Friday, January 12, 2007

Laying the groundwork for a rural cyber

followed up from "Internet in the Village"

As an entrepreneur I have found that if you draw up a business plan that requires KSh. x, go and source for KSh. 5x, you're likely to get KSh. 0.5x. It's a truth I've come to accept, financiers will never give you what you ask for. After some time I found this was actually a good thing, as the entrepreneur in you goes overdrive figuring how to still accomplish your task with minimum resources. You'd think then that I would have no problem with the 300k budget my friend gave me, eh? Well this was actually like 0.2x so I had to employ all strategies to get the project off the ground with the limited funds.

Before I could commit to the project (and the money) I had to make sure that I could get internet to the cyber quickly and inexpensively. I went shopping for an ISP in Nakuru and what I found was mostly disappointing.

1. Jambo Dial-up. This would involve installing a telephone line and using the Jambo service from Telkom. The cost per minute would be equivalent to making local calls. Local calls are approximately 7.50/= a minute (USD 6.40 per hour). This was immediately ruled out.
2. Telkom ADSL. The ADSL service has a fixed monthly cost starting from approximately Ksh. 10,000 (USD. 143). However ADSL can only work over a distance of 4 kilometer radius and Njoro is at least 25 km from the Nakuru ADSL service.
3. Wananchi leased line. This would involve pulling an analogue Telkom kenstream line from Nakuru and providing 32Mbps internet over it. The initial cost was 150,000 (USD 2,143) and subsequent costs would be 30,000 (USD 429) per month. This was too expensive and the benefits (speed of the internet) too low.

As a last ditch effort I decided to explore the mobile phone internet option. Celtel and Safaricom had recently been touting their EDGE technology (Enhanced Data rates for GSM Evolution. A technology that gives GSM networks similar capacity to handle services for the third generation of mobile telephony. EDGE was developed to enable the transmission of large amounts of data at a high speed, 384 kilobits per second.) as a convenient way to access the internet from anywhere. On the face of it, it looked like something I could consider but I was not putting my hopes too high as it was advertised as a high-end market product for personal use.

I was pleasantly surprised to find that what Safaricom and Celtel advertised was a gross understatement of the power of EDGE. The technology was just what I was looking for: it was easy to setup, it was instantly available in Njoro , it did not have inhibitive setup costs, and its running cost would allow me to charge affordable rates at the cyber. I couldn't believe that these firms had such powerful technology that they were not shouting about at the top of their voices.
As an aside I was astounded at the lack of technical/marketing knowledge the firms' personnel displayed regarding using the EDGE technology for my specific use. I thought the lack of knowledge might be local (Nakuru) but on speaking to their representatives in Nairobi I was surprised that the lack of knowledge persisted even there. Just as the internet initially found its way into people's homes through the ubiquitous fixed line telephone network in the US, I think the mobile phone network can be what accelerates internet penetration in Kenya. Celtel and Safaricom need to wake-up.

After comparing the two firms I settled on Celtel based on cost, coverage and network reliability. Immediately after purchase I tested out the service with my laptop and was impressed at the consistency and quality of the internet service. I would have to wait until the whole cyber was up and running before I knew whether I was right or the Celtel people would be telling me "I told you so". Read about what happened when I hooked up all the machines to the internet in my next post.

20 comments:

Juergen said...

Edge? Edge works?

How much did it cost?

I totally agree that both players should advertise their services.

Ssembonge said...

Is Africaonline still in town?

When I go upcountry one of the reliable cyber cafe connects through AfOL. I'm not sure now, but I could have sworn it was through a satellite dish.

startupkenya said...

Hi Juergen,

Yeah EDGE works very well. You can talk to Celtel/Safaricom for the actual usage costs but the initial setup (modem + subscription) costs about Ksh. 25,000 (USD. 357).

startupkenya said...

Hi Ssembonge,

I know Africaonline is still operational in Nairobi, I'm not sure about its operations upcountry though. I also wouldn't know about the satellite dish, but it could be VSAT.

Benin "Mwangi" said...

This is exactly what business people abroad should be hearing about business in Kenya. Bravo!!!

In fact, not only has this technology helped your business, but the EDGE technology has the power to shift many more of Kenya's small and medium sized entrpreneurs into one of global competitiveness..

-Benin Mwangi

Onesmus said...

i would like to setup my home pc to use edge so that i can work from home. How do i go about it.

Onesmus said...

how can i set up my home pc to use edge and what are the costs involved?

startupkenya said...

Hi Onesmus. Two things you need:
1. Edge modem
2. Data subscription with one of the providers.
It should cost you about KSh. 25,000 to setup. Your mobile phone provider should have more information.

Anonymous said...

I'm curious about where you guys got the capital to start your various businessess, especially given that you are still so young.

Anonymous said...

I'm curious where you guys got your startup capital to start your various businesses, especially given the fact that you are still so young.

very, very, impressive what you guys are doing.

startupkenya said...

Hi,

Thanks for all your comments. You can read more on SoftLaw's history here

toiyoi said...

Endlea vivyo hivyo
Quite curious:
(i)what is the average speed?
(ii)What is the cost?
(iii)What other equipment would one need?

startupkenya said...

Hi Toiyoi,

Thanks for the comments. Answers below:

(i)what is the average speed? - With 6-10 computers on the LAN I was getting between 7 to 10 Kbps per comp. Total bandwidth is 234Kbps but since it is shared with voice its unlikely you will ever hit those speeds.

(ii)What is the cost?
Initial setup cost is KShs 25,000 (USD 357) - modem and subscription. Recurrent costs are based on usage and depending on subscription range from Kshs 8 - 10 per MB (USD 0.14 - 0.29)

(iii)What other equipment would one need?
1.EDGE modem
2. Normal networking equipment (switch, router etc. depends with your network configuration)

toiyoi said...

Thank you sir,
Was thinking of setting up home access for my folks in Nakuru. Will see viability of this and will let you know what i decide.

Again, i see you succeeding beyond measure :)

kenyananalyst said...

I love your blog. I'll kip in touch. Kenyananalyst at yahoo.co.uk

Anonymous said...

HK, this is very good to read. I have been agonizing on how to provide affordable, reliable and sustainable internet connectivity to the community computer centre that I started in Meru. This EDGE service by Safaricom/Celtel seems like a route to pursue; I am going to look into it. How's the operation going in Njoro?

Kamib....

startupkenya said...

Thanks for asking Kamib.

The Njoro project is doing quite well. I also have another setup in Donyo Sabuk and two more in the pipeline in Central province. I'm in talks with some development partners to see how to do a faster roll-out in other rural areas.

Anonymous said...

Hey startups in kenya.'
I am interested in setting up a cyber cafe in Butere in western Kenya. My folks have to go along way either Mumias or Kakamega to check for internet. My cousine who has a laptom stated to me that for 15,000 kenyan shillings plus an additional something he can buy a gadget to access emails and internet in his home. That is fine but I would rather the project helped majority of people than just an individual. So how do I go about really and is it possible?
Let me know.
Jenepher J N
jnalyany@gmail.com

beth wanjiku said...

Dear startups in Kenya,

I want to start a cleaning business in Mombasa that is cleaning services business and have no idea on how to go about it and i still need some capital to purchase for the machines, detergents.
Please advice me on how to go about everything.

Regards
Beth.

Anonymous said...

Beth contact me at fred829@hotmail.com. I might be able to help