Date: 9 September 2007 21:52:19 GMT+03:00
Subject: SV: [AfrISPA.Discuss] Undersea cable plan tangled in acrimony inSouth Africa
Frank,
You are right that everyone else but RSA needs a cable to RoW much, much
more than the good folks south, also that the thing has got stuck in
political concerns and power games. The good thing is, however, that the
general consensus on the needs, commercial impact and development leverage
of a widely available optical fibre cable has shifted from cold to warm.
Technically, there is no need for an East African submarine cable south
beyond Maputo at all, as there is well protected optical fibre Maputo -
Pretoria on the power lines. Which, btw, RSA has effectively prevented open
& fair use of during several years, effectively leaving Maputo on VSAT for a
much longer time than necessary. So SA could connect that route, already
today, to any cable from the north that lands close to Maputo.
Now two small issues:
First, RSA companies are major stakeholders in any submarine cable proposal
that has emerged the last couple of years, dominant to the extent that it
has made other parties concerned on who actually will control a cable system
supposed to be a joint project with some 23 participants. The Telkom SA part
of EASSy is closer to 50% than 1/23, and may well increase to >50% if Telkom
buys any of the other participants, which has been contemplated by some
pundits.
Second, the RSA market is a closed market where only a very limited number
of politically approved players are carefully allowed to participate in
sharing the revenues of an artificially high price level market. Who wants
to rock that boat of the industry insiders? So you have strong concerns
among established telecom industry interests in RSA to not change the game
for as long as possible. According to some analysts, keeping this inflated
price for another year or so is worth much more money in excessive profits
than the entire investment in EASSy. Why give away money by a too early
price reduction?
So what does the rest of the SSA think about this? And also the
international community in general, forking in quite a bit of the financing
into any of the cable projects suggested?
Well, they probably don't go easily on potentially offending the single
biggest partner they have in all other trade and political issues in SSA by
suggesting a solution without clear RSA involvement. The bean counters then
look at the traffic volumes and say that any project without the RSA volume
will be a commercial disaster, and what about restoration if we cannot reach
and have an agreement with SAT-3?
You end up in a situation where the question is: Who blinks first?
If there is no initiatives potentially making any EA submarine cable
roll-out happen ex RSA, there will be little change in any broader RSA
stance as long as the revenues and influence of the joint RSA political and
industrial telecoms interests are lined up the way they are.
Others have to consider their positions and responsibilities in relation to
all this. Personally, I cannot help looking at TEAMS in the light of the
above.
What about an EASSy project, now financed even more by international
development money, first built to those countries where an open market
exist? Gradually expanding South instead of gradually expanding North?
Loosing a big Telkom part of the financing is of cause not what those
banking, operator and vendor interests want that have got the financial
EASSy-packet stitched together with difficulty.
The interesting thing, however, is that the financing of EASSy seems to have
been growing softer by the day during 2007. What was a year ago portrayed as
a pure commercial financing is now looking more and more to be relying upon
soft elements just short of labelling significant amounts pure grants.
This shift opens up interesting considerations on the entire development
financing too: Shall such money be used to shelter commercial interests from
competition, actively preventing driving user prices down?
Maintaining artificially high profits to protected operators in restricted
markets is not necessarily in line with what should be eligible for support.
At some point of time that discussion will re-surface too in a similar way
as it did at WSIS when the WBG took a clear stance pro openness and equal
availability of cable capacity for all interested parties.
I have a hard time understanding how EU institutions can provide not only
the initial semi-soft "commercial loans" but now more of softer financing to
any venture so openly wide open to violating several EU principles regarding
telecoms and general market openness. Sure, as long as it stayed under the
radar various individuals could claim ignorance, but that is getting harder
and harder with the EA debate on why an obvious need is not met in a fair
way. Supporting a questionable package could soon kill a promising career
inside the EU system rather than promoting it. Time must be running out on
the non-open conditions?
The alternatives to EASSy now visible, funded by pure commercial capital
like SEACOM, makes it even more questionable to give soft funds to any
set-up having questionable market development properties. Rather, it
reinforces the need to justify any support by such funds with even MORE
arguments on the project openness and development leverage.
Both EASSy and SEACOM seem to have a hard time in RSA as long as they are
not clearly controlled by local interests.
Both seem up for a hard choice in RSA:
Give in, as little as possibly, but the control must be in RSA hands
Pass RSA in an immediate implementation of the rest of the system, or
Delay the whole thing, waiting for RSA to blink in fear of being left out.
Other EA stakeholders need to consider what situation they like to promote
for any cable project in the above respect. Don't just ask the cable
projects to carry the burden of dealing with this political risk all by
themselves, later blaming them for whatever compromise they make! A risk now
being the main obstacle between the current deficit and a state-of-the art,
reasonably priced cable connection for SSA to RoW.
The worst alternative for RSA operators is probably a combination of an
early East-West SSA link (EA to Angola or Nigeria?) with two new terrestrial
and/or submarine links north to the Mediterranean from EA. All the current
transit traffic from RSA neighbours to SAT-3 will then disappear in a flash.
Instead, RSA may be faced with not only a very limited interest from others
to consider an EA submarine cable south, but a desire to making RSA
operators subject to a similar transit pricing practice that Telkom SA has
up to now offered its neighbours in connecting to SAT-3. Considering the
profits in the closed RSA market such a scenario may, however, still be a
good alternative to some players in that local market as it may delay the
tide by another year or two.
