In 2013, the government signed a $260 million (Rwf187.2 billion) 25-year agreement with Korea Telecom, the biggest telecom company in South Korea, to deploy 4G Long Term Evolution (4G LTE) broadband network across the country to ensure fast, reliable and affordable Internet services for Rwandans.
The technology was rolled out in Kigali in October last year, assuring Rwandans access to high speed Internet.
Today, only over 1,000 users have taken up the service, according to the regulator, the Rwanda Utilities Regulatory Authority (Rura).
The service wholesaler, Olleh Rwanda Networks (ORN), sells to the other ISPs who retail the 4G to users at different rates as part of the deal, where ORN bought a 51 per cent stake in Broadband Corporation Systems, a government-owned Internet service provider (ISP).
Early this month, the government, through Rura and ORN announced a new product offer together with ISPA, one of the 10 4G retailers. Presently, users can buy one gigabyte of 4G LTE Internet at Rwf1,300, down from Rwf4,100 previously, representing a 68 per cent reduction.
Following the wholesale price cut, ISPA customers pay Rwf39,000 for 30 gigabytes of unlimited Internet per month under the retailer’s flagship 4G Internet package, which would have cost about Rwf160,000 previously.
Yvon Kaningu, co-owner of ISPA, said the package targets individual users or small businesses, but not where the Internet is shared like in offices.
Why other ISPs haven’t come up with similar packages
In interviews with Business Times, some of the retailers said they do not control the pricing of 4G.
Under the 25-year agreement between Korea Telecom and the government, no one else can invest in 4G-enabled technologies apart from ORN, which has caused uneasiness among some players who are calling for policy review.
“We have to define what the agreement covers. Every state-of-the-art sector technology made now, is 4G-enabled but we can’t buy them because of the policy.
“Our current infrastructure is depreciating and we cannot replace them,” the retailers noted.
Minister of youth and ICT, Jean Philbert Nsengimana, said ORN wanted to boost 4G Internet uptake when they cut prices in the first place this month.
“The wholesaler has interest in having as many people as possible using the network because they have invested money. So they are trying all avenues to attract users and increase access to the service and spur growth.
He said prior to making the policy framework two years ago, they inquired from all ISPs on whether they planned on rolling out 4G networks and most of the ISPs were only willing to roll it out on small-scale.
“We gave them that chance before we approved the policy and nobody had a plan on a national roll-out of 4G, so we had to structure it in one-wholesale network basis,” Nsengimana explained.
He said if anyone wants to invest in the wholesale network, they are welcome to do it through ORN where the government has shares.
He said at the time of making the policy, the guiding principle was that the investments needed to translate in net benefit for the people and that it needed to be accessible and affordable to all, not only focusing on the well-off citizens.
“What was clear was that the small networks wouldn’t have been affordable because of economies of scale which is why we consolidated the market.
“The Rwandan market is small, so if we start fragmenting it, it will become completely impossible for anyone to make substantial investment in the telecom sector,” Nsengimana explained.
Much as the intentions of the government may be to protect investors in 4G and final users, the challenges present a huge hindrance to the network’s growth in Rwanda.