Project report

ANJUMAN POLYTECHNIC

Department of Electronics &

Telecommunication, sadar
Nagpur.

Prject title :
Prepare a report on VSAT based on
internet survey

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 Group Members :

Roll.no Enrollment.no Name

25 2100760193 Vdant Jayant Meshram

26 2100760 Nilima uikey

12 2000760057 Nihal Nipane

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Table of Contents:

Introduction.................................................................................................................3
Objective of study...................................................................................................3
1.1. Research methodology..................................................................................3
1.1.1. Alternatives to VSAT................................................................................4
1.1.2. Uses of VSAT...........................................................................................5
1.1.3. Voice over Internet Protocol:....................................................................5
1.1.4. Licences:...................................................................................................5
1.1.5. Availability, quality and standards of service...........................................6
1.1.6. Cost of services.........................................................................................6
1.1.7. Efficiency of production and distribution of services...............................7
Cybercafe Surveys......................................................................................................8
Introduction.................................................................................................................8
1.2. Demographic Specifics of Cyber Consumers...............................................8
1.3. Communications and Computation Patterns...............................................10
1.4. Cybercafé Usage.........................................................................................11
: Conclusion..............................................................................................................15
References.................................................................................................................17

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 Introduction

Over the last few years there has been increasing research on the digital divide. The
digital divide refers to the discrepancy between access to communication
infrastructure and services in Developed Countries (DC’s) and Least Developed
Countries (LDC’s) - the international digital divide - as well as the discrepancy within
countries, between those with access to Information, Communication Technology’s
(ICT)’s and those without - the domestic digital divide 1. There are fears amongst the
international development community, and marginalised countries themselves, that the
ICT gap between DC’s and LDC’s will continue to grow. Over the last few years there
has been a concerted effort internationally to exploit the digital opportunities that
provided low cost, rapidly deployable technologies to reduce these digital divides.
Very Small Aperture Terminal (VSAT) is such a technology. The characteristics that
determine this potential include:
• its distance independence makes it suited towards locations that are not easily
accessible for more traditional forms of connectivity such as fixed line
technologies
• installation is relatively inexpensive and rapid
• maintenance costs are low and the technical expertise needed to maintain
equipment is relatively low
• allowing for the use of applications, such as Voice over Internet Protocol
(VoIP), that can reduce the cost of service to low-income people.

Objective of study

The overall objective of the research is to determine the existing licensing and
regulatory framework for VSAT and, further, how VSAT is being used in a country
specific context. Specifically, this study looks at the use of VSAT in three countries,
namely Nigeria, Algeria and Tanzania.

1.1. Research methodology

The primary purpose of the research was to establish the status of VSAT usage in each
of the three countries. The methods used included desktop research to obtain
background information on the socio-economic and regulatory situation in the three
countries followed by data collection and finally quantitative and qualitative analysis.
Interviews to survey the views of different interests and gather further data on usage
patterns were also conducted.

For the purposes of the research a distinction was made between users and consumers.
Users were defined as commercial companies making use of VSAT in some way.
Consumers were defined as the end user and, for the purposes of this research, were
the limited to cybercafés.

The quantitative analysis conducted involved enumerators covering a total of fourteen

cybercafés in Nigeria and twelve cybercafés each in Algeria and Tanzania. A total of
418 questionnaires were completed in Lagos and 350 in Algiers. In Tanzania, 297

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questionnaires were conducted in Dar es Salaam and a further 196 in the rural town of
Mtwara.

The qualitative analysis involved a series of interviews with industry experts, ISP’s,
industry stakeholders (such as telecom companies); appropriate regulatory bodies and
Small, Micro and Medium Enterprises (SMME’s). Select interviews were conducted
with the owners/managers of cybercafés to get a more qualitative understanding of
consumer trends. In addition, a further set of two focus groups were conducted
amongst Distinction between C and Ku bands
The introduction of Ku band for cybercafés, ISP’s, SMME’s and corporates is
perceived as a relatively new phenomena. Around 90% of all interviewees stated that
there is a negative attitude towards Ku Band because of the perception that it is
unreliable and effected by the weather. Estimates of the downtime that users of Ku
band experienced ranged from 1 hour per day to 60 days per year.

