Internet access in Rwanda and other developing countries will remain expensive until service providers are able to host the content locally, a new report shows.

The report, Promoting Local Content Hosting to Develop the Internet Ecosystem, released this week by the Internet Society (ISOC), uses Rwanda as a case study to show that developing countries should focus more on content development as Internet infrastructure becomes more available.

But the impact of such efforts on adoption rates will be limited if local hosting and content delivery is overlooked in favour of solutions overseas.

“Accessing any type of content abroad can be very costly for internet service providers (ISPs), and therefore, international links are often under-provisioned, resulting in slow access times that limit usage,” said Michael Kende, ISOC’s chief economist and co-author of the report.

“These increased costs for accessing international content are passed on to users, with high prices limiting usage. These limits on demand will, in turn, restrict the creation of further Internet content, keeping the entire ecosystem underdeveloped.”

The report finds that almost all of the commercial websites in Rwanda are hosted abroad, which results in significantly higher costs for the ISPs to access the content.

Jean Philbert Nsengimana, Rwanda Minister of Youth and ICT, said higher local hosting prices have driven a big number of content providers to be hosted abroad.

“We are looking at the factors influencing the prices, and coming up with incentives to encourage subscription to local hosting. We want to lower Internet tariffs for those who are locally hosted,” he said.

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For one of the larger Rwandan websites that was examined, the content developer saved $111 per year by hosting overseas, while it cost the Rwandan ISPs U$13,500 in transit costs to deliver the content from abroad to local users. This impact is limited, however, because the websites hosted abroad suffer from high latency, which reduces usage.

“Local content providers typically host their content abroad because the hosting cost is lower, the result is a negative externality, the rational decisions of content providers to host abroad have a negative impact on ISP costs,” said the ISOC report.

“Content hosted abroad must be delivered back to the country over international Internet transit links that, in spite of significant infrastructure investments in recent years, are still expensive.”

The resulting high costs to access content hosted abroad are generally borne by ISPs. Meilleur Murindabigwi, CEO of Igihe Ltd, a Rwandan content developer, said they are finding it increasingly expensive to be hosted locally.

A survey done on one of the country’s leading content developers indicated that the average cost for hosting content abroad is $149.99 per year in the US, while hosting an 8GB website in Rwanda costs $ 261, saving $111 per year.

New legislation intended to curtail hate speech has also been seen as a factor that makes content providers to go for hosts abroad, so that they can enjoy privacy.

“The potential for government interventions, such as blocking websites or shutting down operations, were factored in by the Rwandan content producers interviewed,” said the report.

Industry experts want the government to regulate data and hosting costs.

Habineza Musa, one of the proprietors of Khenz, an electronic ticketing service whose website is hosted locally, said Rwanda’s hosting companies have limited cloud services, which discourages some content providers.

“Its only MTN Rwanda which has cloud services,” he said.

The report provides several examples of the positive impact on usage when Google and Akamai made content available locally.  For instance, Akamai recently turned on a cluster in Rwanda that increased throughput significantly, and within two months usage increased by 80 per cent. 

The report recommends several steps to bolster the local hosting environment in Rwanda, in order for local content providers to get the benefits of local hosting.

While local content hosting is a key element for creating a vibrant local Internet economy, the report notes that the focus for policymakers, companies, and content entrepreneurs, should be on creating a positive enabling environment that will incentivise local hosting and service development and thereby offer content providers a local choice, rather than imposing measures that artificially require local hosting. 

Rwandan Internet Service Providers (ISP’s) can purchase international transit for USD 125 per Mbps per month, while this is significantly lower than what was paid in Rwanda before, it is also still significantly higher than the prices paid by ISPs in developed countries.

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