Lowering the costs of International Bandwidth in
Africa
June 21 2006
Mike Jensen
1. SUMMARY
Bandwidth is the life-blood of the world’s knowledge economy, but it is scarcest where it is most
needed – in the developing nations of Africa which require low cost communications to
accelerate their socio-economic development. Few schools, libraries, universities and research
centres on the continent have any Internet access. For those that can afford it, their costs are
usually thousands of times higher than for their counterparts in the developed world, and even
Africa’s most well-endowed centres of excellence have less bandwidth than a home broadband
user in North America or Europe, and it must be shared amongst hundreds or even thousands of
users.
A variety of factors are responsible for this situation, but the biggest cause is the high cost of
international connections to the global telecommunication backbones. This is mainly the result of
the lack of international optic fibre infrastructure, which is necessary to deliver sufficient
volumes of low-cost bandwidth, and the consequent dependency on much more expensive
satellite bandwidth. Less than 20 of the 54 African countries have international optic fibre cable
connections, and these are currently controlled by inefficient state-owned operators which charge
monopoly prices while neglecting to build the national backbones needed to carry local and
international traffic. As a result, circuits from Africa to the US or Europe usually cost more than
US$5000 /month1, while cross-Atlantic links between North America and Europe can now be
obtained for US$2.5/Mbps/month and for US$16–30/Mpbs/month on international routes in
Asia2.
The only large-scale international fibre link in Africa (SAT-3/WASC/SAFE) connects eight
countries on the west coast of the continent to Europe and the Far East. Operating as a cartel of
monopoly state-owned telecommunication providers, prices have barely come down since it
began operating in 2002. New fibre projects have been proposed which could break this
monopoly and add many more African countries to the global grid, but most of these projects are
also being developed by state-owned telecom operators. As a result they are following the same
high-priced SAT-3 business model. Unless interventions are made to reduce the cost of these
existing international fibre links and to ensure that new fibre infrastructure is quickly built, the
continent will be prevented from tapping its latent potential and will fall further behind the rest
of the world.
1
See for example - GISPA signs agreement with GT for new, low prices on SAT3. Balancing Act Issue 233
http://www.balancingact-africa.com/news/back/balancing-act_233.html. and Fibre Optic Cable Systems in the Arab
World www.aticm.org.eg/admin/Documents/ArabFiberOptics-Study2.pdf
2
See for example circuits obtained by the research network Canarie, Canada. Note these prices are
predicated on 3–5 year contracts for multi-Gbps circuits. Personal communication with bill.st.arnaud@canarie.ca
This problem is not unique to Africa. Other developing regions suffer from the same problem,
but it is at its most extreme in sub-Saharan Africa, which has the lowest teledensity in the world
and the highest unmet demand for telecommunication services3. Fortunately, African
governments and the international community have recently become more aware that action is
needed to improve access to communications and to encourage the adoption of alternative
business models that can significantly lower the cost of international links. These have centred
on what are known as Open Access models, which are cost-based and owned by the public sector
(similar to roads and rail lines), rather than being operated by a club of companies aiming to
maximise profits.
Most African country telecommunication markets are slowly moving to a more competitive
environment which will ultimately address pricing and national imbalances in demand and
supply. However the international sector in developing countries is different from developed
nations because the majority of countries have markets that are too small to justify the cost of
deploying many competing international fibre cables. With each cable able to carry data at
terrabit speeds, only one international connection to a global hub is needed, although a second
physically separate link is also for back-up (redundant connection) purposes. However achieving
competitive pricing between just two suppliers is infeasible. Thus, in order to ensure cost-based
pricing, a different model of deployment is needed, where the cable and landing points are
operated on a non-profit basis, extending the models used by Internet service providers for
operating national or regional Internet Exchange Points (IXs).
This follows a number of recent studies which have identified public-private partnerships and
open access models as a more appropriate solution for fibre deployment4. These also build on
precedents set by the oil and gas industries when building pipelines, in which the basic approach
is to establish a Special Purpose Vehicle (SPV) to operate the facilities. The main objective of
the SPV is not to make a profit, but to facilitate profits made elsewhere by the participating
companies. The aim is not to exclude incumbent telecom operators from the process, but to allow
the participation of others that might bring additional funding or other advantages to the table
such as rights of way to build fibre along power or rail routes5.
The most viable structure for this approach is likely to be a two-part system in which national
cable landing points are managed by national associations of bandwidth providers, while the
cable itself is owned by a mix of operators and private or public investors. Given that the most
appropriate place for the cable landing point is likely to be at the facilities of the national
operator, these would most likely be owned by the state, but operated by a management company
appointed by the national association of bandwidth providers.
3
While demand forecasting is heavily dependent on the assumed end-user cost, the billion dollar annual
payments for satellite bandwidth across Africa already show that there is sufficient demand for international
infrastructure to justify deployment for virtually every country in Africa except perhaps the smallest and most
remote nations.
4
See for example the World Bank InfoDev Study: Open Access Models: Options for Improving Backbone
Connectivity in Developing Countries http://www.infodev.org/content/highlights/detail/2568
5
Finding rights of way for cable is a major difficulty in terrestrial projects unless they can be provided by
municipalities and parastatals such as railway, pipeline, and electricity grid operators.
With the cable itself, different models can be adopted. In one scenario any entity would be free to
invest, either as an operator, in which case the investment would be tied to guaranteed amounts
of bandwidth, or as a non-user shareholder who might invest funds or provide a right of way (e.g.
a gas pipeline operator wishing to minimise the cost of operating their pipeline network).
Alternatively, ownership of the cable can be defined on a national basis with shares held by the
same special purpose companies that operate the landing points.
In either case, sufficient investment is likely to come from the much broader base of operators
that would be able to access the bandwidth at cost, and little additional financing would likely be
required6. However some of the smaller, more remote or less developed countries might require
special assistance, and given the general interest by the international community in ensuring
more universal access, along with the positive impact on demand for national backbones that
would result from affordable international connectivity, donors could provide a demand
guarantee that would meet any revenue shortfalls in the early years. This may be a risk for
donors if the demand was not met over the life of the cable. However, assuming the long-term
business case is sound, they might look to recoup the funding when traffic increased at a later
point. Donors could also be invited to meet the cost of additional add-drop units on fibre projects
to ensure small and remote communities along the way can be reached. The choice of these
locations would be a matter for negotiation between the donors and national governments.
Given the interest of governments in supporting the development of their nations such as through
improved access to health and education, along with the broader social improvement and
enhanced public services which can be provided through better connectivity, there is a growing
interest amongst a wide range of stakeholders in ensuring that Open Access models are adopted.