With the exception of large telecom and VSAT operators (such as IPDirect and Direct
on PC), cybercafés and ISP’s reported no links to industry specific literature on VSAT
networks. Thus the incorrect impression that Ku band is unreliable persists. One of the
responses to customer reservations about using Ku band was to point out the price
discrepancy between C band and Ku band. However, this is not a consistent response
since some companies provide very little distinction, in terms of price, between Ku
band and C band to customers. Only with the advent of mass roll-out of Ku band by
companies such as Direct on PC and IP Direct is the lack of price discrepancy being
addressed.

A common theme amongst interviewees was that a greater awareness of VSAT

needed to be introduced into the Nigerian market. This was substantiated by the cyber
café user survey, which indicated that nearly all respondents understand that VSAT is
a satellite technology. However, there is little understanding of the different types of
VSAT networks and the advantages and disadvantages of Ku vs. C band.

1.1.1. Alternatives to VSAT

Lagos is the world’s third most densely populated city and it is estimated that 60% of
national telecom revenue is generated within Lagos and surrounds, despite poorly
developed infrastructure. With strong economic growth expected in Lagos and an
increasing desire for connectivity amongst the population, investment in fibre optic
cable is becoming a serious alternative. Of the large telecom companies interviewed,
all were moving towards optical fibre because of its lower cost (based on large
numbers of users) and increased functionality. However, the ubiquitous availability of
fibre optic cable in Lagos is estimated to be at least five years away. Fibre optic cable
was also seen as a viable alternative for corporates in the short-term future (within one
year) and for SMME’s and cybercafés within five years.

Optical fibre is used, primarily, to connect corporates to the Internet rather than
consumers (including cybercafés). In terms of an alternative to VSAT it is interesting
to note that fibre optic cable has a common characteristic with Ku band. It is
associated with dialup by consumers (this is not the case with corporates) and in turn

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is associated with Nitel and unreliability and high costs. In other words, the only
technology currently believed to be reliable by the majority of users is C band VSAT.

1.1.2. Uses of VSAT

There are two types of users of VSAT networks. The first is the corporate user,
particularly banks and oil companies. The second type of user is the individual
consumer that uses VSAT, usually because it most successfully supplies connectivity.
The majority of individuals use VSAT through cybercafés. The uses of VSAT can
thus be divided into two areas: corporate and individual use:

Corporate Individual (i.e. cybercafé)

Transaction based, between remote Greater than 50% of time is spent on
branches (for e.g. banks) social activities on the web, including
chat and email
Information based, between remote Telephone calls, particularly to
branches (for e.g. oil companies) international destinations using VoIP
Voice & data connectivity Web surfing

In the cybercafé proprietors survey, 8 out of 10 reported that voice was a growth area
for international calls. Call charges using traditional networks are too expensive,
resulting in high demand for Internet based telephony. For example, it costs between
20 & 30 Naira per minute to call a fixed line phone in the USA. The cost of a local
fixed line call, in contrast, is estimated at about 35 Naira.

1.1.3. Voice over Internet Protocol:

With the current regulatory regime under review, the ARPT has been reluctant to issue
any licences. According to current legislation, the provision of Voice over IP (VoIP)
must be licenced. To get around this conundrum, the ARPT has issued a number of
experimental licences. Of the ISP’s interviewed, all had received the experimental
licences without any difficulty. Specifically, the VoIP licences are called “test”
licences. There is a general expectation that with the new licensing regime in 2004,
these test licences will be withdrawn.

1.1.4. Licences:

There are currently five basic categories of telecommunications operators of which

three are relevant to this report:
• Public data communication operators
• Private data communication operators
• Internet service providers

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There is full competition in each of these categories. The barriers to entry are
primarily financial (namely, start up capital and licence fees) rather than regulatory.

The licence fees for the categories relevant to VSAT and the existing number of
operators are captured in the table below:

Type of Licence Number of Application Initial Annual Fee

Operators Fee (US$) Licence Fee (Royalty)
Public data 10 $1,000 $100,000 3% of annual gross
communication turnover or $30,000
service whichever is higher
Private data 6 $500 $5,000 $500
communication
service
Internet Protocol 23 $75 $1,000 $5,000
Service
(Commercial)

In addition to the above licence fees, there are spectrum charges. For every VSAT
station there is a $1,000 annual fee. A VSAT station is defined by the TCRA as any
satellite system that is capable of receiving and transmitting data or, other words, has a
transceiver.

