[kictanet] Undersea cable plan tangled in acrimony in South Africa

[Eric Osiakwan]

The sole active supporter of the NEPAD-backed Broadband  
Infrastructure Project that will never be built, the South African  
Government is trying to arm-twist EASSy because the project has  
slipped free of NEPAD control. This is the arrogant display of naked  
political power that those who have not signed the NEPAD political  
protocol feared would occur if the larger African brother failed to  
get its way.
The 10,000km Eassy cable will be 27% owned by Telkom, Neotel and MTN,  
and is designed to provide desperately needed cheap bandwidth to 21  
African countries. But SA's communications department has taken  
umbrage at what it sees as the commercial nature of the enterprise,  
and intends to withhold landing rights.
Instead, the government will use taxpayers' money to roll out two  
rival cables heading east and west, jointly known as the Nepad  
Broadband Infrastructure Network. Denying landing rights to EASSy  
will be detrimental to the three local companies, which, they say,  
have had the foresight to invest in the project to slash bandwidth  
prices.
It will also be anticompetitive if EASSy members are not allowed to  
sell bandwidth to other operators in SA, says Mohsen Khalil, a  
director with the International Finance Corporation (IFC). He also  
says the government's hostility shows it has not understood a new  
commitment the consortium has made to open access.
The IFC is part of the World Bank, and is investing $32,5m to help  
about 15 small operators participate in Eassy. Yet the director- 
general of the communications department, Lyndall Shope Mafole,  
remains vehemently opposed to the project. "Eassy is bad news for  
developing countries that are not at the level of SA," she says.
"We have many problems with it. The fact that you work for the World  
Bank makes you think you know what's good for Africa even when you  
don't live in Africa. I find that quite insulting."
Because Eassy's biggest shareholders are giants like MTN and Telkom,  
their bulk buying power gives them an advantage over smaller  
operators also trying to buy and resell capacity to customers in each  
country, she says.
"South African companies could use their dominance to compete  
unfairly in other countries. We have a responsibility as the  
government to ensure there is fair competition. We are not willing to  
look at something that is clearly discriminatory. We couldn't rest  
with a clear conscience." If the South African Government has this  
responsibility, why has it not exercised it over Telkom's SAT3  
prices? The Department of Communications talks the talk but does not  
walk the walk.
A bigger issue threatening not only Eassy but also other foreign- 
backed cables is a demand that any cable landing in SA is partly  
owned by local companies. The minimum percentage of local ownership  
will be determined by Communications Minister Ivy Matsepe Casaburri.
The instant reaction is to question whether SA has the right to do  
that. It has, under the Electronic Communications and Transactions  
Act, Shope-Mafole says. The second reaction is to assume that foreign  
investors will be deterred. The government's belligerent stance in an  
effort to promote local industries may backfire and deprive consumers  
of cheaper bandwidth if foreigners opt to bypass SA's coastline.
Nonsense, Shope-Mafole says. "There are millions of people who want  
to enter into arrangements and land in SA. We welcome anybody who  
wants to invest in submarine cables that land on South African soil,  
but we need South African companies to invest."
Although Eassy boasts 27% local ownership, that may not be enough.  
Seacom, another private cable already under construction, must also  
recruit local investors for the plans on its map to match reality.  
Seacom has signed a deal for SA's second network operator, Neotel, to  
operate the local landing station, which does not impress the  
government.
Shope-Mafole said the demand for local ownership in the entire cable  
linking India to Europe via SA was discussed with Seacom's mostly US  
investors over a cup of coffee. "I don't think they thought it was  
unreasonable. I wouldn't say they loved it, but they didn't throw  
their cups at us," she says.
(Source: Business Day)


Eric M.K Osiakwan
Executive Secretary
AfrISPA (www.afrispa.org)
Tel: + 233.21.258800 ext 2031
Fax: + 233.21.258811
Cell: + 233.244.386792
Handle: eosiakwan
Snail Mail: Pmb 208, Accra-North
Office: BusyInternet - 42 Ring Road Central, Accra-North
Blog: http://blogs.law.harvard.edu/eric/
Slang: "Tomorrow Now"




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