The initial focus is likely to be on supporting the adoption of Open Access models for the
upcoming East African fibre project (see below) which could then be replicated in West and
Central Africa. At the same time SAT-3 and other existing international fibre cables may be
declared essential facilities serving the public good with regulated pricing. Specific activities are
likely to be:
1. Increased backing for policy makers and regulatory agencies in Africa to implement
policy changes and regulations that allow open access to international fibre
2. Support to local associations of bandwidth providers to establish shared international
fibre gateways
3. Increased backing for international fibre projects which aim to provide equal access to all
bandwidth providers.
There is the risk that the entrenched interests of the incumbent operators and their state-owners
will be able to resist efforts to change national telecom policy, and that the EASSy project goes
ahead as currently planned. Nonetheless, support from a broad range of stakeholders is expected
to substantially improve the chances of an alternative strategy being adopted, which could have a
major impact on the way international fibre projects in developing countries are being planned in
the future.
6
The potential role for private finance in these projects is also more limited because there is virtually no risk
of failure – the demand for international fibre bandwidth from the first two connections is guaranteed, and if services
are offered at cost-plus, there is little opportunity to undercut pricing.
In summary:
 Most of Africa is as yet unconnected to the global fibre backbones.
 Optic fibre is the only way to supply sufficient international low-cost bandwidth.
 As elsewhere, the limited fibre that has been laid in Africa is not competitively priced,
and uses business models developed by cartels of monopoly telecommunication
operators.
 A cable planned for the East coast of Africa (EASSy) which will have a major impact on
bandwidth availability in the region, was being developed as a club of mostly state
monopoly operators with high prices and low volumes in mind.
 The strategy for the deployment of an Open Access model for EASSy is in the process of
being legislated by policy makers in the region.
 The adoption of a low-cost Open Access model for EASSy would likely have a major
impact on the way new fibre projects are planned in other regions in Africa.
2. THE NATURE OF THE PROBLEM
Communication costs in Africa are currently thousands of times higher than in Europe or North
America. This particularly affects those with the most limited resources: students, researchers,
doctors, scientists, and other public servants, as well as the general public, who are unable to take
full advantage of the unprecedented access to knowledge the Internet provides. Cheaper
bandwidth for African institutions, particularly governments, schools, universities, libraries and
hospitals would provide widespread access to the wealth of information available online,
facilitate African contributions to the global economy and increase the likelihood of successful
solutions to African development problems. So in a nutshell, the constraints on development in
Africa caused by the high cost of communications are not being addressed due to inappropriate
business models used for deploying international fibre infrastructure.
The developed world is benefiting from the surplus of optical fibre cable laid during the dot-com
bubble which has coincided with technology advances that have made speeds of over 1000
Gigabits per second routine on these fibre links. While those in the North reap the benefits of
these developments, much of the South, and Africa in particular, has not seen significant
deployment of international fibre. This is clearly shown in the diagram below which depicts
improvements in the speed of the internet over the last 10 years as measured by Stanford
University in the US. As can be seen, Africa is the region showing the slowest improvements and
is actually steadily falling behind the rest of the world.
There is only one intercontinental fibre link to Sub-Saharan Africa (SAT-3) which provides
connections to Europe and the Far East for eight countries along the West Coast of the continent7
(This is shown in the map below). Except for some onward links from South Africa to its
neighbours, and from Sudan to Egypt and from Senegal to Mali, the remaining 33 African
countries are unconnected to the global optical backbones, and depend on the much more limited
and high-cost bandwidth from satellite links. Even the few countries that have access to
international fibre through SAT-3 are not seeing the benefits because it is operated as a
consortium where connections are charged at monopoly prices8 by the state-owned operators
which still predominate in most of Africa, and in many other developing regions.
As a result, institutions in these countries pay thousands of dollars a month for Internet
connections which a home broadband user in North America would pay US$20 a month for.
Aside from the general dampening effect this has had on uptake, unaffordable bandwidth has
actually excluded African scientists from gaining access to the services of global research
networks which now expect their member countries to have at least 1Gbps on international
connections in order to access the advanced services and petabit data sets they now provide9.
7
As detailed in Annex 2 (Stakeholders in Telecom Infrastructure Deployments in Africa)
The International Telecom Users Group (INTUG) observed in January 2005 that “the level of the prices
seldom arises from high underlying costs, but instead are imposed by monopoly or dominant operators through the
exercise of their market power. Often these operators are shielded from potential competitors by the refusal of their
governments to permit any new players to enter the market in international telecommunications”.
8
9
Telemedicine and genetic research in particular require high bandwidths for the transfer of images, video
and large data sets, other examples include high definition video, super-computing, and physics, and remote sensing
Source: M Jensen “Needed” links are defined by the NEPAD e-Africa Commission as those necessary to support its
strategy of establishing redundant fibre links to every capital city in Africa, for which it is now in the process of
lobbying operators and investors. (“Proposed” links are additional project proposals without formal NEPAD
endorsement.
In a chicken-and-egg situation, the constraints on demand resulting from the high tariffs charged
by the monopoly operators have contributed to the slow pace of fibre deployment and the severe
lack of investment in needed infrastructure. Many of these state-run telecom operators, often
mismanaged, inefficient and suffering from much reduced profits caused by the collapse of
international settlement rates, do not have the resources to invest the millions of dollars needed
to deploy national and international fibre, and neither do their host governments.
Understandably, few private investors or donors are interested in financing these moribund
organisations that rest on artificially closed markets. At the same time, continued state-operator
control over international gateways and national backbones has meant there are very few
opportunities for investment in privately operated telecommunication infrastructure.
3. THE EXPERIENCE FROM SAT-3/WASC/SAFE
The first large-scale international fibre project in sub-Saharan Africa, SAT-3/WASC’s first
segment connects Portugal to the Cape in South Africa reaching eight coastal countries along the
way: Senegal, Ivory Coast, Ghana, Benin, Nigeria, Cameroon, Gabon and Angola. A second
segment, in the Indian Ocean, connects South Africa to Malaysia while passing through
Mauritius and India (SAFE). Jointly funded by 36 members10 and spearheaded by South African
data. The ATICS survey of 84 leading tertiary institutions in Africa found 850,000 students and staff with access to
a total of only 100Mbps international bandwidth (www.atics.info). By contrast, Australia’s tertiary community of
250,000 share 6Gbps of international bandwidth (although even this is still insufficient to meet their needs).
10
The SAT-3 shareholders are: Angola Telecom, AT&T Corp (USA), Belgacom SA, Communications
Global Network Services Ltd (BT), Cable & Wireless Global Network , Camtel, China Telecom, Chunghwa
Telkom which invested US$85 million for a 13 per cent stake, the project cost about US$650
million dollars. The cable was expected to lead to much reduced international bandwidth costs,
but so far this has not occurred due to the business models used to develop the project.
The ownership of the cable was established as a club consortium, which is a confidential
shareholder agreement about which little is known11. The shareholders appointed Telkom South
Africa as the managing agent who runs it on their behalf, taking care of day-to-day performance
and maintenance issues. Telkom South Africa also has the largest amount of traffic among
consortium members. Consortium members have a monopoly on selling access to the fibre in
their own country until April 2007. If the consortium builds more capacity than its members can
take up (on which they have first right of refusal), then the “pool” capacity will be sold off as
IRUs (Indefeasible Rights of Use).
