[kictanet] [AfrISPA.Discuss] Ex-Africa One Honcho bringing Optical Fibre to East Africa in another project

[Eric Osiakwan]

Anders, you have taken the wind out of my sail but to add one more  
small point to the ensuing argument that Africa has the trump card  
and we must paly it to the advantage of the larger societal good,  
extreme profit interest not withstanding.

Again the challenge is "Africa cannot afford another of the same  
mistake".

Eric here



On 2 Apr 2007, at 13:00, Anders Comstedt wrote:

> Hi Brian,
>
> It is true that the situation is heating up a bit, but "One more  
> piece of
> evidence that Africa holds the key to the future of
> the global telecoms business" is perhaps to stretch things a bit to  
> say the
> least.
> On the contrary, there is a lot to look out for to ensure that,  
> whatever the
> solution, SSA is not trapped in a SAT-3 look-a-like situation also  
> on its
> Eastern side. None of the proposals on the table are ready to  
> clearly spell
> out how they will ensure a level playing field in the countries  
> concerned,
> in fact several have been asked to say how, not least during the  
> meeting
> Balancing Act refered to.
>
> The major thing now seems to be landing rights and termination of
> international connectivity/traffic as seen from the side of the  
> respective
> cable projects, and equally, access to the landing station and the
> international connectivity from all operators in any country on
> non-discrimination conditions as this point may be controlled by a  
> local
> dominant player.
>
> And what about terrestrial backhaul to landlocked countries? There  
> is not
> much of a clear open situation developed there either,or?
>
> The fact that Africa is still such a thin market will not support  
> multiple
> cables in the near future. There is a distinct first mover  
> advantage for
> anyone capable to handle the combined political and commercial  
> risk. What is
> good is the increased policy maker awareness of the need to have a  
> more open
> situation, and the work by the regulators to find ways to handle the
> dilemmas in changing the situation.
>
> The debate over the various caracteristics of the projects also  
> raise the
> question of not only getting to just any fibre cable connecting to  
> Rest of
> World, but what the conditions really would be to get all the way  
> to global,
> competitive hubs, mainly in Europe.
>
> The only thing that seems to be eliminated at this very point seems  
> to be
> the argument that "if we do not get a monopoly we will not invest".  
> That
> bogus card seems to have been all to frequently played before in  
> all kinds
> of telecom situations, also in this.
> Several players seem to be just wanting to be allowed, not  
> restricted, to
> make the investment, considering of cause also the first mover  
> advantage.
> Also, the number of statements saying that they accept to make  
> capacity
> available on level conditions implies that there is even a  
> readiness to
> accept an "essential facilities" thinking on most of the projects.  
> Finding
> and applying a regulatory regime along those lines will therefore be
> difficult to avoid. Many parts are readily available as templates  
> anyway,
> including all the counter arguments for that matter.
>
> The external stakeholders (also called USERS) can still not sit back
> comfortably.
>
> Anders
>
> -----Ursprungligt meddelande-----
> Från: Discuss-owner at afrispa.org [mailto:Discuss-owner at afrispa.org]  
> För Brian
> Longwe
> Skickat: den 2 april 2007 09:55
> Till: kicTANet Kenya ICT Action Network -; Discuss at afrispa.org; APC -
> Private list for use by EASSY Workshop Participants
> Ämne: [AfrISPA.Discuss] Ex-Africa One Honcho bringing Optical Fibre  
> to East
> Africa in another project
>
> Interesting to note that the former top gun at Africa One - the
> failed "fibre necklace for Africa" - is spearheading this initiative.
> One more piece of evidence that Africa holds the key to the future of
> the global telecoms business.
>
>
> OUTSIDER EAST COAST FIBRE PROJECT COMES IN FROM THE COLD – SEACOM
> GOES PUBLIC
> (From Russell Southwood's Balancing Act)
> There are four projects to build an international fibre cable to
> connect the east coast of Africa. There’s EASSy, the Kenyan
> Government’s TEAMS, Flag Telecom…and the fourth project? Sithe’s
> SEACOM has been working quietly on the fringes to put together a
> privately funded “carriers’ carrier” project. News has been filtering
> out about it but Sithe’s Brian Herlihy made his first public
> presentation of the project at a United Stated Trade Development
> Agency Africa conference ten days ago in San Francisco. Russell
> Southwood spoke to him about what SEACOM will be and how it will work.
>
> The new cable follows the same route as the EASSy cable down the
> eastern seaboard but it will either connect internationally directly
> into Italy or India via VNSL. The latter is important because the
> total cost of international fibre transit will include any second leg
> beyond the point where the cable lands.
>
> Brian Herlihy is a veteran of Africa One who has learned the lessons
> of that over-ambitious project. Sithe is owned by venture capital
> company Blackstone but is raising private equity to complete the
> cable which will be called SEACOM. It wants to become a carriers’
> carrier for what it sees as an “underserved” market.
>
> Thus far, it has raised money from the following sources: American
> funding from an African infrastructure fund, an Africa and Middle
> East Fund based in Europe and two private equity groups in Africa. At
> the conference presentation, Herlihy told delegates that “50% of the
> shareholders are African.”
>
> In order to act as a “carriers’ carrier”, it will outsource day-to-
> day operations and is currently in discussions with an
> internationally reputable carrier. It will either invest in
> terrestrial backhaul directly or buy it from others. It has excess
> funding targeted at inland backhaul.
>
> It is talking to ISPs and carriers about Capacity Purchase
> Agreements. In effect, it is selling IRUs where the purchaser will
> put 5% of the price down by an agreed date and make the final 95%
> contribution at the start of operations.
>
> One of the current obstacles the project has overcome is that the
> South African Government will not allow it to land the cable in that
> country itself. Therefore it will make a commercial agreement with an
> existing carrier (Neotel) and transfer the operation of the landing
> station to it. Under the ECA Act, it will make sure that the fibre
> offers open and fair access to all operators and allows co-location
> of other POPs.
>
> By contrast, in Tanzania it will obtain its own licence and build its
> own landing station and a large co-location centre and put a large
> ICT park alongside if it proves to be feasible. It will follow the
> same licensing and operating route in Kenya and also build a co-
> location centre there. It is currently talking to the Kenyan utility
> companies about obtaining terrestrial backhaul.
>
> A factor that will affect all four East African fibre projects is the
> tightening market for optic fibre cable and build capacity. Having
> been in the doldrums for a number of years, the two main
> international submarine cable-laying companies are believed to be
> both short of fibre optic cable and ships over the next three years.
> There are now a large number of new fibre projects, particularly in
> the Pacific. EASSy has chosen Alcatel Lucent as its contractor and we
> understand that it also bid for the TEAMS project. The Kenyan
> Government chose Tyco as its contractor. Neither Flag nor SEACOM has
> appointed contractors although Herlihy says it will do so this month
> (April 2007).
>
> On pricing, Herlihy told delegates”We have lowered expected pricing
> twice to unlock pent-up demand.” He said that the company would act
> as a wholesaler and that it expected that a reseller market would
> develop for bandwidth in much the same way as already operated in the
> satellite market. On pricing, he was coy about starting prices but
> expected prices to drop to US$91 per mbps per month in ten years
> time. He noted that the price of bandwidth was “killing more business
> cases (in Africa) than other factor”. Asked whether his company would
> be interested in building a competitive alternative to SAT3, he
> replied that there was already interest in Guinea (where it was
> involved in an aluminium smelting project) and several groups had
> already approached it.
>
> It is interesting to note that the countries with more competitive
> markets like Kenya and Tanzania are attracting new operator interest,
> whilst South Africa is not really open for business in quite the same
> way.
>
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Eric M.K Osiakwan
Executive Secretary
AfrISPA (www.afrispa.org)
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