SA COMMS MINISTER IN SEARCH OF “SECRET” SAT3 AGREEMENT

Telecoms

Government is growing increasingly frustrated with Telkom for not providing it with a copy of an agreement that governs the international fibre system links SA with the rest of the world.

"No-one has seen this secret document," says deputy communications minister Roy Padayachie. "We [government] can't see the shareholder agreement, yet we are a 38% shareholder in Telkom. It's crazy."

Government wants to regulate access to the cable system in an effort to reduce telecom prices. Internet service providers say Telkom, which is the only SA investor in the system, with a 13% share, is charging excessive rates to lease capacity on it. They say this is keeping the cost of bandwidth in SA artificially high and discouraging investment in business process outsourcing ventures, such as outsourced call centres.

Padayachie says he is keen to empower the sector regulator, the Independent Communications Authority of SA, to take the steps necessary to regulate the cable.

"Telkom is part of an international group [of investors in the system] and it appears that it's very complicated to try to unravel this thing," Padayachie says. "But I cannot for the life of me see why it's so complicated. All we want to do is regulate access by SA companies to the cable. There is nothing complicated about that. We need to find out what is going on and take the necessary steps."

The 27,450 km cable system, known as Sat-3/Wasc/Safe, runs along Africa's west coast, from Cape Town to Sesimbra, Portugal, and from Mtunzini in KwaZulu Natal to Penang, Malaysia. It carries most of SA's international Internet and telephone traffic.

Telkom, which invested US$85m in Sat-3/Wasc/Safe, has previously cautioned against regulating access to the cable. It has warned that regulation could deter investment in new cable systems around the continent. A company spokesman said this week that it is not aware of any request by government for access to the consortium agreement. "The document is not secret but as with any commercially sensitive contract or agreement, it contains confidentiality clauses."

Efforts by government to regulate the cable system might prove unnecessary. A rival system, the East Africa Submarine System (Eassy), is scheduled to come online in the fourth quarter of 2007. Eassy will connect to Sat-3/Wasc/Safe at Mtunzini and run along Africa's east coast to the Red Sea, where it will connect to a range of other international cables. Unlike Sat-3, Eassy will be an "open access" cable. This means any company with a licence to provide international telecom traffic will be able to get access to it.

Telkom, Sentech and the second network operator, SNO Telecommunications, all have international gateway licences. MTN and Vodacom do not have the requisite licences but Padayachie says he won't discount the possibility of government granting them licences. "I think we should be guided by the maxim that the more competition we have the more opportunity there is to reduce telecom costs," he says.

Financial Mail