Being the only international fibre cable available has put the consortium’s owners in a relatively
unassailable position. Sentech, the South African state-owned broadcasting and telecom
provider, argued in parliament last year that Telkom's monopoly over the cable was limiting
Sentech’s ability to provide affordable, high-speed Internet access to consumers. It said that
SAT-3/WASC/SAFE was a strategic national asset that was funded by taxpayers. At the time the
cable was initiated, Telkom enjoyed a statutory monopoly and was majority-owned by the state.
There are three recurring issues here: the monopoly each national operator has on the landing
stations in their country; the monopoly on the sale of capacity; and the fact that shares in the
consortium are not tradable. Examples include:
1) Under pressure from Ghana’s ISP association the local incumbent with the landing
station, Ghana Telecom, lowered its prices by about a third to US$8050 a month for an
E1 leased circuit from Ghana to Portugal. Previously, E1s had been quoted at between
US$12–15,000 a month, but even with the reduction, the price is many times higher than
cost. The agreement is again covered by commercial confidentiality.
2) Landlocked African operators who have tried to purchase international fibre capacity
directly from one of the consortium’s international members have found themselves
being charged as much to reach the SAT-3 landing point as they were charged to get from
the landing station to Portugal. Sadly, the high costs have made it cheaper to send the
traffic directly by satellite, even for SAT-3 shareholders such as Telecom Namibia, which
has no landing point of its own.
3) Nigeria’s SNO, Globacom realising that to be competitive it would need access to its own
international fibre capacity, it tried to buy a shareholding in the consortium. It was told
that it could not do so, presumably because Nitel would be threatened by its access to
capacity. In the meantime, Globacom has announced that Alcatel will build it a fibre
between Nigeria and England. The Nigerian Government has talked about separating
Nitel’s SAT3 capacity as an independent operation but this has not yet become public
Telecom Ltd Co, Côte d’Ivoire Telecom, Cyprus Telecommunications Authority, Deutsche Telekom AG, France
Telecom, Ghana Telecommunications Co, Global One Communications, Maroc Telecom, Korea Telecom, KPN
Royal Dutch Telecom, Marconi (Portugal), Mauritius Telecom, MCI Worldcom International, Nigerian
Telecommunications, OPT Benin, OPT Gabon, Reach, Singapore Telecommunications, Societe Nationale des
Telecommunications du Senegal (SONATEL), Sprint Communications Co, Swisscom Ltd, Telecom Italia SpA,
Telecom Namibia, Telefonica de Espana, Teleglobe (USA), Telekom Malaysia Berhad, Telkom South Africa, The
Communications Authority of Thailand, and Videsh Sanchar Nigam Ltd (India) (VSNL).
11
Despite the continued efforts of the South African government to obtain details of the nature of the
agreement, the consortium has not released them.
policy while staff at Nitel have objected to the proposed separation saying that this would
jeopardise the proposed privatisation of Nitel.
A rough budget for SAT-3 shows that the investment has already been recouped and running
costs should drop to US$30 million a year. Taking into account the new upgrade costing US$30–
50 million, which will result in a doubling of capacity to 40 gigabits per second, charges could
come down to something closer to those found on the North Atlantic but are unlikely to occur in
the absence of competition from other new cables.
Approaches to opening up access to the cable using competition legislation have been discussed,
but currently it appears that only South Africa has the appropriate legislation. There is also lack
of clarity regarding lapsing of the monopoly on the landing stations in 2007 and this will still
likely require legislative change to allow other shareholders and wholesalers direct access to
these international gateways. In the mean time the South African government is discussing
declaring the SAT-3 landing point an essential facility ahead of the 2007 date, but is debating
whether to do this through legislation or through regulation. ICASA could draft the necessary
regulations under sections 44 and 51 of the Telecommunications Act. As an essential service,
ICASA would be able to set the prices for access to the cables and regulate these according to
Telkom's costs.
But any move by the government to have the cables declared an essential service, or to amend
legislation, is likely to be met with strong opposition from Telkom. Telkom says it is a public
company and that the cable is its asset. "It would be an unfortunate precedent to nationalise this
cable landing, as it would discourage Telkom from any further investments in projects of this
nature," it said in a statement. Some observers have echoed this concern and warned against
hasty decisions by government, suggesting thhat declaring the cables an essential service could
raise concerns among foreign investors that government is interfering unnecessarily in the
market. Telkom says access to the capacity in the cable could be classified as an essential facility
only if it meets certain characteristics. But, it says, it doesn't meet these characteristics for
various reasons, one being that satellite links are available as substitutes.
Thus most observers have concluded that improving access to low-cost international bandwidth
is more likely to be achieved through new projects which will also put competitive pressure on
the old models, rather than to focus purely on the problematic area of legislating access to
existing facilities which were established under different regimes.
4. THE CASE OF THE EAST AFRICAN SUBMARINE SYSTEM (EASSY)
Recent efforts to establish a fibre project serving the countries on the east coast of Africa is one
such project, which provides an ideal case study in new models for telecommunication
infrastructure provision, while underlining the problems described above. Known as the East
African Submarine System (EASSy), the project is being developed by about 25 telecom
operators, of which 20 are majority owned by African governments12 in the region, four are
private operators which have recently received international gateway licenses (in South Africa,
Kenya, Somalia and Tanzania), along with recently expressed interest from international
operators including British Telecom, Teleglobe and Etisalat.
12
In early June 2006 Mauritius was included in NEPAD's proposed alternative to the EASSy consortium.
With their sole franchise on international links, the state-owned operators have adopted a closed
consortium ownership model, similar to that of SAT-3, which raises the spectre of continuing the
strategy of selling small quantities of bandwidth at high margins. Currently prices on SAT-3 are
up to US$15 000 / Mbps/month, while it is estimated to cost the consortium only about
US$300/Mbps/month13. With new technologies and a shorter cable, EASSy will be capable of
up to 640Gbps and bandwidth should cost the operator less than US$15/Mbps/month to
provide14, while current indications are that pricing will initially be in excess of
US$1000/Mbps/month15.
While most of the EASSy project members have a monopoly on international links in their own
countries, even where there is more than one EASSy member in the same country, it is possible
that the state operators could leverage their position in both the wholesale and retail markets at
the expense of the other bandwidth retailers without international gateways, thus increasing the
costs to the end-user. In addition, their sole rights to the sale of international bandwidth allows
the operators to integrate the wholesale and retail chains, giving them an unassailable position in
the market, making it more difficult for new private players to gain market entry.
