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Internet bundling and it's effects to Internet penetration in developing countries

East Africa being a community of developing countries, has been blessed with the appearance of three submarine cables* at the East African coast. Coming from satellite Internet which is known to have a minimum round trip time of 500ms to optic fibre Internet which reduces the round trip time to even less than 10ms, every thing in Internet speeds and Internet bandwidth has increased at the coast and in the inlands of the East African community. More Internet can be accessed on the move (mobile Internet), more people are becoming abreast with the Internet and the different terminologies, more Internet service providers, more content is being developed and more innovations are coming up in the world of Internet. If all that is not enough, many countries have developed Internet Exchange Points (IXPs) which help in reducing the time to access local content and also develop the capacity of local content creation. The case here in Uganda is the Uganda Internet Exchange Point (UIXP). When Uganda only had satellite ISPs (Internet Service Providers), Internet was expensive, slow, and limited the access to some websites like torrent sites. Although with the increasing number of ISPs, most of these limitations have been done with, but a new innovation has been noticed. Those days, Internet was sold in the whole, meaning you paid for a service and it did not matter how you used the service. These days, even after paying for the service, there is a limit to how much of the data you can download and upload in a particular period of time. This phenomenal is referred to as data capping or data bundling in Internet terminologies.

How has Internet Bundling affected Internet usage?

With the advent of social networks and the entire web 2.0, a lot of content is available, more people are living life on the Internet and more people are joining the Internet. As more demand for the Internet grows, the supply seems to be constrained which leaves people demanding for more. Those who cannot afford the bundles are left to access Internet in corporate offices, Internet cafes and friends computers where possible. This leaves this type of population with out service. Some people still believe that once they have paid some money to the ISPs, they should be let to use the Internet freely with out boundaries. They further assert that, it is because of these boundaries that innovations and some initiatives are limited as some content will require more bundles than other content, which brings in the topic of net neutrality. There are questions like, who uses the unused bundles at the end of the month? Why should ISPs buy unlimited Internet and resell limited Internet? This school of thought therefore confirms that if Internet bundling is stopped, East Africa will even realise deeper Internet penetration.

From the other side of the corridor, is a group of people who believe that it is because of these bundles and these limitations that we can even enjoy the speeds we are talking about. Although there is more capacity available at the coast due to the optical fibres, the ISPs are let trunk space which is a resource. This resource will be unusable by a good part of society if not well managed. If we allow a group of people to clog and monopolise it with some 'capacity-eating' content, other people will not be able to use it yet they have paid for the service. This introduces a topic of fair user policy. It is upon this argument that ISPs limit on how much someone can download and upload even after paying for a monthly subscription. People in finance also believe if it was not for data capping, Internet wouldn't be a good business to invest in. Because of this bundling business, ISPs can be able to sell more and more bundles and accumulate some profits. Some one has once told me that if it was not for data bundling, it would be hard for people with low income to even afford that small Internet. When Internet is bundled, every one is allowed to buy a portion depending on what he wants and what he can afford. Since we are a majority of low income earners, the only way we can access Internet is by buying small affordable bundles.

Each side of the corridor has more points to put across as regards this topic but these are the fundamental basics. It is upon these basics that I would wish to engage you (my reader). Do you think bundling of Internet has hampered the speed and depth of Internet penetration in developing nations? Would the situation be better without bundling?

Your Opinion is much appreciated.

*Seacom, TEAMs and EASSy

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Comment by Enock Othin on July 26, 2012 at 10:10am

Here we could look at the Pros and Cons.There are some advantages to getting your TV, phone, and Internet service through a single carrier. There's just one bill to pay each month, and that bill typically is lower than it would be for the same services purchased singly. those who subscribe to broadband Internet, local and long-distance telephone service, and cable or satellite TV with expanded or premium channels—can save hundreds of dollars a year by bundling.

But also It takes time to research new service, schedule any technicians that need to come in, and be there for the installation,There may also be service outages to put up with while the switch occurs.These hurdles could be enough to make you stick with something you're not completely satisfied with."As competition for bundled service increases between cable and phone companies, the ability of consumers to negotiate has increased,"So I think it hasn't hampered developing countries so much and what they need is proper strategies and policies on bundling.

Comment by Mayengo Tom Kizito on July 24, 2012 at 11:35am

Thank you John for the comments.

Question i) Up to now it is still hard to ascertain a correct answer to this question unless we talk to an ISP but from an experienced point of view, bundling is done for pricing models, and means of rationing for a scarce resource. It is actually not stressed when marketing. To some extend the bundling restrictions are printed in superscripts as a comment when ISPs are selling the so called 'Unlimited Internet', which actually never exists.

Question ii) It is actually the matter of free market economy but before you buy, the information is available for you to decide and according to the available information, you are expected to have noticed that you are buying bundled Internet which breaches no law. It is in rare cases when you will find a customer complaining of having been sold a service with out warning that it was bundled and in such cases, the ISPs have taken responsibility and worked things out with the customer.

Question iii) I hope we all understand the difference you bring forward with the words, bandwidth and data bundle. Otherwise, In developing countries, Uganda in particular, most bandwidth is shared and what you sign for is the maximum bandwidth with (again) a small comment at the end of the document which says that this Internet is shared and the bandwidth (speeds) might be determined by how many people are using the service and what they are using it for. Usually customers never see or read these small comments. However, bundling and bandwidth are not usually related. At the end of your data bundle, you are not able to use the service even if the timely subscription is still active. We don't need to forget that when buying internet you pay for time subscription and a specific data bundle. What runs out first, limits you from enjoying the service.

How the data bundles are consumed or exhausted depends on what you do with the Internet. If you are going to do youtube, high graphical sites and uploading of content like websites, you are most likely going to finish your data bundles before the time subscription is out.

We also need to note that there are some people who can subscribe for corporate Internet, like the one for offices, and large corporations but it is too expensive. Usually this Internet is not limited to bundles but it is also restricted to 'Fair user Policy'. It is this type of people who never even know about the word 'data bundling'. These are the minority and people who we don't even need to mention when talking about Internet penetration.

The majority of people are buying Internet on USB modems and phones which is very much data bundled. The number of people buying this Internet is increasing because of the different data plans available for different income and user groups.

Comment by John Bosco Kintu KAVUMA on July 23, 2012 at 11:20am
Dear Tom,

You poised an important question. Before, I attampt to respond just wanted to be clear on a few issues (i) Is internet bundling done as a pricing model, a marketing strategy or simply means to ration a scarse resource? (ii) Aren't there 'rights issues' in unbundling - if I pay for a service why should I get less than what i subscribe for? (iii) Does budling extend to a situation where subsribers are recieving less internet bandwidth than what they actually pay for or it is only restricted at the point of use where one is using the internet and is limited to the size of content to upload or perhaps download. If it happens at point of uploading content - it is a pretty idea as it will influence innovations such as use of hyperlinks and open government data (OGD). It is quite unfornute that everytime a person wants to upload content thinks of making an attachement - if it were able to mainain common folders then it would be easily and cheaper to hyperlink to the folders other than making attachment that exhaust space. Otherwise, getting less than what is paid for in the name of bundling is thurgery unless there is a deliberate consent by the user/subscriber in a way of donating to those who would go with no service. Members what do you think?



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