Internet is big business in Addis Abeba, but with mobile data networks down and social media sites inaccessible, internet provider businesses are starting to feel the pressure to keep their customers. But they’re not the only ones being hit by the loss of internet connectivity. Ethio Telecom is also losing one of its biggest revenue generators, so it too is having to look at alternate ways to make up the gap reports MENNA ASRAT, FORTUNE STAFF WRITER.
Lately, a glance at the business centres and Internet cafes that line the streets of Addis Ababa tends to reveal a strange lack of customers. Even in the late afternoons when schools let out and students crowd the streets. Morning customers aren’t plentiful at the best of times, but now, with the declaration of the state of emergency and the shutdown of social media and mobile Internet networks, business centres that usually see many customers a day now don’t see even half that number. The answer to this seeming paradox may lie in the shutdown of social media sites. There are four million social media users currently in Ethiopia, up from one million in 2012. It would seem that most of those users are letting their money speak for them. And not many are choosing to spend it at Internet centres.
“We don’t like that we don’t have mobile Internet anymore. It’s really inconvenient for us. We can’t even use social media. We used to be able to chat with our friends no matter where we were or where they were. Now we don’t have that anymore. And price wise there’s not much of a difference. The conversations we used to have online, we now have to have on the phone, so there’s not too much difference in spending for us,” student Helina told Fortune.
The busy Keker Building in the Mexico area houses many business centres, shops of every kind and offices. There is a crush of people moving in every direction as they shop and work. Out of multiple business centres on the first floor of the building, none has more than two customers.
“I have photocopying, binding and secretarial services here, but most people come for the Internet. We don’t have a reliable connection, so people become frustrated and leave after just a few minutes. Although hopefully when the students start to be assigned more projects, I will have more customers. People’s biggest interest right now is social media and since they can’t access the sites in my shop I lose business. I used to make upwards of 500Br a day when people could come to use social media, but now sometimes I only make 100-150Br even from all the services I provide,” said the owner of one of the business centres, who wished to remain anonymous.
“I do worry about the survival of my business, of course. Renting a space in a building like this is expensive, especially since this is a good location. I have concerns about how I can keep the business running if customers don’t keep coming in. And I don’t know how many customers I will have if the Internet shutdown lasts for the next six months,” the owner added.
The shop itself speaks to the truth of her statement. A row of five computers are lined up against one wall, with only two of them in use, one of them just to edit a document. No one else comes into the shop, in spite of its location in a busy shopping mall with many people coming and going.
Internet connections have long been spotty in Addis Ababa. Ethiopia’s Internet service became operational as of 1997; a late start compared to Europe and America. However, the reach of Internet services in Ethiopia has increased drastically over the past five years. From 0.2 pc of the population in 2011/2012, the number of Internet users reached 14.8 pc of the population in 2015/2016. In other words, the number of Internet users in Ethiopia has grown from 221,540 people to 13.6 million. In spite of all these strides, the quality of Internet connection, and particularly broadband, infrastructure and service leaves a lot to be desired.
And with the additional blocking of social media sites as well as disabling of mobile data networks, many people seem to be experiencing increasing unwillingness to go to business centres where there might or might not be a reliable connection.
Frezer Mengesha, owner of Frezer Business Center in Keker Building, has had the same experience.
“Most of the people who came into my business were social media users. Now, the number of my customers has dropped drastically, which means that I have had to find alternative ways to increase my revenue, including filling in the DV form (US immigrant visa) for people. My income has dropped from 1000 Br a day to 700 or even less, and that’s with all the other services that I provide. Some days I don’t even make 100 Br from Internet users,” she told Fortune.
“I have to pay utilities for my shop and salaries for employees, and rent, which is expensive, because I have a good place in the building. All in all, every month, I have to pay well over 10,000 birr. Out of that, I pay about 1700 Br for Internet. In addition to all that, I took a loan to help me with the business, and it’s getting more and more difficult to keep up the payments. I worry very much about what will happen to my business if this keeps up for the next six months,” she added.