The French consulting group, Axiom, which carried out the Detailed Feasibility Study16 for the
EASSy project, admit in their report that: “It is usually difficult to find a Consortium’s majority
ready to agree on attractive or even fair capacity pricing policy for sale to non Consortium
members.” Axiom did discuss an alternative Special Purpose Vehicle (SPV) model with a more
diversified shareholding, including national operators, but they concluded that their model for an
SPV had problems because international gateway operators would be in competition with the
other investors, and because of the unclear regulatory environment for an SPV17.
Currently the EASSy consortium has raised pledges for the bulk of the funds from within the
group of operators, but it has been delayed in finalising the project because an additional
US$60m-$140m in financing is still needed. Many of the smaller EASSy participants were
expecting to obtain soft finance for their stake in the project from multilateral and bilateral
13
The cable is estimated to cost about US$1500 million over its life: (US$600m to lay + US$35m/year x
25years for financing, maintenance, and upgrades) i.e: Assuming only about half the total bandwidth (75Gbps) of
the cable is sold over its lifetime, the annual cost of the cable is: US$1500m / 25 years = US$250m/year. Monthly
cost /Mbps: US$250m/75 000 Mbps/12months = 280 US$/month per Mbps
14
The cable is estimated to cost US$1030 million over its life: (US$280m to lay + US$30m/year x 25years
financing, maintenance, and upgrades) i.e: The annual cost of the cable is: US$1030m / 25 years = US$41m/year.
Assuming only half the total bandwidth of the cable is sold over its lifetime, the monthly cost /Mbps: US$41m/300
000Mbps/12months = 11 US$/month per Mb/s. This does not include the cost of upstream bandwidth to gain access
to the global backbones from the EASSy termination points, currently planned for South Africa, Djibouti and Sudan.
15
The pricing target proposed in June 2006 by a group of DFIs working with the EASSy consortium is for
bandwidth to initially be priced at about 30% of current satellite bandwidth prices and then as demand increases, to
reduce the tariffs to around US$750/Mbbps/Month by 2012.
16
Along with the other reports it is available on the E-Africa Commission site
http://www.eafricacommission.org
17
To be fair, at the time of the EASSy project conception the regulatory environment encouraged a closed
club model as national telecom policies precluded anyone but the licensed international operators to provide
international infrastructure. While this is still the case, following the June 2006 meeting the communication
ministers of the region have adopted in principle a modified regulatory environment which would allow the
provision of wholesale services by an SPV
Development Finance Institutions (DFIs) such as the IFC, the World Bank and the European
Union.
Globally, telecom infrastructure provisioning strategies are still under debate18, and recently, the
models for financing the EASSy cable have come under scrutiny by governments in the region as
well as the DFIs, who are also keen to see lower charges on network infrastructure. Culminating
in the highlighting of African bandwidth issues at the World Summit on the Information Society
(WSIS) in Tunis last year19, national policy makers in Africa are now aware that traditional
strategies to telecommunications backbone deployment have not worked and that a new
approach needs to be adopted. At the same time the DFIs made it known that they would not
finance the EASSy consortium if it continued as a closed club.
While the EASSy consortium continued to push ahead with its strategy, the seeds of an
alternative initiative were laid at the November 2005 meeting of Southern African ICT policy
makers in Botswana which requested its representative body, the NEPAD e-Africa Commission,
to develop an Open Access non-discriminatory model to build the necessary fibre infrastructure
in the region20. The meeting proposed that SPVs, consisting of public-private partnerships, be
used to operate the infrastructure. Following through on these recommendations, studies on
regulatory and business models for SPVs were conducted on behalf of NEPAD by the DFIs, the
Commonwealth Telecommunications Organisation (CTO) and the South African parastatal
investment agency, the Industrial Development Corporation (IDC).
After a series of subsequent meetings earlier this year, involving the East and Southern African
policy makers, regulators, DFIs, NGOs, and a few of the EASSy consortium members, an
intergovernmental working committee (IWC) was established at the April 2006 meeting of
policy makers and regulators convened by NEPAD. The IWC was chaired by RITA (the national
ICT promotion agency of Rwanda), and comprised regulators and policy makers representing
Botswana (as deputy, also representing NEPAD), Kenya, Lesotho, South Africa and the East
African Community (EAC). The IWC was charged to:
● Make recommendations on the viability and functions of a proposed Inter Governmental
Assembly (IGA) which would have oversight over international fibre infrastructure in
the region through a 'golden share' investment in the SPV
● Make recommendations on the functions and scope of the SPV
● Conclude the dialogue with the DFIs and the EASSy consortium membership
● Take actions needed to move the project forward, including defining the process for
registering the SPV
● Raise the interim funding to continue the work of the IWC
● Produce a report for the planned Ministers' meeting
At the same time, a group of regulators lead by Kenya was tasked with responding to the CTO
report on the proposed regulatory model.
See Annex 7 – Teletopia: A New Regulatory Agenda for America
Such as the World Bank’s ATICS and Open Access Model studies, NEPAD e-Africa Commission studies
and IDRC’s PAREN programme.
20
See Annex 3 for the Declaration of the Policy Makers.
18
19
The recommendations emanating from these two groups were subsequently incorporated in a
draft regional protocol21 and associated declarations that were hammered out in an intensive
three-day meeting convened by the NEPAD e-Africa Commission in early June and attended by
most of the Permanent Secretaries and Director Generals from the relevant ICT ministries in the
Southern and Eastern African countries.
The protocol covered the establishment of the SPV along Open Access principles, an
Intergovernmental Authority to govern it and the changes needed to the national regulatory
environment to accommodate the SPV. The protocol was then presented to the June meeting of
Communication Ministers in Johannesburg22 which agreed to house the SPV in Rwanda23,
include Mauritius in the project24, and to adopt the draft protocol as a working document which
would be taken home for further review and then formal signing and ratification at a meeting to
be convened in August 2006 under the auspices of the African Union. The e-Africa Commission
was also requested by the Ministers to convene a meeting in the interim with the EASSy
consortium members to ensure they are on board with the new strategy and to work out the
modalities for taking over the work that has already been done by the consortium members. This
meeting is scheduled for the first week of July.
The key features of the Open Access model and associated strategies that were adopted in
principle by policy makers at the June meeting is that:
1) An SPV would be established in Rwanda to implement, own and manage the cable with a
cost-based tariff regime, a regulated rate of return on investment and ultimate control
which rests with the governments of the region. The establishment of the SPV to operate
the cable in this way is aimed at what is seen as the key deficiency with the consortium
model, which is that the dominant bandwidth retailer in each country and the wholesaler
(the consortium) are not separated and thus the consortium member retailers are able
exploit vertical integration in their markets to the detriment of other service providers
which do not have this advantage. Thus, ensuring that the wholesaler (the SPV) is fully
separated from the retailers and being licensed in each country effectively spells the end
of international gateway monopolies and allows the retailers to concentrate on their core
business while profiting from the lowest possible international bandwidth costs. The
model also accommodates the variety in national policy environments, so that local
retailers are free to charge what they like for international bandwidth, with the
21
Officially known as the Draft Final Protocol on Policy and Regulatory Framework for NEPAD ICT
Broadband Infrastructure Network for East and Southern Africa. The countries party to the protocol are: Angola,
Botswana, Burundi, DRC, Djibouti, Eritrea, Ethiopia, Kenya, Lesotho, Madagascar, Malawi, Mauritius,
Mozambique, Namibia, Rwanda, Somalia, South Africa, Sudan, Swaziland, Tanzania, Uganda, Zambia and
Zimbabwe.
