures, network operators, and their respective ecosystems) don't feel the need to adapt to donor business practices, all of which seem very rigid and constraining when compared to the free-wheeling retail marketplace.
2. Donors can't adapt to private industry's speed
   Mobile technology lives by quarterly targets. New models, pricing plans, and consumer services start, blossom (and die) in 3 months or less. Most donors can't even issue an RFP in 3 months, often taking over a year from idea to contract award - an eternity in the mobile space. In addition, donor agencies require specialized business practices and expertise that might as well be a whole other language to private industry. And don't even get started on the contracting constraints imposed by government purchasing departments who are used to domestic acquisitions.
3. Implementers can't afford in-house mobile expertise
   Last but not least, the implementers who do know how to work with donor agencies, and could be a bridge between the development and mobile communities, often can't afford the mobile expertise. Mobile phone application developers, like other hot IT skills, are commanding salaries that are well beyond international development. Remember, the unwritten rule in development is that no one makes more than the contracting officer at the donor in charge of the contract.

These reasons were inspired by Roxanna Samii's post where she says, "enough with pilots, let's get serious about mDevelopment," and concludes with this great summation of the mobile phone in development issue:

So, quite frankly speaking, I see private and public sector as two separate circles, who are continuously struggling to find an intersection point. However, the reality is that public and private sector live in different time zones and do not seem to have found their preferred collaboration tool which allows them to seamlessly work together and indeed create a win-win situation!

This should be a fair warning to those at donor agencies and within implementers who get all giddy about mobile phones and think that mobile line operators will be just as giddy about their M4D idea.

Working with mobile operators is not easy. Mobiles phones are not an all-encompassing panacea. And just maybe, not the right bet to make at all. Remember that according to the World Bank, broadband Internet access beats mobile phones in boosting GDP.

I am David Scanell and I would like to describe the Internet access landscape in Kisumu and Nyanza from my personal experience. Now this just Western Kenya, so I can't comment on the rest of rural Kenya, though I imagine it's pretty similar.

There are a few terrestrial and wireless ISPs in Kisumu - KDN, Africaonline, Orange Telkom and Swift Global spring to mind. I think a few more may arrive soon once the fibre optic cable installation marathon that's currently under way here is finished.

Right now, I know a couple of people using Orange ADSL and a few others using KDN's WIMAX. I only know a single person (through their business) using fibre but I think quite a few more homes and business may switch to fibre soon; maybe even more will move to wireless services from resellers. I'm pretty sure that far more people will start use mobile data over the same time frame though - coverage in Kenya is very good and the spread of mobile ownership continues apace - and there are a few drivers for mobile growth that are no where near exhausted yet.

Since I last lived here in 2007, there has been a noticeable influx of new, cheaper low- to mid-range phones to the market. Whereas before I saw high street shops full of second hand phones, today I see quite a lot more selling good looking branded phones from China such as Tecno - which has a broad range available here - as well as a Huawei and ZTE who also have a few products. There's also a pretty high volume of KIRF stuff for sale here too. Lots of weird and wonderfully specced Noklas, Samesungs and the like.

Huawei's IDEOS (android) phone has had a huge media push here of late, though it is still way, way out of the average person's reach though at it's current KSH7,999 price point. The Samsung brand seems to be going from strength to strength here and, as ever, Nokia has a big (though noticeably falling) high street presence.

Nearly all these companies offer mid level phones that have EDGE capability at least - some of them also have 3G (the cheapest one in Safaricom's shop right now is KSH3,999). High level stuff is available here too - PhoneExpress have my Desire Z on sale - but the prices are as high as you'd expect with, for example, a Samsung Galaxy S (i9000) setting you back KSH42,999.

For a mobile 3G modem, prices range from KSH1,999 for the Huawei E173 to KSH12,199 for the Huawei E5 (which is a portable wifi hotspot) and most come with a bundle of free data.

As for mobile data coverage and pricing, there may not be much 3G outside of major towns just now, but EDGE seems to be almost everywhere else, at least in the parts of Nyanza, Western, Central and Coast I've traveled to in the last 9 months (including some very out of the way places around Lake Victoria here).

The end user cost is relatively low - standard unbundled MB price on Safaricom is currently KSH8 - and the bundled prices seem to be dropping all the time. The main players Safaricom, Orange and Airtel are cooking up new, lower-priced data bundles. There's currently a new set of bundles being marketed by Safaricom as "affordable Internet for less". These daily bundles are priced from 5MB for KSH5 up to 25MB for KSH20.

