The imminent arrival of “fibre heaven” in Africa spoiled by a number of nagging questions

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Although by 2012 Africa will be connected to the rest of the world by no less than 12 cables (if you include Atlantis II and LION), there remain a number of nagging issues that will spoil what should just be an unadulterated good news story. The old enemies of protectionism and state interference look set to ensure that there will still be some countries (including one of Africa’s largest) that will not be able to get access to really low price, competitive fibre. Russell Southwood looks at some questions that may not go away.

The speed of progress with fibre on the continent – both national and international – has been dizzying. The latest arrivals are EASSy and LION and shortly Glo One and Main One will open for business. Also there has been a scramble to connect countries by fibre to the landing stations with the steady completion of national fibre backbones and announcements of new cross-border links. One of the latest to put its head above the parapet has been the Maroc Telecom link to Mauritania. But beneath all this undoubted good news are a number of nagging questions.

What has happened to the signing of the ACE CNMA?

The CNMA for France Telecom’s ACE cable was meant to have taken place in Q1 of this year but there’s no sign of it yet. Rumour has it that it is proving much harder to get commitments to investment and landing station costs from the many smaller countries that it is intended to connect. The map published on the Orange web site shows it connecting 24 countries and its initial announcement covered only about half of these countries.

The challenge for ACE is that it was late into the game and therefore many of those 24 countries are small economies where even with much cheaper bandwidth, chances of them generating much demand are fairly low. Furthermore, although the map shows the cable landing in South Africa, it’s hard to identify who would be a landing partner as most are already taken by other projects. There was a point where it looked as if WACS and ACE might come together but that moment passed and ACE has to make a business case without key players.

Why isn’t DRC going to be connected to an international landing station?

DRC has really dropped the ball on getting an international landing station in place and may not succeed. Initially when WACS was discussed, it looked likely that Vodacom would run the landing station. In the event, the Government decided that its failed (and failing) incumbent OCPT would be given the landing station rights. Well, however stupid that might seem, that’s Government right but it seems to have then failed to find the money to participate in WACS, hence no landing station.

In an interview with local paper Le Potential Deputy Prime Minister, Minister of Posts, Telephones and Telecommunications, Simon Bulupiy Galati said he was more determined than ever to resolve the question. He even claimed that OCPT has been “allocated a reasonable amount” to modernize itself, although the Minister acknowledged the company’s operating deficit. The Minister was demanding speedier completion of the fibres serving Kinshasa, Matadi and Mwanda, as well as the opening of the link to neighbouring Brazzaville for before the 50th anniversary of independence celebrations in June this year. There has been talk of a Chinese loan for a fibre route from Kinshasa to the coast but no sign of it yet being built.

A landing station in DRC is shown on the ACE map so it yet may happen, otherwise DRC will end up as the one of the largest countries in Africa without a landing station. The problem is that Government has come late to the party and whilst its role should be to ensure equal access, it has in this case probably ensured no access as the likely outcome. There is another much smaller country where the regulator has intervened and the danger of no access may also come about.

What about those countries that will have a monopoly ACE landing station?

Five countries in West Africa will end up with a single ACE landing station: Gambia; Sierra Leone; Liberia; Guinea; and Guinea-Bissau. The question in these countries that have little Governmental capacity to make timely and wise decisions, is who will operate the monopoly landing station and how?

In Sierra Leone, the Government gave back the international gateway monopoly to former incumbent Sierratel as a way of boosting its income. The problem is that boosting Sierratel’s income will not deliver cheaper bandwidth to business and citizens in the country. In Liberia, LTC has almost as little operating existence as OCPT in DRC. Therefore in a country with an extremely lively and competitive mobile market, who will act as a neutral party ensuring equal fair access for all the parties? In Gambia, Gamtel already has a terrestrial link to Senegal but it is unreliable in the rainy season. Government has determined that Gamtel will operate the landing station despite questions about its operational effectiveness.

Why is Senegal not licensing the international cables that will be complete well before ACE arrives?

Senegal has had the opportunity to licence at least two international fibre cables (Glo One and Main One) that will arrive well before the ACE cable in 2010. The Senegalese regulator, which on important matters takes its marching orders from the Government, has chosen not to licence either of these two new cables.

This is hardly surprising given the close political relationship that exists between Government and the Senegalese incumbent Sonatel. The latter now can rest assured that there will be no uncomfortable competitors for its ACE landing station when it finally arrives. So in this, as in so many other markets, Sonatel now has a stranglehold on any potential for emerging competitors. And the Government in choosing Expresso as Sonatel’s latest “shadow-boxing” competitor has ensured that nothing is likely to change in the near future.

Why is it possible to send data more cheaply from Europe to Lagos than it is to send it from Lagos to Abuja?

The arrival of multiple international fibre cables means that a duplex leg from the landing station to Europe will come down this year or next to the sub-US$1,000 per mbps mark. However, sending the same traffic anywhere in most African countries is several times more costly. There are those who explain how with distance-based pricing for both routes, actually using the national backbone is somehow different and therefore more expensive. And there are a very small number of telcos who’ve simply given up on distance-based pricing, including Vodafone Ghana.

In competitive markets like Kenya, the cost of the Mombasa-Nairobi route has fallen rapidly despite endless vandalism problems. The same cannot be said for the majority of African countries. The challenge now is to provide efficient national backbones so that prices can fall into line.

So many questions, so little time…Perhaps we will hear some answers soon.