22
Officially known as the Draft Resolutions of the Ministers responsible for ICTs and / or
Telecommunications in Eastern and Southern Africa, 2–3 June 2006.
23
The housing of the institution to manage the submarine cable in the landlocked country of Rwanda was
adopted as a sign of commitment that the cable project was aimed at benefitting the region as a whole and not just
the coastal countries, as had been the case with SAT-3.
24
Although Mauritius had been involved in the early discussions of EASSy, it had not participated in the
consortium meetings and thus was left out of the Axiom feasibility study. Given that Mauritius already has access to
SAT-3, its interest in EASSy is indicative of the problems countries are experiencing in obtaining affordable
bandwith from the SAT-3 consortium.
expectation that competition will drive down prices and in countries where there is still a
restricted number of retailers in the market, there will be increased incentives to open the
market to benefit from low prices.
2) The SPV will have equal shareholding from each country in the region to underline the
common ownership of the infrastructure by all the nations of the region and to ensure that
small nations are not at a disadvantage from larger nations. Currently it has not been
decided if the same SPV will operate the terrestrial backhaul infrastructure, or if a
separate SPV will be established to carry out this function.
3) Each country can elect how it will allocate its shares to the local operators and can allow
any new operator to invest in the SPV at any time. This principle was adopted to
eliminate one of the main objections to the consortium model, namely that the region is
undergoing a major process of liberalisation and that the many operators that are
expected to be licensed in the near future would not have the opportunity to invest in or
directly benefit from the cable. Notwithstanding the benefits of having a say in how the
SPV is managed, this deficiency is also addressed by the additional provision that there
will be one price for bandwidth, regardless of whether or not the purchaser is an investor
in the SPV. This addresses the other key limitation of the consortium model, being that
only the licensed international operators investing in the cable at the time the of finalising
the financing of the project would benefit from lower cost bandwidth.
4) There will be one price for bandwidth on the cable regardless of distance. This may seem
to run counter to basic business principles, but the issue was debated extensively at the
policy meetings and it was ultimately agreed that this would be the best strategy to
further the interests of regional integration, so as to not penalise the more remote and
isolated nations. However the impact of this policy on the backhaul terrestrial links to the
submarine cable has yet to be examined and there may be some need to reconsider the
policy for these links. The reason for this is that in contrast to the submarine cable, which
has only one landing point in each country and can therefore only be used for
international traffic, the terrestrial links could have add-drop points all along the route
and could be used by bandwidth retailers to carry domestic traffic as well as international
traffic. Clearly if this occurs, then tariffs should not be uniform across the network,
otherwise domestic charges will effectively subsidise international traffic.
In finalising the details of the SPV and determining the strategy going forward there are still a
number of outstanding issues that will be need to be addressed before the cable is built. The chief
issues are:
● The need to re-examine the traffic forecasts on which the business model is based.
Currently the model adopted projects the existing slow growth in high-priced
international bandwidth and only expects to provide for the low capacities that the
monopoly operators expect to carry. i.e only 20Gbps by 2016. Regionally, the academic
institutions alone currently need about 20Gbps (1Gbps / country) to participate in the
global research and education networks, and the international community is ready to fund
it if it can be purchased at a reasonable price25. But the current model assumes that in
total only 20Gbps will be carried on the cable by 2016. Clearly if so little bandwidth is
sold, the high prices envisaged by the consortium would be justified to cover the cost, but
this does not take into account the tremendous latent demand which which expand
substantially if affordable pricing is available. In the case of Uganda for example, the
25
Developed by a group of national research networks known as the Ubuntunet Alliance (see Annex)
●
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26
Axiom report estimates that by 2010 only about 1Gbps will be needed by the whole
country for international bandwidth, whereas the research and academic network alone is
likely to need this amount, and the current rollout of infrastructure by the private mobile,
fixed wireless operators and ISPs in the country will shortly result in much greater public
demand if bandwidth is affordably priced. In many respects this is a true chicken-and-egg
situation – continue the current high pricing and bandwidth demand will most likely
increase very slowly. However it will take a leap of faith to price the bandwidth 10 times
more cheaply and assume that the uptake will be 10 times greater. It has been pointed out
that alternative competing cables may emerge in the future to reduce demand for
bandwidth on EASSy, however if the bandwidth on the EASSy cable is priced at costbased tariffs, there will be no business case for a competing cable.
As the legislation envisaged will effectively level the playing field and dispense with
international gateway franchises, such legislation is likely to be resisted by the incumbent
state operators and the few others with international licenses. In many cases these
operators have been given or purchased licenses contingent on periods of exclusivity
which would need to be ended. Negotiations between government and the international
gateway licensees to bring forward the end of their periods of exclusivity will likely be
needed. This could entail a negotiated settlement for the affected operators based on
estimates of their loss of revenues, with funds provided by government and/or backed by
the international community. This process would probably need to precede the
establishment of the SPV.
The need to ensure that the governance and equity structures for the SPV maximises
African ownership, but minimises the cost of finance by leveraging the best mix of equity
and debt from the different players. The financing models provided by the DFIs and the
IDC will need to be considered for their ability to balance the national interests with the
funds available in such a wide range of country sizes, regulatory environments and levels
of economic development, which results in diverse levels of demand, sources of supply
and costs of finance.
Apart from the decision to look at the modalities for adding Mauritius to the network,
there is a more general need to re-examine the landing points for the EASSy cable and
the plans for backhaul network. Insufficient attention has been paid to the costs of getting
from EASSy to the global backbones, partly because the cash-strapped state operators
were focusing on reducing their investment needs by limiting the length of the cable. As
currently envisaged, the cable would terminate in South Africa on SAT-3 in the south and
in Djibouti and Sudan on SEA-ME-WE-3 and Falcon in the north. The additional transit
costs that must be paid to the operators of these cables for onward links to the global fibre
hubs in Europe, Asia and North America could reduce much of the cost-saving potential
of the EASSy cable. Also, potentially cheaper alternative terrestrial routes for
transcontinental traffic, such as via Sudan, Ethiopia26 and Egypt, have not been
considered, and the strategy for linking the land locked countries is currently undefined.