1.1.5. Availability, quality and standards of service

If ICT is to be an enabling sector of the economy and contribute to economic growth,

one of the objectives must be availability. VSAT is particularly suited towards
connecting locations that are not served by the existing infrastructure. However, the
lack of any universal access policy retards the availability of connectivity. More
importantly, the lack of any coordinating body (or, in the words of one interviewee, a
‘harmonising’ entity) means that there are multiple initiatives underway to expand
connectivity. None of these initiatives is coordinated leading to duplication of
infrastructure and more strain on limited financial resources.

1.1.6. Cost of services

It is outside the scope of this study to analyse trends in costs of services. However,
costs are unlikely to be low in an environment that encourages
• High margins and low number of clients (by penalising high increases in sales)
• That does not incentivise access to connectivity by the majority of people,
regardless of location (for example, through the RTDF)
• Low levels of investment
1.1.7. Efficiency of production and distribution of services

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International donor agencies such as SIDA are investigating setting up a VSAT
network for distance education, linking teachers together so that information can be
exchanged on teaching methods and tools. This VSAT network will be one of the
largest in the country (approximately 34 stations). It is seen as a test case for the
provision of connectivity at an affordable cost.

The Department of Management Information Systems at the President’s Office is

investigating upgrading existing government VSAT networks to connect local
government branches and to migrate applications such as payroll and other HR
functions onto the network. The Ministry of Defence currently owns an analogue
VSAT network of which only 10% is utilised. The project is investigating whether this
network can be digitalised and more effectively utilised by government departments.

In terms of a sustainable private sector model for VSAT implementation, the most
promising candidate is a private sector initiative supported by Simbanet, a local public
data operator. The model assumes that multiple sources of revenues have to be found
in order for rural projects to be sustainable (and therefore profitable). There are
several steps to Simbanet’s model:
• To partner with local businesses
• To sell value added services to local businesses in the surrounding area (in
other words, to become the local ISP)
• To create a 50% partnership between Simbanet and the local business
entrepreneur which shares the start-up costs
The model has many advantages. By partnering with the local business, Simbanet
places the local business under its public data operator licence and thereby avoids the
need for the local business to be registered with the TCRA and to pay its licence fees.
Simbanet pays the annual VSAT spectrum fee as part of its contribution to the costs of
the new business and removes that area of red tape from the entrepreneur. The
equipment is leased by Simbanet to the entrepreneur16. If one includes the costs of

depreciation, the number of small businesses that must be signed up to the local ISP
for it to survive is in the region of 70 to 75. The cybercafé installed at the ISP offices
is seen as a side business which brings in much needed revenue, but one that is not
reliable and does not have much growth given current income levels in the area. While
the one site visited cannot be a representative sample, similar models are worth
investigating as a sustainable method of introducing connectivity to rural areas with
limited consumers and businesses.

Within the private sector (specifically the corporate sector) the commitment of the
TCRA to untrammelled competition is having another effect. The corporate market
represents an area of high margins for local public data operators. The lack of any
incentive to invest combined with onerous licensing fees has contributed towards high
costs. This has encouraged well-resourced companies to bypass public data operators
and to install their own private VSAT networks. Many multinational companies and

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NGO’s have agreements with suppliers in their countries of origin, bypassing local
operators. The requirements for operating a private network is a $5,000 USD annual
licence fee. The effect has been to limit the size of the market and adds to the lack of
incentive on the side of public data operators to invest in local infrastructure and
skills.

Cybercafe Surveys

Introduction

As part of the study, surveys of cyber café consumers were conducted in each of the
three countries. In Nigeria a largely pre-coded quantitative survey was administered to
418 cybercafé consumers at 14 cybercafés in 12 districts in Lagos. In Algeria a similar
survey was conducted amongst 350 cybercafé consumers at 12 cybercafés in 10
different districts in Algiers. In Tanzania, the same type of survey was conducted
amongst 297 cybercafé consumers at 12 cybercafés in 10 districts in Dar es Salaam. In
addition, six in-depth interviews were conducted amongst consumers in Algiers, seven
in-depth interviews and two focus groups of twelve and fourteen respondents in Lagos
and six in-depth interviews in Dar es Salaam. In Tanzania, an additional 194
consumers were interviewed at 2 cybercafés in Mtwara, which is a perfect example of
rural town. Located in far south of the country on the coast at the Mozambique border,
Mtwara is an underdeveloped town that is the main urban centre for a very
underdeveloped region. The findings for Mtwara are presented in tabular form,
however a detailed description of these, as well as for all the other areas can be found
in the country specific reports.