I'd say the number of Kenyan's going online via mobile will continue to increase rapidly for a good while yet.

I was just in Kenya and amazed that I could call endlessly in Kenya, call to the USA, and surf massive amounts of data on my iPhone and laptop (via the $100 Google IDEOS mobile phone acting as a wifi hotspot), and yet only use a trifling amount of Safaricom airtime.

It seems my experience is now the norm in Kenya, as Daily Nation reports:

Stiff competition in the mobile telephony market and an active industry regulator have reduced calling tariffs in Kenya to the lowest in Africa. Statistics from individual telecommunication operators show that calls in Kenya average Sh3.5 per minute, compared to an average of Sh11 in the East Africa region.

In Kenya, Airtel and Essar Telecom, which trades as yu, charge Sh3 for calls across networks, while it costs Sh3 for on-net and Sh4 off-net calls when using the Safaricom network. Telkom Kenya’s Orange charges Sh2 for on-net and Sh4 for off-net calls per minute.

The industry regulator, the Communications Commission of Kenya, introduced new, low mobile termination rates in August last year, which precipitated the current price wars that have seen retail prices slashed to unprecedented levels. A termination rate is the cost attached to terminating a call outside the originating network. According to CCK, the termination rates will fall to Sh1.44 from July 1, and further to Sh1.15 on July 1, 2012.

Kenya’s calling costs compare favourably even with neighbouring Tanzania, which follows closely with its mobile phone operators Vodacom, Tigo and Airtel charging about Sh4 for on-net calls and Sh6 for off-net calls a minute. But MTN, Airtel Uganda and Orange charge between Sh16 and Sh17 per minute for on-net calls and Sh18 for calls terminated outside the network, the highest rates in the East African region. South Africa and Nigeria, two key markets with higher subscriber numbers, have higher calling rates compared to East Africa. There are also relatively high rates in Angola at Sh48 and Zambia averaging Sh28.

Safaricom chief executive officer Bob Collymore says CCK should keep the termination rates where they are for the market to stabilise after a series of price wars.

“We want conducive business environment for the telecoms industry. Low calling rates mean we will have to go slow on our expansion plans,” Mr Collymore said.

He wants the government to ensure healthy pricing in the industry and to attach strict rollout and coverage requirements to mobile licences.

Safaricom might just have a point. Budde.Comm reports that this price war is actually a net loss for all those involved:

A price war has characterised Kenya’s mobile communications market since 2008, following the market entry of the third and fourth network, Econet Wireless Kenya (in which India’s Essar acquired a stake), and Telkom Kenya under the Orange brand. Subscriber growth is now forecast to slow gradually over the coming years, and rapidly falling ARPU levels have driven one of the incumbents, Zain (which was subsequently acquired by Bharti Airtel), deeper into negative earnings, leaving only the market leader, Safaricom, with a net profit, although reduced. Financial performance has improved again in the 2010/11 financial year.

A friend of mine thinks that Airtel is pushing the price war for a reason. Airtel is using its profits in other countries (like Malawi and Nigeria) to sell airtime below cost in Kenya just to push out the smaller mobile phone operators until its just Airtel and Safaricom. It would then raise rates to profitable levels and slowly push for more market share from Safarcom.

That's her theory, anyway. What's yours?

Russel Southwood interviewed Safaricom’s new CEO, Bob Collymore, on their business plans in Kenya. While the interview covered many topics (read the full interview), there was one quote that was quite shocking for those focused on bringing ICT to rural areas:

"We have 77% of the market by subscriber numbers. Our ARPU is higher than anyone else's. But 77% market share is not sustainable. We do have 'significant market power' but we feel that's because everyone else was very incompetent. There was no consistent management at the number two operator. We're OK with losing market share (faced with unrealistically low rates) and focusing on Nairobi and high-income communities. The people in remote districts are receiving calls (more than making them). If rates decline, why should I continue to do that?"

This seems to indicate that Safaricom is willing to abandon its market share, and subscribes, in rural areas - any place that is not a "high-income community". Watch the full interview video and let me know your thoughts:

Moses Kemibaro made an amazing video of Safaricom’s departing CEO, Michael Joseph, who spoke for about 2 hours at iHub on his wildly successful and "peculiar" decade at the helm of Safaricom, Kenya’s leading mobile network.

Here's a tidbit that should get you watching: Michael Joseph was told when he started at Safaricom that the entire mobile phone market in Kenya would be about 400,000 customers in 5 years, and Safaricom would have 50% of that market. We all know that didn't happen, so watch the video to learn more: