Vanguard with 

Broadband Atlantic Coast

 - Saturday 11 December 2010.

By Sewanu Kponou, Atlanta, GA.

In the beginning there was satellite and that was how there was (tele)communications between nations. In the last twenty (20) or so years, technology has transitioned to using more of optical fibers for transmission of large amounts of data, voice, tv. The advantages of fiber over satellite is mostly associated with speed and quantity, bundled with lower operating costs. The speed of transmission in optical fibers has basically doubled every year for the past ten years, while the cost of equipment and materials has taken a dive.

SAT-3

In 2002, the then "high speed" submarine fiber optic cable, SAT-3, that goes along the west coast of Africa was commissioned. It ran from Portugal to South Africa. It made stops in a few countries along the way. However the majority of nations that were connected, did so via the incumbent, state-run phone companies. Using the power of monopoly, the majority of these companies (incumbents) went on to charge high access fees and deliver(ed) poor services. In the process, nations, already behind in the internet race, never caught up to the level that could have been achieved had the free market been allowed to prevail. In essence because the rest of the world is moving on at an even faster rate, some of these countries can be rated as actually falling farther behind relative to the great leap that other countries have taken. As a matter of fact, charges for broadband in some countries with access to the submarine cable were, for the most part, just as high as countries without such access, even though the cost of using undersea cables is far less than that for satellite.

New Order

There are presently about three (3) cables now going down the west coast. There is the now-old SAT-3. Next we have GLO-1, by Globacom, which seems to be taking forever to be commissioned. There is also MAIN One, the first such cable company, in Africa, to be headed by a female, Funke Opeke , who just happens to be black and was born, raised and educated to undergraduate level in Nigeria. Their cable, Main ONE, was recently commissioned. On careful study of the cables it appears that the operators were selective in choosing which countries they landed. Since the reasons for having a landing are dependent on a lot of issues, namely political, there will be no discussions on that here.

Waiting

The wait for a high speed connection for a lot of countries along the West African coast is getting, albeit slowly, closer to being over — depending on one’s interpretation, about 18 to 24 months from now, sometime in 2012, may be relatively close. The delivery system is the Africa Coast to Europe (ACE) Submarine cable. On close inspection this cable system is trying to do a landing in all countries along the coast, all the way down to South Africa from Portugal. The system is spearheaded by France Telecom, who desperately wants to get in on the telecoms rush in Africa. During the past June (2010) the so-called final pieces were put together.

The DEAL

Considering that no deal is perfect, there are concerns about the way the whole ACE system has evolved. The ACE system is seen as a repeat, of sorts, of the SAT-3 system, which was a monopoly for those countries that were experiencing a fiber optic cable for the first time. The Democratic Republic of Congo, Equatorial Guinea, Gambia, Guinea, Liberia, Mauritania, Namibia, Sao Tome and Principe and Sierra Leone will be getting a fiber optic connection for the first time. Noticeably absent from the list are Togo & Guinea Bissau who still do not have any fiber optic connection. Landing points will become cash cows for nations with very few sources of formal taxation. Some new cable companies whose ownership was hurriedly worked out have been formed, with incumbents in charge. Very interesting when you consider that these incumbents were unable to meet financial obligations per their MOU’s , very close to deal time. In other cases only Orange TM operators are given access to the cable. Orange is a wholly owned subsidiary of, you guessed it, France Telecoms!

In many of these very countries there are usually 3 or more cellphone companies and various ISP’s in operation, who will be using the bulk of the bandwidth provided. It is not difficult to see how convoluted the set up is from the start. This setup is an indicator that the ACE cable system is going to be of serious benefit to France Telecom and maybe the incumbents/national governments. However it is possible that the system, much like SAT-3 that precedes it, will not be as beneficial to the citizens, due to the effect of the monopoly being created. Evidence shows that a few nations are quietly hindering other cable providers from entering their markets because of ACE. In essence read connivance between France Telecom and these countries to essentially create a cartel-like monopoly, not unlike the SAT-3 cable.

From research done as far back as when SAT-3 was the only fiber optic cable (circa 2004), it was shown that due to the very high cost of creating each landing, the emphasis should have been on terrestrial inter-country connections (there is one known terrestial link between Lagos, Nigeria and Cotonou, Benin, in the event of a break in the SAT-3 cable in Nigeria, which has indeed happened on a few occasions.) However the building of terrestial links has not been the case, overall, and a break in a cable could mean serious problems for customers utilizing these cables. Very few SAT-3 incumbents/nations showed any inclination to share access with others who were not able to be (for one reason or the other) a party to the cable when the project was initiated. Either none of the governments have given much thought to sharing landings or the submarine cable companies have done a good job in insisting on a landing for each and every nation.

Presently the high rate of innovation in the information industry is making it difficult for private for-profit companies that are well financed to keep up. It is therefore easy to see how difficult it is for government utility types, in donor driven economies, to keep up. In addition to the problems already mentioned, the governments set the rules of the game, even though they have a vested interest in one of the players (incumbent). Globally a lot of countries are coming to the realization that because of economies of scale, these country specific players are failing. The world of telecoms now belongs to the multinationals. It is much easier to deal with a for-profit corporation in another country than to encourage another sovereign government operation in one’s country. As such only carefully cloaked and heavily subsidized national companies e.g. France Telecom and British Telecoms, are still trying to operate as multinational telecoms companies. Evidence suggests that they are showing the strains as well, regardless of subsidies.

When it comes to the provision of services to the people, a government is only under obligation to provide such services in situations when no other entity can perform such services. At this time it has been clearly demonstrated that for-profit companies can, and do, provide such services (telecommunications) to the people in a very efficient and timely manner. Evidence abounds that had the for-profit telecoms operators been given the green light, an ACE cable would have been just one more of many, albeit a very late entrant.

This leads to the only suggestion I can offer for the improvement of telecoms, especially countries in which ACE will be the only cable: Government cannot, and should not, be competitors (incumbents) and regulators at the same time. Government should create an open system in which all who want to (telecoms cos.) can participate in this new entity. A strong regulating agency, coupled with a strict tax auditing department, and a will to implement the laws is all that is necessary to collect all taxes due. Governments should not be in the business of service provision. Policy making is what governments do best.

Just before finishing my piece I came across this article: Senegal Sonatel (1) There is a line which stands out “However, unions objected to an August decision to monitor incoming calls passed through the PTO, claiming it would hurt Sonatel’s business and put jobs at risk.” How is the government going to figure out how much tax they are to receive? That is what happens when you have very convoluted relationships. See also Sonatel Dominance (2). This article sheds a little more light on the topic of convoluted relationships and why governments may not be the best entity to operate a for-profit company.

The best of luck to all the people who would, and should, be able to benefit from these infrastructural improvements.

(1) Courtesy of TeleGeography’s CommsUpdate (2) Courtesy of Balancing Act Africa