Now referred to as Community Networks, this is concept is based on values of voluntary associations, resources and expertise available in local cooperatives and communities to provide telecommunication services. The rural Tel-coop concept is proposed for implementation in selected rural areas with the objective of improving connectivity and contributing to the achievement of the government’s policy objective universal access to ICT services.

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THE RURAL TELECOMMUNICATION COOPERATIVE (TELECOOP)
PROJECT CONCEPT
Kenya: General Information
Kenya is situated on the East African coast and has a population of approximately 34
million, approximately 80 per cent of whom live in rural areas. The country’s
economy is dominated by the agricultural sector which employs 75 per cent of the
labour force and accounts for 24.5 per cent of the gross domestic product (GDP).
Many of country’s economic activities are organised under cooperatives which
account 45 per cent of the GDP and 31 per cent of national savings and deposits and
employ approximately 250,000 people. The cooperative movement has a membership
of 5.9 million people while 20 million people directly or indirectly derive their
livelihood from the movement. Agricultural based cooperatives form approximately
half of the total number of cooperatives in the country with 4.4 million members and
accounting for turnover of approximately US$ 7.5million.
The current telecommunication landscape in Kenya consists of a growing number of
operators and service providers encouraged by an increasingly liberalised
environment. Despite the growing potential to provide services to the wider
population through the licensing of players in various market segments there are
limitations that result from technical and economical infeasibility particularly in rural
and remote areas. The government’s objective stated in the ICT policy of 2006 is to
improve the fixed-line teledensity in rural areas from the current 0.33 lines to 5 lines
per 100 inhabitants by the year 2015. Unfortunately, the policy limits the provision of
universal access to the establishment of telecentres financed through the universal
service fund and public private partnerships. It is however important to acknowledge
that the lack of local connectivity limits end user service provision through
telecentres.
The Tel-coop concept
Telecommunication service provision under the cooperative model has been
successfully utilised in the United States to provide affordable services to rural areas
unserved by the commercial operators. These telecommunication cooperatives owned

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entirely by users have contributed to universal provision of services as well as
economic and community development.
Based on the success of cooperative provision of services in the United States, the
CTO has developed the Tel-coop concept to extend network connectivity to bridge the
access gap particularly in rural areas. The concept seeks to utilise the values,
voluntary associations, resources and expertise available in local cooperatives and
communities to provide telecommunication services. The rural Tel-coop concept is
proposed for implementation in selected rural areas with the objective of improving
connectivity and contributing to the achievement of the government’s policy
objective. The advantages of utilising the cooperative structure are that they provide
services to disadvantaged communities, create synergies, provide a relatively
permanent institutional framework, create employment, promote decent work and
generate wealth that is equitably distributed, provide basic education and democratic
experience, offer opportunities for people to exercise and enjoy corporate rights.
The cooperative movement in Kenya has shown an interest in telecommunication
service provision. The Kenya National Federation of Cooperatives (KNFC)
composed of 10,000 local cooperative societies with a membership of 5.7 million was
a member of Econet Wireless consortium that was awarded the third GSM licence in
2003. Unfortunately, however this initial interest in the telecommunication industry
has been dogged by controversy following revelations KNFC bankruptcy and
shareholding wrangles. The cooperative movement is supported at government level
through the Ministry of cooperative development and marketing which has identified
the promotion of ICT as key agenda of the strategic plan 2004-2008. Consequently,
there is an opportunity to leverage on these interests and strategic aim to enable the
provision of telecommunication services through the cooperative movement.
It is therefore expected that the rural Tel-coop concept will implemented under a
rural-based agricultural cooperative in which members should be willing to make an
investment in telecommunications. The initial criteria for selection would be that the
cooperative should be located in an area not sufficiently served by commercial
telecommunication operators, registered with the ministry of cooperative development
and marketing and should having a formal management structure.

