Business News
Fibre-optic project begins
By Washington Gikunju
The Government may use subsidies to lower bandwith costs for
outsourcing centres in the country, a minister has said.
This would help call centre businesses stay competitive until
construction of fibre-optic links forced costs down.
Information and Communications minister, Mr Mutahi Kagwe, said this on
Wednesday at the signing of a $2.7 million (Sh191 million) contract
with Tyco Telecommunications to fund a survey on the construction of a
fibre-optic link to Fujairah in the United Arab Emirates (UAE).
The US-based firm is to undertake a four-month mapping of the Indian
Ocean to determine where a fibre-optic cable could be laid. The cable
will be known as The East African Marine Systems (Teams). The Kenyan
government through Telkom Kenya and the UAE government, through
Etisalat, have entered into a memorandum of understanding for the
construction of Teams.
Kagwe argued that the current cost of bandwith is too high and is
driving outsourcing companies in the country out of business. It
currently costs Kenyan call centres over 30 times more to transmit
data than it costs Indian rivals.
"We are talking about real jobs here and that is why this measure has
to be taken," said Kagwe. He, however, said that this is only a
temporary measure as bandwith costs are expected to come down
significantly with the coming of the fiber optic cable expected to be
completed by early next year.
Bandwith costs are the costs incurred to relay information (voice and
data) from one point to the other. The high bandwith costs in Kenya
are attributed to the fact that the country relies on satellite
linkage, which has a lower capacity, as opposed to fiber optic cables
(physical connection), which have a higher capacity.
The sub-marine survey is scheduled to start in February and will last
for about two months after which tendering process for the undersea
cable will commence.
Mr Jeffrey Stark, Tyco Telecommunications sales and marketing director
for Europe, Middle East and Africa, said that his company was ready to
commence work in February.
"We have a ship, deep sea boats and divers at the ready," Stark said.
"The process is going to involve a detailed survey of the underground
terrain and establishing the exact passage for the cable."
The successful laying of the cable is expected to reduce
telecommunication costs in the country significantly.
The information minister called on investors to start positioning
themselves to take advantage of the telecommunications boom to follow.
Permanent Secretary, Dr Bitange Ndemo, explained that a separate
company (a "special purpose vehicle") would be created to manage the
cable. The government is expected to own 40 per cent of the project.
The tender process for procurement of a financing consultant is
ongoing. The financing consultant, who will be known as the `lead
arranger', will be responsible for promotion of the project to
potential private sector investors.
Telkom Kenya will hold the Teams project in trust for the Government
until the company that will manage the project is registered.
Kenya is also involved in the construction of the African East African
Submarine Cable System (Eassy) project.