Similarly to SAT-3, which only lands in eight of the 20 countries along the west coast,
the EASSy consortium model has not aimed for completeness in its coverage of countries
within the region, and membership simply reflects the individual operator’s interest in
participating in the project. Once the cable is designed, the addition of new landing points
at a later stages is usually not an option with marine fibre as these projects need to be
designed as an integrated system.
Which has now joined its fibre network to Sudan and Djibouti
●
●
Considerable work will need to be done to develop a strategy for the terrestrial backhaul
network. In addition to the terrestrial transmission networks of incumbent fixed-line
operators, a number of other providers also own and operate telecom transmission
networks for their own purposes. These include cellular operators, electricity operators,
pipeline operators, road and railway operators. In one or two cases these organisations
have obtained licences to provide wholesale services to other licensed operators, and in a
few other cases they are leasing long-haul transmission capacity to telecom operators. In
several key places where gaps exist in the regional network, this alternative infrastructure
offers substantial capacity which is currently unused. In many countries in the region
mobile operators have built the most extensive national fibre backbones. Thus cellular
operators may lease capacity on the backbone of incumbent operators where it is costeffective but in many cases have had to construct their own transmission networks in
order to carry traffic between base stations and switches. In total, cellular operators such
as Celtel, MTN and Vodacom have invested in the region of over US$500m on the
construction of these networks within the last five years. Furthermore, some of the
cellular operators such as Celtel are active in a number of countries with contiguous
borders and are in a good position to provide international backbones across these
countries. As a result representatives from the national retailers would likely need to be
brought together to rethink the strategy for the terrestrial network.
The EASSy consortium members have recently said that the urgent need to implement
the project means that the region cannot wait for the restructuring that an SPV would
require. Whether an SPV would take much longer to constitute is open to question, but
the Axiom Detailed Feasibility Study has pointed out that due to weather conditions, the
most appropriate time to build the cable is between December and May. So there is
actually still adequate time to make the necessary preparations for an SPV to initiate
laying the cable in December 2006. In any event the end-user would certainly be
prepared to wait a few months longer if it meant much better long-term prices.
ANNEX 1: FIBRE INFRASTRUCTURE IN SUB-SAHARAN AFRICA – A CHRONOLOGY
OF EVENTS
June 1999 – AT&T and ITU promote plans to lay a fibre optic cable around Africa in a project
known as Africa One. The project fails to get off the ground because the biggest potential user,
Telkom South Africa, has its own cable project to Europe serving other African countries along
the way (SAT-3/WASC)
May 2002 – Telkom’s plans come to fruition and SAT-3/WASC/SAFE is inaugurated amid
widespread optimism for better connectivity. It is the first large scale African fibre optic cable,
landing in eight countries on the West coast and connecting to Europe.
2003–2004 – Plans are made for a similar East African sub-marine cable and other terrestrial
backhaul projects are discussed by NEPAD and mainly national operators. Some countries,
notably Senegal, Uganda and Sudan extend their own national fibre backbones. But overall,
changes are small because international bandwidth on the cable is uncompetively priced.
June 2004 – Availability of international bandwidth becomes a major issue for international
groups supporting the African educational and research sector and the Ford / Rockefeller
/ MacArthur / Carnegie Partnership for Higher Education in Africa funds the BAND-ITS study
on access to better bandwidth for its partner universities. The Mellon Foundation, OSI’s
Electronic Information for Libraries (EIFL), J-Stor and others also focus on the issue.
February 2005 – The IDRC PAREN and World Bank ATICS surveys are launched at the
Association of African Universities AGM in Cape Town which showed that African tertiary
institutions are paying up to a thousand times more than their European and North American
counterparts for international bandwidth.
March 2005 UbuntuNet Alliance formed by East and Southern African Universities to gain
wholesale rates to EASSy. SIDA and IDRC each pledge US$1million to support the initiative.
March 2005 – The South African Department of Communications requests the national
regulator, to deem Telkom’s SAT-3 access an “essential service”. As yet no action has been
taken.
May 2005 – Final report of the IFC funded Axiom / EGS / Terabit group study determines that
EASSy would be commercially viable and will cost US$200–220 million to implement.
July 2005 – An open SAT-3 Campaign discussed informally by IDRC and the Open Society
Institute (OSI).
September 2005 – EASSy Club members pledge US$210million for the project.
November 2005 – Southern African telecom regulators meeting issues communique, calling for
an open access model for EASSy. (see below).
November 2005 – NEPAD e-Commission convenes meeting on EASSy at the World Summit on
Information Society in Tunis. Opposing camps go public – club members says they want to
move ahead quickly with closed model, calls for open access by the World Bank, UbuntuNet
Alliance and others. Association of African Universities hosts a pre-summit meeting on the
bandwidth issue, supported by IDRC, SIDA and others.
December 2005 – OSI sponsored OSIWA meeting in Saly, Senegal on improving access to
SAT-3. Discussions of the group include plans to investigate if a law suit could be brought
before the South African Competition Commission and a communique (see below).
December 2005 – Planned financial closing for EASSy project, now unlikely.
January 2006 – OSI/ APC to send letter to SAT-3 consortium requesting information.
February 2006 – OSI/APC/CIPESA support open access to EASSy meeting in Kampala,
Uganda.
March 2006 – EASSy supply contract and C&MA were to be signed but financing delays
preclude this
April 2006 – OSI/APC/CIPESA to support open access to SAT-3 meeting in South Africa,
June 2006 - East and Southern African Ministers adopt in principle the draft protocol to
establish an alternative vehicle to implement the EASSy project.
August 2006 – Ministers are scheduled to officially sign the protocol.
April 2007 – SAT-3 exclusivity ends.
Sept 2007 – EASSy projected to begin service.
ANNEX 2. EASSY DETAILS AND OTHER REGIONAL FIBRE INITIATIVES
East Africa Submarine System (EASSy) is a plan for a submarine cable running along the east
coast of Africa, most likely between South Africa and Djibouti, complementing the
SAT3/WASC cable on the west coast. The roughly 5,000 miles of coastline is the longest stretch
of land untouched by fibre-optic cable, and countries bordering the Indian Ocean, which include
some of the continents most prosperous and stable nations, rely on satellite for the bulk of their
Internet connections. The project also assumes that distribution networks to the landlocked
countries will be built and that it will connect to global cable systems at each end. The system
length of the cable is currently expected to be 9,300 km and is planned for an ultimate capacity
of 320- 640 Gbp/s using 2 fibre pairs, and costing about US$280 million.
