One of our readers has sent us an email regarding his frustrations with Safaricom’s Internet. According to him, Safaricom’s Internet ought to be the best, not in comparison to the competition, but when compared against an ideal situation or minimum benchmarks for quality services. His issues can be summarised as follows:
- His nearest telephone mast (booster) does not have 3G Internet. He however receives 3G connectivity from a mast approximately 6Kms away that is most of the time congested due to a wider coverage area it serves with 3G Internet. GSM masts have an average coverage radius of 4Kms meaning one ought to be at least 3.5Kms near the mast to receive strong signal.
- Safaricom assured him that they will increase the number of masts on 3G network in two years (one year to go). The mast nearest to him is not part of the upgrade plan.
- He stays at an estate in Nakuru equivalent to Buru Buru of Nairobi where most tech savvy youth with 3G smartphones reside. However the masts to be upgraded, including the mast currently supplying the 3G Internet in the area, is primarily dominated by those who do not really prioritize on Internet browsing let alone 3G Internet.
- He wonders where Safaricom takes all the profits to (close to 100% industry’s profits) if its customers in most parts of the country still cannot access quality services.
- He wants advice on the best alternative for affordable but reliable Internet access around his place as he works online. Airtel and Orange have failed him more often than Safaricom.
As I was going through the email I realized that Safaricom has not done one thing very well, it has not invested adequately on infrastructure upgrade and setup in tandem with customer growth. Take for example the issue raised up there about expanding masts on 3G around the complainant’s residential place, Safaricom is planning to have the masts outside the area with high demand of 3G Internet to be upgraded to 3G; not now but one year later when the number of subscribers shall have soared probably to more than twice the current demand rate.
The other thing our reader wondered about is how Safaricom is spending its profits that he says are close to 100% industry’s profits and he is right. Before I attempt to address this let’s take an example of Google. Google revolutionized the Internet Search not merely by coming up with algorithm that transformed how web search is done but by also investing in hundreds of thousands of servers, 1000 times over the then demand levels. This ensured that at no time Google servers were overwhelmed by queries from end users, that even when the user base grew, the experience per user in terms of wait time has always remained the same if not better.
Google is now investing in fibre optics technology that is 100 times faster than the standard 100 Mbps speed, a 1 Gbps fibre connectivity that ensures that customers receive information they are looking for faster than they can press the Enter Key. What is interesting is that the infrastructure Google is deploying is already focused on the potential of an exponential customer growth rate. These types of investments based on customer projections is what Safaricom, the region’s biggest company, has not done as desired. It’s not just Safaricom that should develop the Google’s mindset but also the countries that have failed to manage the ever annoying traffic jam in big cities.
I do not have the figures on acquiring and maintaining a mast that can serve let’s say 100,000 mobile phone service users but I want to work with a figure of about Shs 50 million per mast (a very wild guess but given some unofficial figures I have seen this could be a very high guesstimate- we have since contacted Safaricom for accurate figures). In the recent past, Safaricom has had a customer growth rate of about 2 million a year. That means, in an ideal situation, it ought to put up 20 new masts fully on 3G network per year. This would mean they need to spend about Shs 1 billion on developing new but reliable infrastructure annually in tandem with customer growth rate.
Last year Safaricom made a pre-tax profit of Shs 27 billion, that is about 19 billion in net profits. If they put aside only Shs 5 billion on upgrading their infrastructure (shs 2 billion on new masts and shs 3 billion on upgrading existing ones), their services could have been far better than what we currently experience. In the financial year 2012/2013, Safaricom is anticipating to make more than Shs 30 billion on pre-tax profits so I can say they are in a position to ensure that every single subscriber can be serviced with quality voice and data services if they so wish.
But I think Safaricom has decided to focus on other areas other than the core business. For example they have invested a lot in fibre Internet. If you walk in Nairobi you will not miss to see guys digging trenches intended to be passages for Safaricom’s optic cables. I don’t think it is wise for Safaricom to invest in the fibre sector when there are a lot of complains regarding their core business. Instead, they should channel their investment to core business to ensure that both the existing and new subscribers are always satisfied with voice and data services offered through the mast communication networks.
Ideally the fibre cables should be left to some third party company e.g. Kenya Power that has since expressed interest in this sector. Then Internet Service Providers like Safaricom and Access Kenya among others can always lease the cables from Kenya Power for a fee and provide their Internet Services via the leased cable networks. This way Safaricom will be able to concentrate on their core business first before venturing into the numerous and at times irrelevant business opportunities.
Talking about the irrelevant business opportunities, the other day I received a text message from Safaricom informing me that if I want any business contact in Kenya, I can now easily obtain the said contact simply by dialing 191 at Shs 20 per call. Since then I have been thinking of a business contact number that I can’t obtain from online places like websites and social media or through friends so that I dial 191 to get. No such business came to mind. Businesses are on Facebook. They have Twitter handles. They have websites. Why would I spend shs 20 to get a business contact that I can get free of charge?
Lastly, why would Safaricom plan to upgrade boosters around an area with 3G Internet demand instead of upgrading the booster in that area first? I’m not sure if they really understand their customers’ demographic distribution.
Away from Safaricom, when trying to search for options I could suggest to our reader I got impressed with Zuku’s Triple Play services. This is an offer by Zuku Cables where for Shs 4,000 a month, they provide 85 channels in the Zuku Triple Play Premium/R8 bouquet and Wi-Fi router capable of offering 8Mbps for Internet access. As our reader already pays Shs 4,000 a month for Safaricom’s Internet and another Shs 3,000 a month for Dstv Compaq bouquet, if Zuku Triple Play was available in Nakuru then this would have been the better alternative he is searching for. He could simply use his Shs 4,000 a month for Interent to access the Internet services and enjoy “free” entertainment.