Smart Phone Growth Driving Data Uptake in Uganda

Bob Tusiime, an administrator at a private firm, is one of those who cannot wait for his fiancée to jump on the bandwagon of owning a smart phone.

"My fiancée isn't on WhatsApp or Viber," he says with a tone of regret "So, I always have loads of unanswered SMSs from her."

Tusiime is a fair representation of many Ugandans who cannot live without data on their smart phones. Much of his communication is done through the various social platforms such as Facebook.

It is because of people like Tusiime that telecom companies are trying to outsmart each other and lure more customers to their data services. The companies dangle all sorts of baits - many of them centring around internet speeds - to entice undecided customers to choose them.

For example, a couple of years back, MTN Uganda, while launching an upgrade of its internet network, gave some journalists a ride in a rally car just so they can have a feel of how fast its new internet service was.

It is not the internet speeds that customers have been mostly keen on, rather the price. Signing up to data services is no longer a privilege of the rich as it were five or more years ago; in any case one can now find a smart phone as cheap as Shs 150,000 compared to more than Shs 600,000 five years ago. Also, for as low as Shs 500, one can get data services today, which was unthinkable five years ago.


PRICE WARS
The competition within the data market is becoming just as stiff as it is in the voice segment. For instance, for Shs 1,000 you can get 500mbs megabytes from Smart, 100mbs from Uganda Telecom Limited UTL, 50mbs from Vodafone, while MTN Uganda will charge you Shs 1,200 for 50mbs. The prices vary with the heavier internet packages.

And yet, not all hope is lost for those with smart phones but have no money to load data. Airtel recently launched a new product called Tugabane, which allows its customers to share data. The impact of this data boom is quite mixed. While the trend of customers signing up internet packages over their phones has helped shore up the revenues of companies such as MTN Uganda, some experts worry that the traditional form of making voice calls and sending an sms is being threatened.

For example, through the social platforms of WhatsApp, Viber, Skype, Facebook Messenger, one can send an sms and make a phone call quite easily, which is far cheaper than the original form of calling and sending an sms. However, there is a drawback; the quality of an internet-enabled call is usually poor. With the continuous investment in network quality, it might not be long before these internet calls are too good to be true.

Vodafone Uganda, the latest telecom company to join the industry, announced that it would focus on the data market, where it has witnessed "tremendous growth."

MTN Uganda injected Shs 94 billion about $33m on data infrastructures in 2014. MTN Uganda announced recently that data contributed nine per cent to their total revenue.

Revenues from data helped the country's profit shoot to Shs 229 billion in 2014, up from Shs 203 billion in 2013, an 11 per cent jump, according to Brian Gouldie, the chief executive officer of MTN Uganda.

According to the Uganda Communications Commission UCC report on Access and usage of communication services 2014, the latest, internet connectivity has driven growth contributing about 6.5 per cent of the GDP, citing the increase in the use of bandwidth by 25 per cent, from 23,678.8mbs per second in June 2013 to 26,195.0mbps by December 2013. In June 2014, the figure was 26,986.05mbps.

Micheal Niyitegeka, an expert in ICT, offers an interesting outlook for the future. He says consumers are dynamic in nature and will always welcome cheaper services.

"Everybody else is looking at convenience; so, where it is cheaper for them to make a call or SMS using WhatsApp, that's what they will do. In the next five years, we are going to see more people connected to the internet because the majority of the phones that are coming are internet-enabled."

23-April-2015
By Ali Twaha
The Observer Newspaper