Hosting web sites abroad, who loses?

Thousands of dollars are drained into Western countries' coffers due to the high number of local web sites hosted abroad, investigations have revealed.
An Internet user surfs The New Times web site. Internet end-users pay more owing to costs of web-hosting in Western countries. (File)
An Internet user surfs The New Times web site. Internet end-users pay more owing to costs of web-hosting in Western countries. (File)

Thousands of dollars are drained into Western countries’ coffers due to the high number of local web sites hosted abroad, investigations have revealed.

With a significant number of Rwandan web sites hosted overseas, local Internet service providers incur high costs that are, in turn, passed on to ordinary citizens surfing the sites.


Estimates put the cost incurred by Internet service providers to access local web sites hosted abroad as high as $10,000 (about Rwf8 million) per month for large web sites, a cost which is passed down to consumers.


A recent study by the Internet Society, a global organisation that promotes the use of Internet, established that there is heavy economic drainage stemming from overseas hosting of Rwandan content.


Although it may initially appear cheaper to host a web site abroad compared to Rwanda, costs incurred to access content across the year exceed the cost of hosting.

The study’s findings established that while the cost of hosting abroad could be as low as $149 annually compared to about $260 for local web-hosting, the overall cost incurred to access content on the platforms could be as high as $10,000, and slower bandwidth (Internet speed) compared to locally hosted sites.

“This demonstrates that there is a large negative externality involved with overseas hosting of Rwandan content. For instance, for a yearly savings of $111 to this particular local content provider, a cost of $13,500 (about Rwf10.5 million) was imposed on ISPs, which, in turn, is passed over to Rwandan end-users,” the survey’s findings show.

“Furthermore, this is just one website, albeit one of the larger ones, and we expect that there are multiple cases of these externalities occurring.”

With some players in the industry estimating that up to about 2000 local web sites could be hosted out of the country, it emerges that the financial drainage is relatively high.

A spot check by The New Times revealed that a majority of popular web sites in the country with high daily traffic such as news web sites, entertainment sites, online  sales outlets and job advertisement sites are hosted abroad, mostly in the US.

Most of them said they prefer to host their sites abroad as they are assured of quality and prompt online support when need be as well as quality services.

The report attributed the differences of the cost of web hosting in Rwanda and abroad to economies of scale, whereby Rwandan data centres tend to have higher costs than their international data centre competitors, due to higher number of clients and lower energy costs.

Ghislain Nkeramugaba, chief operating officer of Rwanda Information and Communication Technology Association (RICTA), told The New Times that although it is cheap to host the content in Europe or the Americas, it is expensive for the end-user to access and consume the content.

However, Nkeramugaba noted that subscribing to the cheaper hosting option abroad caused a majority of sites to have relatively lower speed compared to those hosted locally. 

“All content hosted locally are many times faster than those hosted outside the country. In content distribution, the distance from where the data seats and where the viewer is located, plays a big role in end-user experience,” he said.

Superior technical advancement

Nkeramugaba admitted that some local firms prefer to host their domains abroad due to the developed digital economies guaranteeing quality support services.

“The Western economies developed their digital economies hence the prompt online support. However, the local web hosting firms also offer good online support. This will continue to improve more and more as content is hosted locally,” Nkeramugaba said.

To improve the reputation of local web hosting, the organisation has accredited all local web hosts of .rw as well as resellers and registers and is also working with local firms to raise awareness.

“The development of local web hosting business is paramount in creating a local digital economy. It takes continuous and relentless efforts, especially in aspects such as education and awareness. RICTA, with its .rw domain, has embarked on a project to enable the local web hosting,” he said.

Eddie Kayihura, chief executive of Broadband Systems Corporation, one of the largest Internet service providers in the country, said reluctance by local firms to host sites locally can be addressed by awareness on the advantages and perks that come with doing so.

By hosting locally, he said, a lot of revenue would be retained by the country, including connectivity fees and hosting fees.

Kayihura cited significant improvement made by local hosting agencies in recent years to meet international standards.

Addressing the issues of online support and security concerns, he said that there are a number of ‘sensitive’ web sites and applications hosted locally and were working well with no issues.

“We do have some very ‘sensitive’ web sites and applications hosted in the country that are involved in tax paying, banking and even sites with a lot of visibility such as government agencies and ministries,” he said.

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