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Rural communications
Rural areas are faced with numerous challenges in the delivery of telecommunication
services which translate into higher costs and reduced per-customer returns that
render conventional approaches by commercial operators, economically unattractive.
These include sparse populations, underdeveloped human resources, poor
infrastructure, difficult terrain, sparse population, poverty and low income levels
affecting project affordability and sustainability and lack of expertise for maintenance
and use of systems.
Despite imposing universal service obligations on the incumbent operator, fixed-line
teledensity in rural areas remains low at 0.33 lines. Apart from the universal access
strategy, policy and regulatory support for community-operated services is limited
however this is expected to improve with the recent licensing of local loop operators
(LLO) who extend services at the district level from the nearest incumbent exchange.
Proposed Implementation
The regulator in 2004 initiated a universal access programme that aimed to improve
access, availability and affordability to communication services including basic
telephony, internet and postal services. The universal access strategy recognises that
community-based network are an important means to deliver connectivity in
developing economies however this approach is limited by the fact that it is dependent
on the infrastructure of telecommunications operators. To overcome this limitation the
rural Tel-coop concept seeks to engage the local community in extending connectivity
through the building of communication links that utilise cost effective technologies.
Under the universal access strategy the government is seeking to establish a national
fibre optic backbone. The national backbone is expected to extend the reach of the
broadband capacity that will be landed at Mombasa by the East African Submarine
System (EASSy). It is proposed that the extension of this capacity to community level
utilise the Tel-coop concept. The utilisation of the concept at this level will not only
extend broadband connectivity to the local level but will leverage on the usage of
publicly-owned infrastructure at minimal or no cost. It is expected that the initiative

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will improve and contribute to rural productivity by enabling the active participation
of the community in various social and economic activities.
Stakeholders
With the support of the CTO, it is expected that the regulator, the Communications
Commission of Kenya will facilitate the project and seek the cooperation and
participation, engagement of stakeholders and potential partners including relevant
ministries, non-governmental organisations (NGOs), telecommunication operators
and service providers.
The stakeholders organised in a project steering committee shall have the key
responsibility of conceptualization, planning and implementation of the project. The
stakeholders will be responsible for refining the project proposal and shall facilitate
the submission to potential funding, technical and technology partners.
The communities’ contribution to the implementation of the project is critical in
ensuring support/buy-in as well as appropriateness of the services. Community-
driven infrastructure is expected to utilise the community’s resources including capital
and manpower to build open access infrastructure that will address connectivity gaps
and reduce communication costs. The Tel-coop model of network ownership and
management at the community level will be utilised as a tool to empower individuals
and enhance local development.
Regulatory Issues
The regulatory environment in Kenya is governed by various legal instruments
including the ICT policy, the Kenya Communications Act and the Kenya
Communications Regulations. It is acknowledged that the regulatory environment
could act as an enabler for the development of rural communications utilising the
rural Tel-coop project. It is therefore imperative to identify the regulatory issues that
would impact on the implementation of the rural Tel-coop concept.
The following have been identified as regulatory issues that should be taken into
consideration in facilitating the implementation of the rural Tel-coop concept:

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• Licensing requirements: In accordance to the Act the provision of
telecommunication services is subject to licensing without exception.
Licensed operators have universal service obligations mainly consisting of
provision of public payphones; however these have proved insufficient to meet
telecommunication needs. In acknowledging their input and impact on
community development preferential regulatory treatment should be extended
to community ownership of networks which may include subsidised frequency
fees and regulatory exceptions.
• Unified technology neutral licensing: The new licensing framework will
allow for the deployment of the most appropriate and cost-effective
technologies with minimum hindrance and will facilitate licensing that will
cover the provision of numerous services. There is a proposal to facilitate
unified and absolute technology neutral licensing based on three
categorisations; Network Facilities Provider (NFP), Applications Service
Provider (ASP) and Contents Services Provider (CSP). It may be assumed
that the Tel-coop initiative would be categorised as a NFP.
• Universal service fund: The modalities of managing the universal service
funds are yet to be finalised. It is recommended that the Universal Service
Funds should be open to providing funding to benefit community owned
networks.
• Interconnection requirements: There is potential for the network to generate
revenues from interconnection and from high volume of incoming calls to the
rural area. It is therefore critical to establish efficient, favourable and cost
based interconnection rates that should be extended to the rural connectivity
project. It is proposed that an asymmetric interconnect agreement based on
differential cost-based network access fees or a differential revenue sharing
formula between the commercial and rural community operator be established.
This would ensure that rural operators are compensated for their higher cost
structures and a fair proportion of the total revenue generated. The
community’s expertise in negotiating these rates may be limited; thus the
regulator should play a supportive role in defining the principle of
interconnection with rural areas.