The problem with the project is that it has so far been conceived and developed in the same way
as SAT-3, by a club mainly comprised of national telecom operators who control the
international gateways as well as the retail markets. Currently 23 international gateway operators
from 16 countries are members of the EASSy consortium and the Lesotho Regulatory Authority
also recently signed the project MoU, becoming the first non-licensed network operator to join
the project as a stakeholder and investor. The coastal partners are: Telkom Kenya, Kenya Data
Networks, Zanzibar Telecom (Zantel), Tanzania Telecommunications Company, SatCom
Networks Africa (Tanzania), Sudatel – (Sudan), TDM - Telecom Mozambique, Djibouti
Telecom, Sentech - South Africa, Telkom SA, Telecom Malagasy. The landlocked partners are:
Uganda Telecom Ltd, MTN Uganda, Rwanda Telecom, Botswana Telecom Corp, Ethiopia
Telecom, Corp, Dalkom, Somalia, Malawi Telecom Corp, Zambia Telecom (Zamtel), Onatel Burundi, TeleCel Burundi, and TelOne – Zimbabwe.
The project has not yet been finalised and the opportunity still exists to change the model on
which the cable will be built. Simon Olawo, Secretariat Office, Nairobi, Kenya, +254 20 316167
(direct) +254 20 3232166 (alternative), +254 20 310104, cell: +254 722 710099
http://www.eassy.org
Other Regional fibre initiatives. There are a variety of sub-regional initiatives to lay crossborder fibre in Africa, which are almost entirely being carried out by incumbent national
operators. The most significant projects are the:
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SADC Regional Information Infrastructure (SRII), which is a process undertaken by
the national operators in Southern African countries to build and upgrade their national
infrastructure and cross-border telecommunication links.
The Intelcom II project of the West African countries is establishing links between
neighbours.
The Central Corridor Project would connect Botswana, DRC, Zambia and Malawi to
the EASSy cable station in Tanzania.
The COMTEL project of the national telecom operators of the 20 countries in the
COMESA region and other investors, envisages establishing a regional
telecommunications infrastructure linking upstream intercontinental bandwidth via
South Africa and Egypt or Djibouti, and through the EASSy system when it is built.
Little has been heard from COMTEL since Ericsson announced that it was pulling out of
the project in 2004.
The Cameroon-Chad link along the current oil pipeline, which will likely be extended
to CAR could provide a link to SAT-3 for Chad and CAR.
The West Africa Festoon System (WAFS) would link countries currently unserved by
SAT-3, i.e. Congo Brazzaville, Equatorial Guinea, Chad, Sao Tome & Principe, and
provide diversity to SAT-3/WASC/SAFE for countries with landings i.e. Angola,
Gabon, Cameroon and Nigeria. In addition the governments of the DRC and CongoBrazzaville are closely involved. The project financing is expected to be complete by
March 2006 and provisional acceptance by March 2007.
The COM-7 project, which in its first phase aims to provide a link from Zambia to
Tanzania, with a branch to DRC, using railway and power lines. Further links from
Zambia to Zimbabwe, Botswana and Namibia are under evaluation.
The Nigel pipeline project planned by the national oil companies to link Nigeria to
Algeria via Niger will also establish fibre links between the three countries.
Operators from Kenya, Uganda and Rwanda (Telkom Kenya, Uganda Telecom and
RwandaTel) are in talks to build a fibre optic link from Rwanda to Kenya via
Uganda. The Kenyan section is expected to cost US$5 million (Sh3.9 billion).
The Infinity Worldwide Telecommunications Group (IWTG) proposal to link the
remaining West African countries to Europe via marine fibre which would also provide
competing infrastructure to SAT-3. The seven initial cities being focussed on are four in
Nigeria (Lagos, Abuja, Wari and Port Harcourt) plus Dakar (Senegal), Accra (Ghana) &
Douala (Cameroon). IWTGC claims financing is in advanced stages.
Of these, the only links that have actually received confirmed financing are some of the
Intelcom II links which are currently being built with funding from the West African
Development Bank (BOAD/WADB) and the incumbent operators at a cost of about US$100
million.
ANNEX 3: COMMUNIQUE OF GOVERNMENT OFFICIALS AND REGULATORS ON A
PROPOSED POLICY AND REGULATORY FRAMEWORK FOR THE DEVELOPMENT OF
THE BROADBAND NETWORK INFRASTRUCTURE IN EAST AND SOUTHERN AFRICA.
7th November 2005
A meeting of SADC ICT Ministers, held in Johannesburg on 7th October 2005, resolved that an
urgent meeting of officials and regulators from the SADC countries be convened to develop a
policy and regulatory framework within which the broadband network infrastructure in East and
Southern Africa can be constructed and operated. As the regional broadband network and the
EASSy project extend beyond the SADC countries, the meeting would of necessity include
countries outside of SADC. The NEPAD e-Africa Commission was tasked with facilitating and
organizing the meeting. The meeting of officials and regulators was held on 7th November 2005
and agreed on the following set of principles that governments of the region should adopt to
provide a framework for, and facilitate the rapid implementation of the broadband network
infrastructure in East and Southern Africa.
Principles:
1. The urgent need to build broadband ICT infrastructure for terrestrial and submarine cable
networks for East and Southern Africa.
2. The application of open, non-discriminatory and affordable access to these networks.
3. Acceptance that cross-border terrestrial and submarine cable segments of these networks can
be developed, owned, and maintained, as appropriate, by special purpose vehicles.
4. Agreement on the application of the principle of public private partnerships to these networks.
5. Governments should create regulatory and policy frameworks conducive to the development
of these networks.
Actions:
1. Regulators agreed to start a consultation within their respective regional bodies (TRASA and
ARICEA), and liaise with NEPAD on their input into the action item 2.4 below.
2. NEPAD was tasked with facilitating the following actions
2.1. Elaborate further on the concept of ‘open-access’ as applicable to the terrestrial and
submarine cable segments of these networks.
2.2. Undertake a detailed analysis of the appropriate ownership structures to ensure that
these are suitably framed for acceptance by parties concerned with the development of
these networks, such as the EASSy cable system.
2.3. Articulate the applicability of the principle of Public-Private partnerships to these
networks, in particular the roles of governments.
2.4. Study legal, policy and regulatory conditions that will facilitate and promote the
development of these networks, taking into account inputs from regional regulatory
bodies and the provisions in existing treaties between the governments of this region.
2.5. Prepare inputs for a meeting of stakeholders.
2.6. Convene a three-day meeting consisting of a one-day meeting of policy makers and
regulators, followed by a two-day consultation with network operators and developers,
and the EASSy parties.
2.7. Prepare proposals and recommendations for presentation to the Ministers of the
region, within the African Union framework, in the first quarter of 2006.
LIST OF PARTICIPATING OFFICIALS: GOVERNMENT OFFICIALS AND ICT
REGULATORS FROM THE FOLLOWING COUNTRIES: KENYA, TANZANIA,
MOZAMBIQUE, SOUTH AFRICA, UGANDA, MALAWI, ZAMBIA, BOTSWANA,
LESOTHO, MADAGASCAR, THE DEMOCRATIC REPUBLIC OF THE CONGO AND THE
TELECOMMUNICATIONS REGULATORS ASSOCIATION OF SOUTHERN AFRICA
(TRASA).ANNEX 4: OPINION PIECE ON EASSY FROM TELECOM CONSULTANT
ROLAND ALDEN
Alden is an experienced consultant and although this article was placed on the author's personal
web site and has no official status, due to its accurate and impassioned summing up of the issues
around monopoly operators and cable deployment it has been picked up by many of those
working in the area.