The research was undertaken during October 2003 in Lagos, November 2003 in
Algiers and March 2004 in Dar es Salaam and Mtwara. In all the areas the surveys,
wherever possible, were spread throughout the week across a daily eight-hour spell
(11:00 to 19:00), including weekends, in order to allow for all types of potential
consumers to be reached. The aim of these surveys were to profile cybercafé
consumers and by implication consumers of VSAT technology. In all three countries,
local researchers and enumerators administered the interviews, which were in English
in Lagos, French in Algiers, and Swahili in Dar es Salaam and Mtwara.

1.2. Demographic Specifics of Cyber Consumers

In all the surveys respondents were asked a number of questions relating to

demographic variables, from which the average age of the cybercafé consumers in
Lagos was enumerated at a little under 28 and one-half years, compared to a little over
25 years in Algiers and 29 years in Dar es Salaam. It would seem that at the lower end
the ‘entry’ age for using cybercafés is between 15 and 17 years, with the number of
consumers increasing into the 20-year age cohort, before levelling out and declining.
In Algiers, this decrease is already noticeable amongst consumers over the age of 30 ,
being somewhat higher in Lagos and Dar es Salaam (40 years).

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There is a perceptible gender imbalance amongst cybercafé consumers, with men
accounting for 72% of all consumers in Lagos, 59% in Algiers and 55% in Dar es
Salaam. Although the reasons for this discrepancy are not distinctly accounted for, as
it is the case in many other activities in African countries, gender can be a critical
variable in defining the culture of using the Internet, and shaping access to and
knowledge about the technology. As a case in point, traditional beliefs and prejudices
regarding gender based role divisions and thus the tacit inhibitions females feel in
relation to showing up in public places without the courtship of men, among other
things, could partly explain the lesser proportion of female cybercafé consumers. This
could also be related to the relatively lower occurrence of women involvement in
higher education and formal employment, as will be later shown that the vast majority
of the cybercafé consumers were found to be scholars and full time employees by
vocation. This finding was also further substantiated by visits on campus Internet
cafés in all three capital cities, where it might be supposed that women might be more
likely to be found using cybercafés than elsewhere in those cities, however in all cases
the similar ratios of consumers with other cybercafés were observed.

Qualitative information would suggest that women simply lacked interest in the types
of subjects that were found on the Internet: general news, sports, pornography and
music. Additionally in Algiers, it emerged that women’s travel from their place of
residence was more limited than that of men, and the lack of cybercafés in residential
areas limited their scope to utilize them, however, as will be shown later, cybercafés
exist in sufficient numbers in locations close to where consumers live, thus
discounting this hypothesis as a reason. In Dar es Salaam the difference was not as
large as in the other two cities and when raised as an issue, it was said that at the entry
level, “girls” tend to take up the usage of cybercafés a little later than “boys” but then
catch up, whilst at the older age cohorts, men dominate, but that this would fade away
as they are swamped by new younger consumers of both genders.

What is striking about the demographic composition of cybercafés consumers is their

high levels education, with 72% of consumers in Lagos being currently in tertiary
education and 13% either in or having completed a secondary school. In Algiers 83%
had either received or were still in tertiary education and all the rest having either
completed or currently in secondary school. In Dar es Salaam, similar trends were
found with 43% of consumers having either completed or were still currently in
tertiary education and 51% of consumers either completed or were still currently in
secondary education. Such high levels of education would mean that a there would be
a high correlation between employment and consumers, which is borne out by the fact
that just over 60% of consumers in Lagos are engaged in a full time work with a little
under 10% on a part time basis, with scholars and students accounting for 19% of all
consumers. In Algiers there was an inverse relationship amongst consumers, between
on the one hand scholars and students (56%) and on the other those working full-time
(24%), and like Lagos, a little under 9% were working part-time and 10% were
unemployed. In Dar es Salaam, 43% were employed, 36% were scholars or students
and 7% unemployed.

