Benin connects 2nd landing station (ACE) but continued Benin Telecoms monopoly holds back growth

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This week saw the ACE cable connect one of its second phase cable landing stations in Cotonou, the capital of Benin. Like many francophone African countries, Benin has a monopoly telecoms provider that is holding back the growth of the market. Russell Southwood looks at what ought to change.

The connection of the Cotonou landing station is part of the second phase of deployment of the ACE submarine cable, which now serves 18 countries: France, Portugal, the Canary Islands (Spain), Mauritania, Senegal, Gambia, Guinea, Sierra Leone, Liberia, Côte d’Ivoire, Benin, Ghana, Nigeria, Equatorial Guinea, Gabon, and São Tomé and Príncipe. Two landlocked countries, Mali and Niger, are connected via a terrestrial extension.

Benin already has a landing station: SAT3 controlled and operated by the monopoly infrastructure provider Benin Telecoms. And the new ACE landing will be operated by? Yes, you’ve guessed it, Benin Telecoms. Those with long memories will remember a fire in the SAT3 landing station that cut the country off from the Internet for 2 weeks. Although international fibre prices have come down a great deal, they are still not as cheap as in Ghana and Nigeria.

There was a period when the Government of Benin talked about privatising Benin Telecoms but it has since then backed its existence as a publicly funded monopoly infrastructure provider. In this role, it has built out fibre links to neighbours and rolled out ADSL.

In a tactic that will become standard for francophone African monopoly providers, they will be launching an LTE service this month. It will connect 21 towns and cities in the country and offer voice, VoIP and data. Yes, you read that right, VoIP. This particular tactic aims to give monopoly providers a jump on other players in the market with LTE and a way back to more profitable operation.

This kind of monopoly on infrastructure has persisted in francophone African countries even though the source of regulatory best practice - France - has long since dispensed with it.

This kind of monopoly both keeps prices high for operators and for end users alike. Monopolies on infrastructure lead to inefficient operations. There’s no incentive to repair breaks in national fibre if the customer can’t go to another operator. There’s no need to provide a quick quote to a customer because they can’t go anywhere else.

These kinds of disincentives mean that francophone African markets with infrastructure monopolies have grown comparatively slower that their Anglophone equivalents. Francophone African regulators and Government have been protected from hearing this by the language barrier.

At a conference in Abidjan back in March this year, I asked two of my fellow panellists, the Government and regulatory representatives, why it was that international wholesale fibre prices were twice as expensive in neighbouring Ghana. The response? Oh, we’ll need to do a study to look at that….

The direct consequences of not lowering prices will be that fewer people use the Internet and that the current wave of start-ups and e-government services will not take off. The jobs of the few at the incumbent monopoly operator will prevent jobs for the many developing.
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