SAT3 FIBRE: REGULATORS AND POLICY-MAKERS ASK FOR “TRANSPARENCY ON…PRICING AND GOOD GOVERNANCE

Telecoms

Last week over 30 policy-makers, regulators and operators met in Johannesburg to discuss what will happen when the self-awarded monopolies of Africa’s SAT3 consortium members comes to an end in June 2007. This is the first time policy-makers and regulators have come together to address issues that affect more than one country.

One of the speakers Dr Krishna Oolun, the CEO of the Mauritian regulator ICTA described how it had used a cost-based analysis to address the issue of the high prices for international connectivity found on the monopoly access SAT3 cable. Before the cost priced investigation started, prices were $10,000 per mbps per month and only 17% of the cables capacity was utilised. When the cost investigation was initiated, the incumbent Mauritius Telecom lowered the prices to $5250 per mbps per month.

The final price determination that was made this month based on costs supplied by Mauritius Telecom was $3250 per mbps per month and $2962 per mbps per month for bulk discount supply. Mauritius Telecom’s usage of the fibre capacity has gone from 17% to over 80%. Mauritius Telecom has not appealed against the price determination from ICTA.

Rates on the SAT3 fibre are supposed to be distance-related. So it is perhaps a little surprising that South African rates from Telkom SA at $11,000 per mbps per month would still have been higher than the pre-regulated price. To be fair, Telkom SA are dropping prices to $8250 per mbps per month in August but this still leaves it what can only really be described as “super-margins”. Meanwhile, Cameroon’s Camtel which is geographically nearer SAT3’s landing point in Portugal is charging US$15,000 per mbps per month. Go figure.

Geoff Rehmet, Internet Solutions said at the post-event press conference that operators could almost certain sell capacity at $1,000 per mbps per month and still make a reasonable profit. He stressed that he was not against SAT3 members making a profit but only if it was too high as the Mauritius price determination demonstrated.

Policy-makers, regulators and operators were drawn from countries along the route of the fibre or from those served by the fibre and included: Senegal, Mali, Cote d’Ivoire, Nigeria, Namibia, South Africa, Botswana, Lesotho, Gambia and Mauritius. SAT3 member Telecom Namibia was in attendance.

The joint statement from the event said that participants believed that “Any future regulatory decisions regarding SAT3 should be in the interests of the industry as a whole and the African consumer rather than in the sole interests of any single operator or consortium of operators”. The statement also called for transparency on issues such as pricing and good corporate governance once the period of national exclusivity expires and that the Consortium needs to “publicly state what its intentions are regarding the future of the cable and its remaining capacity.” The statement also highlighted the importance of resolving the problems experienced by those countries without landing stations and for landlocked countries.

Participants agreed to create an interest group for regulators affected by these issues to share information and approaches to the problem and said that all licensed operators should have the right to purchase capacity from any current or future owners of the capacity.

This workshop was organised by the APC (Association for Progressive Communications), AFRISPA (African Internet Service Providers’ Association), CATIA (Catalysing Access to ICT in Africa), CRASA (Communications Regulators Association of Southern Africa) and Balancing Act with support from OSI and OSIWA (Open Society Institute and OSI West Africa).