The fact that the distribution of the cybercafé consumers was highly skewed in favour
of scholars and those involved in full time employment can be related to the financial
capability and/or appreciation of the different technology services availed of by these

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consumers. If the aim of proponents of VSAT technology is to secure and consolidate
what currently represents the existing market, then a narrow band of the population
needs to be targeted, which given the nature of its education levels the message would
have to be no different to that used elsewhere in the world. Furthermore, given their
predominance in the employment sector, it ought to be a group of consumers for
which usage should not decline, however, this trend is tested for later.
1.3. Communications and Computation Patterns

In order to better understand communications and computation configuration of

cybercafé consumers, they were asked a number of questions about the types of
telephones found within their households, the contractual arrangements relating to
these telephones, and usage in terms of monthly costs. In addition, they were asked
whether they had access to a computer or the Internet, either at home or at work, and a
number of usage patterns were also probed for.

In Lagos, a cybercafé user typically comes from a household that will on average have
2.5 working mobile phones and in all except for 1.4% of consumers there would be at
least one mobile phone in their household. In Algiers, cybercafé consumers
households averaged 2.1 working mobile phones, however, 22.6% of user households
do not have a working mobile phone at all. In Dar es Salaam the average number of
working mobile phones per cybercafé user is 1.8, with 7% not having a mobile phone.
In Lagos, the overwhelming majority (95%) of mobile phones are on a pay-as-you go
basis which is similar to 97% in Dar es Salaam, however in Algiers, 34% of all mobile
phones amongst cybercafé consumers and their family members were on a monthly
contract.

In Lagos a cybercafé user spends 4,200 Naira (US$34.62) per month on their mobile
phone, with the similar expenditure being 1,200 Dinar (US$16.67) for Algiers and
19,115 Shillings (US$17.54) for Dar es Salaam. Cybercafé consumers were also asked
whether they had a fixed phone at home, with slightly more than 42% having one in
Lagos, 71% in Algiers and 40% in Dar es Salaam having one.

Table 1: Mtwara Cybercafé Consumers – demographic, communications and

computation statistics
Gender composition 64% male 36% female
Average age 28.7 yrs
Education Level - completed 32.3% secondary 19.5% tertiary
Vocation - employed 23% students 60% employed
Personal mobile telephone, ownership 58%
Personal mobile telephone, monthly expenditure US$ 20.19
Household fixed telephone, ownership 34%
Fixed telephone, monthly expenditure US$ 26.45
Personal computer home ownership 22%
Internet connection at home 14%
Use of computer at school / work 27%

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Internet connection at school / work 23%
Average time spent on internet at home and school /
work 19.8 hrs

Home-based personal computer ownership was recorded at 40% for cybercafé

consumers in Lagos, 51% in Algiers and 36% in Dar es Salaam. In Lagos, only 12%
of all cybercafé consumers have an Internet connection at home, the same applying to
18% and 11% of cybercafé consumers in Algiers and Dar es Salaam respectively. In
Lagos, those respondents with working Internet connections in their homes, claimed
to spend on average 7.7 hours per week on line. In Algiers cybercafé consumers with
an Internet connection at home claimed to spend approximately 15.1 hours a week
online, this would compare with 12.4 hours per week for the same generic sub-group
of cybercafé consumers in Dar es Salaam. For the month preceding the survey,
consumers reported to have paid or have an account, which included fixed line
telephony, of an average of 8,204 Naira (US$63.10) in Lagos, 4,001 Dinars
(US$56.57) in Algiers and 22,522 Shilling (US$20.66) in Dar es Salaam.

In Lagos, 62% of cybercafé consumers had access to a working computer at school

and/or work, with 32% also having an Internet connection for personal use, which on
average was used for six hours per week. In Algiers 34% have access to a fully
functional computer at school and/or work, with 31% having Internet that was used
for approximately six hours a week. In Dar es Salaam, 32% have regular and 47%
occasional access to such a computer, 36% to Internet and on average spend four
hours a week on-line. A combination of home and school or work based Internet
usage shows that cybercafé consumers spend an average of 9.2 hours in Lagos, 18.4
hours in Algiers and 5.1 hours per week in Dar es Salaam,. However, this is applicable
to 65% of cybercafé consumers in Lagos, 44% in Algiers and 45% in Dar es Salaam.
However, what this demonstrates is that for a proportion of cybercafé consumers, a
significant amount of time is spent on the Internet away from cybercafés, therefore it
can be assumed that if time and cost factors can be made to be compatible to
consumers abilities, the scope to increase usage time exists.