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• Frequency licensing: The project is expected to utilise broadband wireless
access (BWA) frequencies which are subject to licensing at commercial rates.
There is however an opportunity to utilise unlicensed frequency bands on the
Wi Fi range to extend connectivity.
Establish linkages with other development initiatives
The project should be consistent with development goals that have been identified by
policymakers and should contribute to sustainable and equitable development in the
telecommunications sector. The economic recovery strategy (ERS) identifies efficient
telecommunications services as a means of accelerating growth in other productive
sectors of the economy.
The investment through the rural Tel-coop should be strategic in contributing and
supporting high development priorities particularly in health and education. The
steering committee should seek to establish linkages with development sector that
contributing to the sustainability of the project. Consequently, it is proposed that
community based organisation working in particular stated fields be co-opted in the
steering committee.
Model implementation plan
• Pre-implementation phase:
Before launching into the project the following needs to be implemented:
o A review of existing rural infrastructure to determine feasible upgrade
possibilities, alternatives and potential for leveraging that existing
technology for new types of services
o A review the current policy and regulatory framework and expected
changes including tariff policy, spectrum allocation, licensing and
liberalisation among many others.
o A review of plans by market players to expand to rural areas. This
review would serve to determine the sustainability of the project in the
face of competition. An assessment of how the market and sales
assumptions could be affected by other similar installations, networks
or alternatives, and the impacts on the project target.

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o It is imperative to carry out a market and beneficiary assessment
o Training and capacity building should be extended to stakeholders, and
staff to ensure that the stated goals are understood.
• Implementation:
To ensure that the project is sustainable there is need to generate interest
within the community to ensure that the network capacity availed is utilised.
Consequently is it important to raise awareness of the service through
community-driven means including the local council, youth and women’s
groups.
Identification of technical inputs and potential partners for support
A technical assessment of the area is essential to determine the appropriate technology
to be utilised in the project. This assessment would include a topographical survey,
population distribution and electrical power availability.
The challenge for community-owned network is to build and aggregate demand for
low cost communication needs. However, this challenge can be overcome by
leveraging on the rapid pace of innovation in new wireless technologies including Wi
Max and Wi Fi. Wireless technologies have numerous advantages including rapid
deployment times, greater reliability, flexibility, scalability, low-cost maintenance and
open standards, better security and adaptability to both voice and data requirements.
The distribution capabilities of these technologies could be utilised to extend the reach
of commercially owned networks. It is expected that the combined use of low-cost
wireless technologies and Voice over Internet protocol (VoIP) will provide significant
price reductions for end users. The provision of flexible and low cost services to
communities will invariably have a positive impact on productivity and development
of rural areas.
It is expected that technology partners engaged in the project will be required to
transfer skills with the aim of empowering the local community by building
entrepreneurship and local competence and enabling self-sufficiency of the project.

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Financing
It may be difficult to obtain financing due to the small size and not-for-profit
objectives of community owned networks. Though inadequate to finance the project,
these networks may have access to free rights of way or in kind contributions from
community members. There are various financing mechanisms that can be adopted to
support the implementation of the project this include membership subscription, start-
up loans, development, donor funding and universal access funds. Other innovative
funding mechanisms may also be pursued including tax incentives and import duty
relief.
With regards to finances, a summary of funding requirements should be drawn up to
indicating the sources of funding, the investment requirements and scope of services.
There is also a need to draw up a financial plan containing start-up expenses and
projections on revenues and operating expenses. The plan should also include
depreciation and replacement costs. Further a financial analysis should be established
indicating the expected incomes and funding requirements.
This concept has been developed by Mwende Njiraini, Assistant Engineer,
Licensing Compliance and Standards, Communications Commission of Kenya
while on internship at the Commonwealth Telecommunications Organisation
(CTO) January 2007.
References
• Hammond, A. and Paul J. (2006) A New Model for Rural Connectivity
http://www.nextbillion.net/files/A_New_Model_for_Rural_Connectivity.pdf
• HIV/AIDS Crippling African
Cooperativeshttp://ica.coop/gender/seminars/2003-oslo-nachu.pdf
• Kenya SACCO Report http://www.icaafrica.coop/resources/SAccoken.pdf