Mobile data networks were shut down on October 3, a few days before a national state of emergency was declared. This isn’t the first time that this has happened. Earlier this year, when answers to a key school leaving examination were posted online, the Internet was shut down for no less than five days. According to government sources this was a move to encourage students to concentrate on their studies.
Unlike previous incidents, the current shutdown closed down mobile Internet connections and expanded to include social media and communication software like Viber and Whatsapp following the Irrecha stampede.
Since the exam incident, the Internet has been shut down for no less than 40 days in total. In addition to mobile data networks, media channels such as ESAT and OMN have also been banned. The mobile network shutdown may be more costly than expected.
Even though Internet and data services make up only 0.6pc of GDP earnings, Ethio Telecom, the state phone and Internet service provider, gets a big part of its revenue from mobile data usage; six billion Br out of total revenues of 28 billion Br in 2015/2016. Revenues from Internet users have been increasing over the past three years.
With the spread of smartphones, thanks to companies like Tecno Mobile, the numbers of mobile and data users are steadily on the rise. The highest rate of growth in Internet use was registered in 2012/2013, with 4.4 million users – 19 times higher than in the users registered in 2011/2012. It was also in this period that Tecno Mobile smartphones were first introduced into Ethiopia. The next expected peak in Internet user registration is in 2016/2017, when total mobile subscribers are expected to reach 64 million.
Ethio Telecom also offers 3G and 4G plug-and-play internet packages, which have also been deactivated since mobile data networks were shut down. These packages cost a minimum of about 450 Br per month on average as a fixed payment to Ethio Telecom from all subscribers. Although it has not been stated whether subscribers will have to pay the monthly rate even when the internet is not working, subscribers will know in a short while when it comes times to make their monthly payments. If the payments are required, Ethio Telecom will have gained it’s customary subscriber fees. If not, the company will lose no less than 360 million Br this month.
All this means that the blow to the telecom company’s pockets may not be as severe as it might have been. “Even though mobile Internet usage has stopped, international outgoing calls are on the rise,” says Ethio Telecom chief Andualem Admassie. International calls are one source of revenue for the company, with 71 million minutes worth of international outgoing calls made in 2014/2015.
Some examples could be business centres that offer VPNs and Wi-Fi. These don’t seem to be feeling the side effects of the data network and social media deactivation.
“We have about twice as many customers as we did before the mobile data shutdown. People don’t really have a choice, so they come in to use our computers, and use our Wi-Fi services. We have software on our computers that lets people access their social media sites, so we do very good business. Before the shutdown we were making about 1000 Br a day profit. Now we make about 2000 Br profit. We pay about 5500 BR per month for both Wi-Fi and broadband as a bundle ,” Mikael Abreha, the owner of Balderas Business Center, told Fortune.
His shop is located under a very busy block of condominium buildings, as well as on a very busy road, so professionals and students use his services in equal measure.
“Internet has become a necessity for many people. Professionals work online and students do much of their work with help from the Internet. However, since there are power outages and system failures, it’s difficult to maintain the business. Sometimes the Internet won’t work for four or five days without the telecom company sending anyone to repair it. ”
A report released this month by Analysys Mason predicts that the Sub-Saharan telecom service markets will be worth 51 billion dollars in 2021, up from 41 billion dollars in 2015, due to the availability of low-cost smart phones and improved data networks. Mobile data services are predicted to be the biggest source of revenue growth for Sub-Saharan African countries between 2015 and 2021, contributing an estimated 8 billion dollars. In the current fiscal year, Ethio Telecom is projected to earn 40 billion Br.
However, according to a recent report by the Brookings Institute, Internet shutdowns cost countries an estimated 2.4 billion dollars globally. Looking at the period from July 1 2015 to June 30 2016, the report found that there had been a total of 81 disruptions in Internet service globally, with countries like Algeria, for example, losing 20,504,794 dollars as a result. This latest round could cost Ethiopia more than it should, both in terms of government earnings and private businesses.
“I spend a lot less than I used to. I used to have to top up my credit every day, sometimes even twice a day. Now I go three days without needing to buy more credit,” says Yonas, a student at Addis Abeba University.
For now though, customers, business owners and retailers alike will have to wait out the mobile Internet shutdown, while waiting to see if social media sites will be restored at the same time.
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