1.4. Cybercafé Usage

Respondents were asked a series of questions about the cybercafés they use, the
distance these are from their homes and pace of study or work, the amount of time and
money spent at these cybercafés and a few questions as to what might influence their
selection of a particular cybercafé.

Figure 1: Frequency of Weekly Usage of Cybercafés

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In Lagos the average time to get to the nearest cybercafé from home is 11.5 minutes,
with one quarter of all respondents having a cybercafé less than five minutes walk
from their homes. The nearest cybercafé from school or work is 15.3 minutes away,
with one quarter of all consumers being within three minutes of a cybercafé after
leaving their place of study or work. In Algiers the nearest cybercafé from home is
eight minutes and from school or work approximately 10 minutes, whilst in Dar es
Salaam 21 minutes and 11 minutes respectively were recorded for the cybercafés
closest to home and school or work.

Interestingly however, only 19% and 26% of cybercafé consumers in Lagos, 45% and
10% in Algiers and 28% and 32% in Dar es Salaam used the cybercafé closest to their
home or school or work. The rest traveling an additional 15 minutes in Lagos, 18
minutes in Algiers and 17 minutes in Dar es Salaam to use a different cybercafé. The
reasons for this were that a relationship had been created between them and the either
the owner or other consumers at this further away cybercafé, speed of connection was
noticeable faster, hardware both better and more varied and the ambiance more to
their likening. The latter included the cybercafé layout, including space between
consumers, privacy in terms of what was being viewed and air-conditioning.

Figure 2: Six-Monthly Usage Change of Cybercafés

16.5% 12.5%
31.1%
36.4% 54.9%
28.4%

40.5% 47.1%
32.7%

Algeria Nigeria Tanzania

Increased Stayed the same Decreased

In Lagos, cybercafé consumers visited a cybercafé on an average of 4.5 days per

week with 47% saying that the frequency of their visits had increased and 35% of the

13
 consumers had not undergone any change over the six months preceding the survey.
In Algiers, cybercafé visits averaged 3.6 days per week, having increased for
41% of consumers and decreased
for 28% of consumers. In Dar es Salaam, 4.0 days was the weekly average cybercafé
use, with 33% having recorded an increase and 55% no change during the six months
preceding the survey.

On average a Lagos based cybercafé user spent 239 Naira (US$1.84) per visit with
51% of the consumers stating that there had been an increase in their average
expenditure in the cybercafé, 10% a decline and 39%) a consistency in their average
expenditure at the cybercafé during the six months preceding the survey. In Algiers,
the amount of money spent per cybercafé visit averaged 123 Dinars (US$ 1.70), with
45% feeling that their average expenditure in cybercafés has increased, 37% stayed
the same and 18% decreased over the previous six months. In Dar es Salaam, average
cybercafé expenditure per visit was 890 Shilling (US$0.82), which was an increase for
35% of consumers, a static amount for 52% of consumers and a decrease for 13% of
consumers over a six-month period.

Figure 3: Six-Monthly Expenditure Change at Cybercafés

18.0% 12.8%
39.3%
36.7% 52.2%
9.6%

45.3% 51.1%
35.0%

Algeria Nigeria Tanzania

Increased Stayed the same Decreased

Such expenditure patters meant that consumers spent an average of 4,179 Naira
(US$32.15) in Lagos, 1,720 Dinars (US$23.89) in Algiers and 16.657 Shilling
(US$15.28) in
Dar es Salaam on average cybercafé each month. However, in such
instances it might be prudent to control for extreme expenditures at the outer levels
and look at the median expenditure, which is the 50% point, which measured
US$22.62 for Lagos, US$15.60 for Algeria and US$9.63 for Dar es Salaam.

