ONE PERSON’S VIEW: ERIC OSIAKWAN ON OPEN ACCESS TO SAT

Mergers, Acquisitions and Financial Results

Since publishing the Open Access EASSy paper @ http://blogs.law.harvard.edu/eric/ (you must read it to understand the article below), I have been challenged on the viability of Open Access to SAT3 and questioned on the need to institute the same standards for both cables though we all know that SAT3 is already established and EASSy is yet to be. In this thesis I make an attempt at upholding the same Open Access structure and principles of EASSy to SAT3 – this is possible because both cables lie in the same realm but the context of their execusion are different. This is ONLY possible because of the window of opportunity presented by the end of exclusivity by the historic operators on SAT3 in April 2007 so I also suggest a process approach.

For the records, SAT3 was established with an exclusivity period to recoup investment by the historic operators and this is due in April 2007 at which the SAT3 country governments can either entrench the exclusivity of the historic operators or consider other mechanisms such as what an proposing. SAT3 stands both as a pillar of hope and despair for the African continent; hope because it was a the first cable and there is an opportunity for it to significantly change bandwidth prices based on it’s non-performance, despair because we may decide to keep things the way they are currently and continue with the incumbency and high bandwidth prices.

The reasons for the non-renewal of the exclusivity range from, the historic operators haven recouped their investment in the cable at high cost and yet made fiber bandwdith more expensive than satellite capacity. Secondly we know that the loan granted by the WorldBank to the historic operators for their contribution to the SAT3 cable was guaranteed by their respective governments hence the onus lies with the government after supporting the private interest of the historic operators to now consider the public interest of providing cheap and affordable bandwidth for socio-economic development.  

If the SAT3 goverrnments collectively or individually decide to end the exclusivity in April 2007 then the question to me is, what steps should they take towards Open Accessing SAT3? I don’t hold monopoly on the steps and process because national and or regional relationships coupled with on the ground details must be taken into consideration but I would proceed to outline what I see as the larger framework of what is possible in terms of structure, principles and processes – same as for the EASSy cable. Hopefully other cables or subsequent ones would adopt or follow the same strucure, principles and process to have the desired impact.

Declaring SAT3 an “essential facility” would mean that it holds much in the public interest so must be treated with the public good as primary and other consideration as secondary. Private consideration would be first on the secondary ladder because that is important for the running of the public entity. Am not for once suggesting a move from an extreme private position to an extreme public consideration, but rather my suggestion is to use minimal public holding as a temporal measure to move from an exteme private interest to a balance between the private and public consideration. Open Access is about balance and consideration of the various interests.

The governments holding the essential facility in trust after declaring it so is only a temporary measure which must be seeded quickly to a multi-stakeholder institution which would work in the interest of the various constituency and ensure that there is a clear reflection of equity. Regulatory and public policy must recognise the establishment of the essenttial facility which in this case would be “infrastructure provider” – providing infrastructure for the other service providers wthin the value chain.

In some cases the regulatory and public policy must creat the structural change from a vertical to a horizontal layering communication system and that enables the change process. Whatever the case may be, the first fundamental step is the re-alignment of the communication paradigm where there is a distinction between infrastructure and other service providers. The essential facility in this case the SAT3 cuntry segment would constitute the infrastructure provider which DOES NOT provide services on the value chain. Ghana, Nigeria, South Africa and Senegal has hinted that they are going to adopt this approach post April 2007. In the case of Ghana, the government has also contracted the Chinese to finalise the nationwide fiber network which was owned by the Volta River Authority called Voltacom. Voltacom would be merged with the SAT3 country segment to form an “infrastructure provider” which would provider international and national bandwidth infrastructure.  

Owership of the infrastructure provider is the next consideration, enjoining a multi-stakeholder ownership model ensures that there is a balance of power, money and interest. It is in the interest of the government to ensure that this happens so that they are labeled as “corrupting” the entity. The mechanism is for the government through an initial private and or public offering to invite the private sector, educational institutions, civil society, investors, PTTs and the consumer to own a part of this entity. Enlisting the infrastructure provider on the stock exchange would ensure that it is subject to the dictates of that platform ensuring access and commonality on the ownership.

SAT3 at this point would have adhered to Open Access in terms of the structural change below;

1. Within the structural framework, the cable would have differentiated “Infrastructure” from “Services” where Infrastructure is seen more in the “Ownership” realm whiles Service is seen in “Access to capacity”.

The most distinguishing feature of the Open Access approach is that, ownership of the infrastructure DOES NOT GUARANTEE any access (discriminatory or not) to capacity on the value chain for the provision of service to the market. The respective country capacity would be on the money here.

A set of principles would hold for the ownership of the cable and those principles would be different from those for access to capacity.

Infrastructure ownership principles for the SAT3 cable would include;

1. The ownership of the cable must be in a public private partnership involving Government, PTTs, ISPs, Educational Institutions, Civil Society and Consumers.

2. A fair distribution of these constituencies from the member countries in an equal sub-regional distribution leading up to the Board of Directors of the enterprise in case a regional approach is adopted like EASSy.

3. The same set of rules must be established to identifying the various shareholders from the various countries in the different constituencies, again this applies to regional.

4. For the purposes of this exercise a Special Purpose Vehicle (SPV) or a legal entity with an African wide structure and majority Africa ownership should be considered

5. The essential facility must have a public interest combined with a private sector approach in it’s business model in order to ensure cheap and affordable bandwidth to the end-user.

Value Chain access to capacity for service delivery principles are;

1. The essential facility must sell capacity to all entities who meet the legal and regulatory requirements in each country directly and non-discriminatorily.

2. Service Providers shall be offered Transport Infrastructure Layer access to different capacities depending on their requirements.

3. End Users shall be free to choose any local Service Provider connected to the National and or Regional Network.

4. The essential facility shall not compete with Service Providers (its customers) by offering services at the Service Layers directly to End Users.

5. All countries must create a regulatory structure that recognizes the essential facility.

6. The essential facility shall be formed, owned and operated in such a way as to facilitate competition and to foster innovation at the Services Layer, and where practical and commercially viable at all levels, with a view to maximizing usage of the network and benefits to the End Users.

This sets out the framework for Open Access as it relates to the SAT3 cable but I must admit that this is not the ONLY approach in terms of process but structurally and principles wise, the above is not far from wrong. The devil as they say is always in the details though.

NB: These principles and structure are drawn from the Open Access study conducted by Anders Comstedt, Eric Osiakwan and Russell Southwood for InfoDEV @ the WorldBank – http://www.infodev.org/en/Project.80.html

Eric M.K.Osiakwan is a Visiting Fellow and Scholar, DV Program, Stanford University: http://blogs.law.harvard.edu/eric/