Virtual Inequality

Even on the net...africa gets screwed...

Ever wondered why the cost of Internet access is so high in Africa relative to living standards and the costs of telephone calls? You might tell yourself that state monopolies don't help, or that's just "the way things are" or perhaps you don't think about it and consider yourself lucky to have any connection. Might the fact that there is a reverse subsidy of European Internet users by African Internet users have something to do with it?

Yes, you read it right - here in Africa, we are subsidising the cost of Internet use for people from the G8 countries. Like me, you probably find this astounding especially with all the talk of
"Bridging the Digital Divide" that is being bandied around at the moment. This is in fact so hard to believe that it merits a little further explanation but in order to do that some basics of
telecommunications and economics thereof need to be clarified.

Historically Speaking...
In days of old (pre 1994) the Internet as we know it today did not exist, there was little international data exchange, most of the telecomms traffic was voice, that is to say telephone calls. The voice market in various countries was controlled by statewide and often state-owned telecomms companies, many of whom enjoyed a monopoly in their home countries: In Britain it was BT, here in Rwanda it is Rwandatel. These big companies had long standing arrangements with each other on how to divvy up the revenue gained from international voice traffic (that's telephone calls to you and me), which obviously used the telecom infrastructure of (at least) both the caller and the recipients home country. With the event of mobile telephony (ie
international roaming) and deregulation of the industry (ie no more monopolies) these pricing agreements needed to get more sophisticated but they worked it out. Don't forget the voice industry had been around for the better part of 70 years by then.

Telecomms 101
For both voice and data the connection (such as a telephone line) from your house to the local exchange, for instance a telephone exchange in Gitarama or connecting to your Internet Service Provider (ISP) in Kigali, is called the local loop. The deregulation mentioned in previous section serves to open up the market and bring down the local loop cost. From the local exchange you connect to the Internet or to an international phone number. If you are in Europe that's the end of the story both for voice and data. When we talk of the Internet in this scenario, we mean the International Internet Backbone from where all the internet connected computers in the world are accessible.

Hence: Cost of Internet Access = Cost of local loop + charges of ISP
for connection to Internet

The problem for data traffic such as emails, is that Africa is notdirectly connected to the backbone, it must use satellite uplinks and these are expensive. The analogy for telephone calls would be if all telephone lines and all mobile masts terminated in North Africa and the only way to communicate for the rest of the continent would be for everyone to buy and use satellite phones! The result is that, whereas in Europe the local loop cost is 10 times more than the ISP, in Africa the economics are reversed and the local loop portion is 5 times less than the Internet connectivity cost. Deregulation of the African markets can not have the same dramatic effect on connection prices as it did in Europe.

A Case of the Mountain coming to Mohammed
What happens when the African ISPs reach the internet backbone, either in Europe or North America, is that they need to "buy" access to the internet from an Internet Backbone Provider (IBP) in much the same way as a home user in Africa pays for internet access from their local ISP (eg Rwantatel). In fact the situation in Rwanda and many other countries in the region is even worse as they are what's known as third tier providers, that is they buy access from a regionwide ISP who buy access from the European IBPs. Some Rwandan access comes via
Tanzania and there exist fourth tier providers also, which are a link further down in the food chain. Each time a link is added in the chain the cost is passed directly on to the consumer.

With this arrangement if I send an email to my friend in London, I pay for the satellite link to the European backbone but also if my friend sends me a mail I need to pay again for the satellite link to the backbone in order to retrieve the message - all she pays for is her connection to her ISP, i.e. her local loop cost. This is why we talk of a reverse subsidy of European and North American Internet users by African Internet users.

If this wasn't bad enough the final coup comes in the fact that along with many countries in the region Rwanda lacks an Internet Exchange Point (IXP). This is somewhere data traffic coming from different providers in the same country or region can be exchanged. Although
negotiations have begun to implement the IXP at the current time it results in emails sent from KIST across town to a business in Kigali on a Rwandatel connection pass through New York!

Of course as anyone who has used the Internet in Rwanda knows, this set up is completely invisible to the user until that is, when is time to pay your internet bill.

Note: Rwandais sheduled to have an IXP installed and running by the end of this year. Full details on the reverse subsidy situation may be found in "The Halfway Proposition" document produced by Afrispa, the assosciation of African Internet Providers.