In the focused discussion with consumers, the trend for Internet usage was reported to
decline amongst those participants who use the Internet for e-mailing purposes alone
and/or those who did browse a little or none at all. On the other hand, over one-fifth
of the participants who use the Internet for socializing purposes like chatting, reported
that their use of the Internet has increased through time and they envisage an even
greater usage (amounting to half of the time they spend on line) over the months to
come. Furthermore, during focused discussions it was revealed that the participants
spent a lot of time browsing and the most popular sites were the International Press. In
fact, a number of students said that this accounted for more than half of all the time
spent surfing the net. Music and video sites were the next most popular, however only
one respondent claimed to download from the net. Hobby and sports sites also

14
emerged in the list, as did fashion and clothing accessory sites. Finally, pornography
sites were also mentioned as sometimes being used, resulting in a debate where it was
claimed that these were the most popular, although not necessarily amongst the group
discussing the issue. Interestingly, International Press sites were more common
amongst women than men, music and video the younger as opposed to older
respondents and pornographic sites the exclusive preserve of younger men. During the
discussions it was unanimously agreed in the discussion that women did not visit
pornographic sites, and such sites were described as the exclusive preserve of men.

It was also claimed that the Internet is used, among other things, as a way of passing
time - browsing and socializing- chatting, and/or as an information source- job related.
Interestingly, unemployed and students claimed that that browsing accounted for more
than half of all the time spent surfing the net, whilst employed cybercafé consumers
tended to use the email most often. Chat rooms were used more by younger women
than other respondents. It was argued that the usage of chat rooms seems to have
declined during the past year, as had the downloading of music, although music and
video sites remained the most popular amongst younger consumers and second most
popular overall. The wide usage of the Internet by current students does not
necessarily mean that they use the technology for academic reasons. The finding from
the focused discussion suggests that the Internet is not conducive for studying
purposes. In addition, it was argued that the reason that the Internet tended not to be
used for study purposes was attributed mainly to the user unfriendliness of
information sourcing, and the prohibitive cost of surfing while trying to locate
relevant materials.

In Lagos, 55% of cybercafé consumers had noticed a positive (9% negative)

qualitative difference in both the quality and the speed of the Internet during the
previous six months. In Algiers, 61% of consumers indicated that there has been no
noticeable difference, 23% that the speed of Internet access had increased while
15.4% said that Internet connection has slowed down during the six-month period
preceding the survey. In Dar es Salaam 69% said that there was no noticeable
difference in speed, 21% felt that they had noticed an increase and 10% said that they
felt that the speed had decreased.

In order to test price elasticity, respondents were asked whether they would pay more
money to go to cybercafé which is no further than that most frequently patronized but
having a faster Internet connection. In Lagos, 80%, Algiers, 79% and Dar es Salaam,
74% of consumers reported that they would pay more money for a speedier access. In
a focused discussion, speed was argued as being essential when browsing, as it saved
money and reduced levels of frustration, but was not considered as being important
when the Internet was used for other purposes. It was also argued that most consumers
were ‘single finger’ typists and as such a speedy connection did not make much of a
difference when mailing was in operation.

Those respondents that would not migrate to a cybercafé with a faster connection were
asked to explain their responses, which were: user cybercafé loyalty, possible higher
user costs and current satisfaction with the service (including speed of connection) and
facilities, as well as the location of their current preferred cybercafé. Of those user that

15
would be willing and capable to pay more for an Internet connection that is faster than
it is at the current café, in Lagos cybercafé consumers will willing to incur an average
of 18% more, in Algiers 26% more and in Dar es Salaam 13%, more than their
current average expenditure, which could then be projected to average monthly
expenditure for cybercafé consumers of US$26.69 for Lagos, US$19.66 for Algeria
and US$17.40 for Dar es Salaam.

Table 2: Mtwara Cybercafé Consumers – cybercafé statistics

Length of trip to cybercafé from home or school or
work (shortest) 28.9 mins
Number of days per month that cybercafé is used 12.5 days
Change in usage during previous six-months 27% increase 28% decrease
Average monthly expenditure at a cybercafé US$ 10.30
Increase in expenditure during previous six-months 23% increase 16% decrease
Knowledge of operating system 22% yes
Additional amount willing to pay for better service 20.8%

