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Africa's small Portugese-speaking countries seem to be stealing a march on their larger neighbours. First Guinea-Bissau opened itself up to VoIP, now tiny Cape Verde is about to allow a second national operator to offer mobile, internet and cable TV, making it the equivalent of an SNO. The long, dark years of Portugal Telecom's monpoloy are coming to an end. The argument always advanced is that Africa's smaller countries cannot afford competition as their markets are too small. At around half a million inhabitants, you don't get smaller than Cape Verde but they look set to have new competitor - Shanghai Telecom - by this December. Russell Southwood investigates.

Portugal Telecom (PT) has a licence from the Government to run Cape Verde Telecom (CVT), offering fixed lines, internet and mobile. Portugal Telecom is poorly regarded locally and as one person told us:”Portugal Telecom is amongst those with the highest prices in Europe.” The licence given to PT by the Government specified various investments but not all of these have been completed.

Under previous government, the licence was originally for 25 years but this was reduced to 15 years by the current Government, ten years of which have already passed. The monopoly on fixed lines finishes in 2010. Much of the Government’s communications infrastructure is sourced from CVT.

The Government owns a "golden share" of 3.4%, with the balance held by Portugal Telecom (40%) and other investors (46.4%).The network has a capacity of just under 80,000 lines are there are slightly over 70,000 subscribers. In July 2003, there were 45,000 mobile subscribers and 4,500 dial-up subscribers.

The country is connected by Atlantis II which provides a 4 megabit fibre connection to Brazil and on to North America. It was built by a consortium which included CVT and was funded by OPEC money.

The internet was set up by a government agency called RAF, funded by the World Bank. There are about 80 cyber-cafes run by a mixture of private sector owners, NGOs and government. The Government has plans to put telecentres in every town and into schools. There is a distance learning initiative also under development. Solar-power has been used to overcome lack of electricity in some villages but has not worked very effectively. The Government is launching a new institution to spearhead ICT developments, the Institute of Telecommunications and New Technology.

The current cost of access is 200 escudos an hour (USD2.22) but some NGOs are free. Personal access to a house is around 800 escudos (USD8.88) a month excluding tax. The Government runs .cv and domains.

There are two agencies dealing with regulation: the internet and telecoms sector regulator and another agency that is responsible for type approvals on equipment.

The Government has recently called for bids as part of the legal changes it instituted in 2001. Many of the larger operators came and said it was really too small a market but currently there are two bidders – the Chinese Shanghai Telecom and the other an American company working with local investors. The former looks likely to be successful. The new operator will be able to offer internet, mobile and cable TV.

The islands have half a million population and there is a diaspora of about 1 million people which means for its population size there is a relatively healthy flow of international traffic. Often diaspora visitors bring back mobiles for their relatives. The cost of domestic mobile calling is 20-28 escudos per impulse, with three impulses to the minute. This givesa per minute rate of between USD0.66-0.92 centsa minute. What will be the impact of competition? According to a source close to the Ministry of Communications it will “lower prices and provide a challenge to the incumbent Portugal Telecom".