The frustration over the EA development lag by the delay in cable
implementation is causing a lot of impatient folks to say that "the only
important thing is that a sub marine cable gets built". That is
understandable but dangerous. Remember SAT-3.
Dispatched over an industry standard 100Mb/s connection to the home,
commonly available for a couple of Big Macs/month in an open, competitive
market.
Anders
-----Ursprungligt meddelande-----
Habicht
Skickat: den 9 september 2007 09:27
Ämne: Re: [AfrISPA.Discuss] Undersea cable plan tangled in acrimony inSouth
Africa
Question(s)...
Who _needs_ (badly) that Eassy lands in SA ?
I'm not up-to-date with most things, but I guess for many the connection
to Sudan will connect them to the world (maybe without redundancy, but
maybe that redundancy would be clumsy anyway).
I think the ones who need Eassy to land in SA the most are SA operators
(maybe excl. Telkom, maybe not?).
For everyone else only one thing is important: that this thing gets built!
If SA wants to stay with the connectivity they have now.... fine with
me. I don't want myself to stay with VSATs.
So, let the SA companies loose out. Let them take it up with their
government. Or change the same if necessary. Their problem.
The worst thing that can happen in my little uninformed opinion is that
this political (*&^%()*&% delays the building of that cable.
So, can we continue to build it up to Maputo, please?
The ..... opinion of politicians in SA shouldn't prevent ~20 other
countries to get proper connectivity.
For how long has this project dragged on already? For how long been
delayed by politics?
Wasn't the contract done to start building?
Frank
impatient, disappointed, upset
On 9/8/2007 3:10 PM, Eric Osiakwan wrote:
The sole active supporter of the NEPAD-backed Broadband Infrastructure
Project that will never be built, the South African Government is trying
to arm-twist EASSy because the project has slipped free of NEPAD
control. This is the arrogant display of naked political power that
those who have not signed the NEPAD political protocol feared would
occur if the larger African brother failed to get its way.
The 10,000km Eassy cable will be 27% owned by Telkom, Neotel and MTN,
and is designed to provide desperately needed cheap bandwidth to 21
African countries. But SA's communications department has taken umbrage
at what it sees as the commercial nature of the enterprise, and intends
to withhold landing rights.
Instead, the government will use taxpayers' money to roll out two rival
cables heading east and west, jointly known as the Nepad Broadband
Infrastructure Network. Denying landing rights to EASSy will be
detrimental to the three local companies, which, they say, have had the
foresight to invest in the project to slash bandwidth prices.
It will also be anticompetitive if EASSy members are not allowed to sell
bandwidth to other operators in SA, says Mohsen Khalil, a director with
the International Finance Corporation (IFC). He also says the
government's hostility shows it has not understood a new commitment the
consortium has made to open access.
The IFC is part of the World Bank, and is investing $32,5m to help about
15 small operators participate in Eassy. Yet the director-general of the
communications department, Lyndall Shope Mafole, remains vehemently
opposed to the project. "Eassy is bad news for developing countries that
are not at the level of SA," she says.
"We have many problems with it. The fact that you work for the World
Bank makes you think you know what's good for Africa even when you don't
live in Africa. I find that quite insulting."
Because Eassy's biggest shareholders are giants like MTN and Telkom,
their bulk buying power gives them an advantage over smaller operators
also trying to buy and resell capacity to customers in each country, she
says.
"South African companies could use their dominance to compete unfairly
in other countries. We have a responsibility as the government to ensure
there is fair competition. We are not willing to look at something that
is clearly discriminatory. We couldn't rest with a clear conscience." If
the South African Government has this responsibility, why has it not
exercised it over Telkom's SAT3 prices? The Department of Communications
talks the talk but does not walk the walk.
A bigger issue threatening not only Eassy but also other foreign-backed
cables is a demand that any cable landing in SA is partly owned by local
companies. The minimum percentage of local ownership will be determined
by Communications Minister Ivy Matsepe Casaburri.
The instant reaction is to question whether SA has the right to do that.
It has, under the Electronic Communications and Transactions Act,
Shope-Mafole says. The second reaction is to assume that foreign
investors will be deterred. The government's belligerent stance in an
effort to promote local industries may backfire and deprive consumers of
cheaper bandwidth if foreigners opt to bypass SA's coastline.
Nonsense, Shope-Mafole says. "There are millions of people who want to
enter into arrangements and land in SA. We welcome anybody who wants to
invest in submarine cables that land on South African soil, but we need
South African companies to invest."
Although Eassy boasts 27% local ownership, that may not be enough.
Seacom, another private cable already under construction, must also
recruit local investors for the plans on its map to match reality.
Seacom has signed a deal for SA's second network operator, Neotel, to
operate the local landing station, which does not impress the government.
Shope-Mafole said the demand for local ownership in the entire cable
linking India to Europe via SA was discussed with Seacom's mostly US
investors over a cup of coffee. "I don't think they thought it was
unreasonable. I wouldn't say they loved it, but they didn't throw their
cups at us," she says.
(Source: Business Day)
Eric M.K Osiakwan
Executive Secretary
Tel: + 233.21.258800 ext 2031
Fax: + 233.21.258811
Cell: + 233.244.386792
Handle: eosiakwan
Snail Mail: Pmb 208, Accra-North
Office: BusyInternet - 42 Ring Road Central, Accra-North
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