Potential monthly expenditure for better service US$ 12.43

Finally, cybercafé consumers were asked what factors inhibited a greater usage of the
Internet and by implication cybercafés. In Lagos - 18%, Algiers – 28% and Dar es
Salaam 31%, reported that they have no inhibitions whatsoever in relation to having
optimum usage of the Internet and no changing conditions would convince them to
increase usage. In all three areas respectively 55%, 43% and 42% cited a lack of time
and 27%, 28% and 27% - financial constraints, with the rest saying that it was an
interplay of both together with the poor quality of the service (including Internet
traffic and poor network), self discipline from or fear of being addicted, inconvenience
of the working hours of the cybercafés, remoteness of cybercafés from one’s
residence, reasons related to one’s profession and inadequate resources in the
cybercafé were the other factors mentioned as accounting for the inability of
respondents to use the Internet more. In theory however, a better and more convenient
service that would not result in increased costs could potentially result in increased
usage time for approximately three-quarters of all current consumers.

: Conclusion

As the VSAT policy process shows, there is a strong possibility that future
development of the industry in Algeria is going to be inhibited. Through a
combination of a lack of proper consultation with industry players and stifling
bureaucracy, a regulatory framework is being put in place that is unlikely promote
development. The impact of this is going to be the stagnation of the industry and very
slow growth in access to the majority of the Algerian population.

16
In contrast, the regulatory framework in Nigeria is open, relatively consultative and
enabling, particularly for the larger players. Of course, the moratorium on the issue of
new VSAT licences might have an impact on the sector and the effects will have to be
monitored over time. Nevertheless, the result is a growing telecom sector and
increasing demand. In fact, the primary constraint to increased usage identified
amongst cybercafé consumers was a lack of time rather than a lack of financial means.
However, there is a danger that VSAT will be bypassed in this growth curve.
Obstacles to VSAT’s growth include a lack of local technical skills and the perception
that Ku band VSAT suffers inordinately from rain attenuation. Both obstacles can be
easily removed with some simple information dissemination, demonstration and
marketing.

Algeria does not suffer from the same technical skill deficiency. Rather, its growth in
terms of consumers will be effected by a constraining regulatory environment. Price
increases, the issue of new licences where none used to exist and a bureaucratic
approach to regulation of the market has stifled growth. Unlike Nigeria, consumers
report cost as the largest obstacle to increased usage of the Internet. Interviews with
cyber café owners indicated that using the LAN for playing games was becoming
more popular than surfing the web. Games didn’t even feature in the Nigerian case
study.

The Tanzanian ICT market risks continued underdevelopment based upon the
regulators insistence on not taking an active or participatory role in the ICT sector.
The TCRA perceives its function to be the collecting of taxes rather than the
development of the sector. Thus the TCRA continues to licence new operators. The
result has been that operators (such as the public data operators) focus on high margin
business such as corporates in order to pay their licence fees. Operators do not
perceive Tanzania to have an environment that will provide them with a return on
their investment and this explains their reluctance to invest in a local hub. The
development of VSAT is dependent upon the creation of an environment suitable to
local investment. The role of institutions such as the Global VSAT Forum should be
in pressurising the Tanzanian government and the regulator to play a role in the
creation of local investment rather than supporting one set of interests, such as
international satellite operators (a criticism of the GVF in Tanzania).

As urban development increases, VSAT usage will be pushed out to areas where it is
not economically feasible to install alternatives such as fibre optic cable (for example,
rural areas). The three case studies highlight different sets of problems: firstly, the
inhibiting regulatory framework in Algeria, secondly, the lack of technical skills in
Nigeria and thirdly, the high regulatory transaction costs and poor investment
environment in Tanzania. The cybercafé consumer surveys reflect these differences.
Usage is increasing dramatically in Nigeria with consumers requiring more bandwidth
intensive applications. Consumers in Lagos use cybercafés more regularly than their
counterparts in either Dar es Salaam or Algiers. This is also reflected in Figure 2
where 47.1% of consumers stated that they had increased their usage of cybercafés
compared to 40.5% in Algiers and 32.7% in Tanzania. In Algeria, usage is increasing
steadily but consumers are beginning to turn towards applications that do not require
excessive bandwidth. A significant portion of consumers (31.1% compared to 16.5%
and 12.5% in Lagos and Tanzania respectively) in Algiers reported that their usage
had decreased over the last 6 months. In Tanzania, a common complaint is the high

17
prices of bandwidth. 54.9% of consumers reported that their usage patterns had
remained the same. The conclusion to be drawn here is that the consumer and user
market is stagnating without investment in local infrastructure.

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