High Internet costs due to lack of competition

Tuesday October 3 2017

Technicians working on an optic fibre junction point in Kigali, Rwanda on September 30 2017.  PHOTO BY CYRIL  NDEGEYA

Technicians working on an optic fibre junction point in Kigali, Rwanda on September 30 2017. Currently, the Rwanda Internet Exchange (RINEX) is the only local hosting data centre, and is said to charge high fees. PHOTO | CYRIL NDEGEYA | NMG 

By LEONCE MUVUNYI
More by this Author

Service providers blame the high cost of internet on the lack of options for hosting locally-generated information due to lack of competition in the sector.

They said that despite the government putting in place policies to ease access to the Internet, limited hosting infrastructure is not allowing consumers to enjoy low internet prices.

Rwanda has a solo carrier-neutral data centre that allows interconnection between multiple telecommunication carriers in one location.

According to experts, this is a challenge because Internet service providers lack hosting alternatives, and they call for the creation of new hosting subdivisions to allow competition and lower costs.

Currently, the Rwanda Internet Exchange (RINEX) is the only local hosting data centre, and is said to charge high fees. This has seen many local websites seeking alternative, more affordable hosting services outside the country.

For instance, telecommunication companies pay Rwf7.5 million ($8,866) in annual subscription fees for a small form-factor pluggable transceiver of 10GB speed from Rinex.

During a peering meeting with Rwanda Information Communication and members of the Technology Association (RICTA), earlier this month, concerns were raised on the high costs with members calling for the diversification of the sector to allow for more players.

“A lot has to be done to reduce the cost of linking the server with other exchange points. We need more diversified players offering us competitive hosting alternatives,” said Christian Muhirwa chief executive officer of Broadband Systems Corporation Ltd.

Additional carrier

According to Mr Muhirwa, having additional carrier neutral data centres in the country would reduce the cost incurred by internet users.

According to figures from Rwanda Development Board (RDB) only 3,000 out of 89,000 registered domain names are hosted locally, and most of them are under government ownership ac.rw or co.gov.rw.
The annual local cost for hosting a .rw is Rwf12,000 ($14) and Rwf8,500 ($9.9) for .com/.net website.

These rates are high when compared with GoDaddy, a popular domain name registrar, which charges Rwf8,500 ($9.9) a year for a .com domain name including free web redirection, a web interface and other bonus packages.

Ghislain Nkeramugaba, the managing director of Rinex, said reducing the high cost requires consideration of market demand and investment in infrastructure among other things.

“Reducing the cost depends of several components, such as cost of infrastructure, the market you are serving and the margin of revenue targeted by the owner of that infrastructure,” said Mr Nkeramugaba.

Even though telecom companies have their own data centres for storing, managing and disseminating their data, they are all connected to the RINEX neutral data centre, which acts as a centralised location for all operations. This comes at a cost.