Barriers to use of cell phone services

By Michael Ouma

Kenya’s literacy levels and low subscriber spending on mobile phone airtime are two factors working against the widespread use and adoption of mobile network’s value-added services (VAS).

A new market research conducted last December by Strategy Analytics titled Operator Value Added Service (VAS) Offerings and Consumer Needs: Kenya says various challenges impede the widespread usage of VAS, including mobile subscribers’ spending, which is relatively low as most of the respondents in the survey spent less that $8 (about Sh600) on airtime purchases monthly. The other challenge, notes the study, is that Kenya’s "national literacy rates do not seem to be increasing above the 80 per cent mark."

This is despite there being considerable interest in a wide range of value-added services, including TV and video. The study commissioned by Nokia notes that, "the literacy rate in Kenya has been stagnant over the last five years at 80 per cent and is affecting the uptake of VAS, SMS and related services."

Due to this, the researchers recommend that mobile operators target illiterate members of the population and design services, which are easy for them to use. It gives the example of the Voice SMS service by Safaricom, which it says has made it convenient for illiterate people to use SMS services.

The study, commissioned by Nokia, involved the use of operator financial and other published data, Government sources, cell phone owner surveys among other sources of market information.

It further says that the country’s mobile phony industry, whose penetration currently stands at about 40 per cent, is experimenting with price cuts to draw in new users.

Penetration levels

However, taxation of mobile services is working against further penetration as "Kenyan consumers pay relatively high taxes for mobile services, which makes ownership expensive for them."

It cites figures from the Global Trade Association, which show that East Africans pay taxes of between 25 per cent and 30 per cent on mobile phone services, compared with an average of 17 per cent across Africa. Another interesting finding from the study, derived from the fact that all respondents were pre-paid subscribers, is that post-paid service is "virtually unknown in Kenya." According to Strategy Analytics’ Wireless Network Service estimates, post-paid accounts for only 1.2 per cent of the15 million mobile subscriptions.

"Despite their business orientation, all respondents expressed positive preference for having various new features, which allow them to place abet or gamble as well as watch regular TV channels, on their mobile phone," says the study. But even with the current levels of airtime spent, the revenue generated from data services is growing dramatically.

Revenue growth

This is because Safaricom, which accounts for more than 80 per cent of Kenya’s data revenue, has seen data and SMS revenues grow by almost 60 per cent in the last two years. The total the total number of SMS sent in Kenya increased from 153 million to 445 million between 2004 and 2007 due to the increasing use of SMS. The study says the use of SMS, "is typically cheaper than voice calling."

The report, therefore, forecasts that Kenya’s broadband data services market is expected to grow "dramatically" between 2006 and 2011.

Initially confined to only SMS and voice mail services, other paid and free value-added services have since been developed. These include phone ring tones, conference call services, missed call alert, call waiting, data, high speed internet services, international voice-over internet protocol and downloads. Others are mobile TV services.

 

 

Read all about: value-added services Safaricom, VAS Nokia

 

 

---