Kenya’s government won’t partner with Seacom on cable project

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The Americans had proposed a 'co-build' arrangement that permits each party to own individual fibre pairs on the desired routes.

Kenya has turned down a proposal by American company Seacom - the conglomerate currently building a fibre-optic sea cable from South Africa to Europe, India and the Middle East - of a joint venture on the government-sponsored The East African Marine Cable System (TEAMS) project.

It is understood that the Seacom had proposed what is known as a "co-build" arrangement - a solution that permits each party to own individual fibre pairs on the desired routes, allowing major savings in shared facilities such as repeaters, cable housing and power facilities.

The EastAfrican has learnt that a top official of Seacom who visited Nairobi last week to sell the project to the government left the country in a huff after having failed to sell the proposal to the government. Four major undersea cable projects are currently engaged in a race to be the first to lay a fibre-optic link connecting the eastern seaboard of Africa to the rest of the world, with the most vicious competition centring on the connections to Europe, which is the destination for 85 per cent of international bandwidth traffic in Africa. The four projects are the East African Submarine Cable System (Eassy), Seacom, TEAMS and Flag Telecom.

So far, Seacom appear to be way ahead of the pack, having reached the critical stages of signing the engineering procurement contract (EPC) and closure of financial arrangements for the project. In the event that they hit the finishing line first, the competitive field will have changed markedly, making it difficult for the other players to effectively compete with them, especially when it comes to pricing of services.

Opinion is still divided as to whether a "co-build deal" between Kenya and Seacom was a better option for Kenya than the stand-alone deal represented by TEAMS, with Kenya reportedly taking the view that a "co-build" deal would see it cede control of this important facility to an American company. The opposite view is that in terms of the ordinary consumer in need of affordable bandwidth as quickly as possible, a " co-build" was the better route.

The international submarine fibre-optic industry has been growing at an unprecedented pace. Since December last year, several cable projects have been launched. Currently, two cables are being constructed between China and the US, one between Australia and the US, while multiple cables are in various stages of completion between East Africa and India and two from the Caribbean to the US.

Consequently, the availability of cable laying capacity will be a crucial factor in who completes their project first. The three companies that manufacture undersea cables and have the vessels to lay them, namely Alcatel, NEC and Tyco International. With too many projects on their hands currently, it is unlikely that the cable projects, which are yet to sign contracts with these vendors, will be able to commit these three vendors to complete their projects within next year. Yet, both TEAMS and EASSy have informed consumers that they will be able to give service by December 2008.

Then there is the ill-fated Nepad project called the Nepad Broadband Infrastructure. Although structurally similar in some ways to EASSy, it puts overall control in the hands of an inter-Governmental committee and this for understandable reasons has been resisted by EASSy’s shareholders. To date, the protocol has been signed by 12 of the 23 participating countries but has not been ratified by any of the signatories. There is widespread unhappiness at the Governmental level with the Protocol and at the role of NEPAD’s e-Africa Commission that seems to be acting in an executive capacity. Kenya is not a signatory to the protocol.

Seacom has signed a construction contract with Tyco Telecom to have the cable ready for service in the first quarter of 2008.

(Source: East African Standard)