Just say No to EASSy
African governments and global institutions like the World Bank are being asked to help finance
another telecommunications project. This one is called EASSy (East African Submarine Cable
System). While more and cheaper telecommunications is surely needed all across Africa, East
African citizens would do well to ask their governments to take a step back from EASSy and
find better ways to sponsor telecommunications projects that will result in real progress. As it
stands today, EASSy could become a giant step backwards for Africa; and, with a US$200
million price tag, it has the potential of being an economic disaster Africa can ill-afford.
Nobody disagrees that the telecommunications capacity EASSy would bring to East Africa is
needed; and nobody disagrees that EASSy would lower the cost of telecommunications for
African citizens. So, what’s the problem?
First and foremost, EASSy is a joint venture between 20+ parastatial telecommunication
bureaucracies that have, through gross levels of corruption and managerial incompetence, wasted
the entire 20th century bringing telecommunications in Africa to the dismal state it is in today.
Entities like Telkom Kenya Limited and Telkom South Africa think EASSy is a good
investment. And for them, it is. It is an investment in the early 20th century vision of
telecommunications monopolies that keep prices high, and erstwhile competitors in court, or
better yet, in jail. That, by the way, is not an exaggeration. In the last two years
telecommunications entrepreneurs in several African countries, including Kenya and South
Africa , have literally had to spend a night or two in jail because of anti-competitive agitation by
Big Telecom, supported by government regulatory power.
Companies like MTN and Kenya Data Networks, which have done a great deal to bring private
capital and entrepreneurial energy to telecom in Africa, should be ashamed of themselves for
consorting with the collection of monopolists that form EASSy’s core support group. The reason
they are involved at all is simple; survival. The parastatial telecommunication bureaucracies
maintain a strong grip on the development of technology in Africa ; a grip that is entirely the
doing of government. Unlike the vibrant technology sectors of computers and software,
telecommunications is not driven by entrepreneurs and venture capital; it is driven by state
regulatory bureaucracies that shakedown the industry for “licenses” to create and operate
telecommunications networks. Try to operate a telecommunications company without paying for
one or more of these “licenses” (they could also just be called “taxes” or “protection money”) to
a government agency and you will find yourself in court in short order. Why do African
governments treat the telecommunications industry as though we were selling drugs, or
pornography, or firearms? Why? Because telecommunications, in the good-old-days, used to
generate enormous hard-currency revenue, and African governments have always been good at
getting their fair share.
But that was the last century. In the 21st century, which some politicians have failed to notice
has arrived already, telecommunications is a highly competitive global technology, one where
the primary product is access to the Internet; which is roughly the same thing as access to the
entire world and all its knowledge.
It is no longer possible for African telecommunications companies to operate in economic
isolation; it is no longer possible for them to generate giant profits that government regulators
can “tax” to line their own pockets. Even twenty years ago this systemic thievery only amounted
to a transfer of wealth from rich global multinationals, embassies, and various agencies of the
United Nations; those who came to Africa in the last century did not mind making phone calls
that cost US$5 a minute, they were not spending their own money anyway. That view of the
market persists to this day and projects like EASSy (and SAT3 in West Africa) are structured to
work well in this kind of economic order. But, African entrepreneurs and African citizens can no
longer afford it; and that kind of economy no longer exists.
Today’s user of Internet bandwidth in Africa is a student trying to learn, a farmer trying to sell
food, and doctor trying to find the right diagnosis. EASSy would lower the cost of Internet
access for these citizens by 50 per cent to 75 per cent. That sounds good, until you understand
that by global standards it is shockingly inadequate. Internet bandwidth in Africa is not two or
three times more expensive than in global competitive markets, it is 2000 or 3000 times more
expensive.
The problem with EASSy is not technology; it is about ownership, finance and competition.
EASSy is a “cartel” that aspires to be the OPEC of East African telecommunications. The
members of this cartel have agreed not to compete with each other, and they are not going to
allow competitors to join the cartel either. And, since they can’t raise enough money amongst
themselves to build EASSy, they are going to ask African citizenry to pick up some of the costs.
Understand that when such projects get a loan from the World Bank and other “donors” they are
using credit created by the next generation of African citizens and taxpayers. This time, Africa
should just say No.
Fibre optic “backbone” networks like EASSy are needed; but cartels like EASSy, Inc. are not.
Africa should demand that their governments disband obsolete technology regulatory bodies that
do more harm than good. Over 95 per cent of the telephone lines that have been created in Africa
in the last five years were created by entrepreneurial capital. These ventures could use some help
from African governments; they need more deregulation, more regional coordination, electric
power that is reliable, and various forms of financing and tax relief. Public financing should be
used to level playing fields, create competition and lower costs for everyone. Public finance
should not be used to pump money into a group of companies that want hold onto the last
century’s vision of the telecommunications business. All around the globe telecommunications is
one of the cheapest and most productive “natural resources” mankind has ever created. Africa
needs its fair share, but it won’t be EASSy.
Public Finance of Telecommunications
by Roland H. Alden
In an earlier essay on EASSy (the East African Submarine Cable System) I sharply criticized the
EASSy consortium’s OPEC-like characteristics, and took the position that public money (and
government regulation, which is a public resource) should not be used to finance
telecommunications monopolies. But while it is easy to find fault with EASSy, and its alreadybuilt and dysfunctional sister project in West Africa called SAT3, it is somewhat harder to be
clear and precise regarding exactly how these telecommunications projects should be structured.
In the last ten years has seen a flowering of privately financed telecommunications ventures, so
we can start with the most basic question: Why should public money be used, at all, to finance
telecommunications? Let us admit that the answer may well be “it should not be used.” But we
need to consider the facts. First of all, the only “flowering” Africa has really seen has been in the
mobile telephone sector and this has been made possible in large part because of tremendous
pent-up demand created by the existing “PTT” telecom monopolies (typically one per country)
who have done such an abysmal job of meeting the needs of their customers. Anytime a business
does a terrible job of serving its customers it creates a window of opportunity for certain
competitive ventures. These mobile phone ventures have been fueled by some liberalization in
the regulatory regimes in each country; but, this regulatory liberalization has been done badly in
most cases; there are many loopholes that protect the PTT from certain kinds of competition, and
many mobile operators are in violation of regulations because the economic consequences of
obeying the law would be certain bankruptcy. It has been a great 10 years of telecom venturing
for the private sector in Africa; but what has happened does not exactly add up to model public
policy.
Mobile phones are only one form of telecommunications capacity; many others are needed. In
order for to develop and compete in the global economy of goods and culture, it needs high
bandwidth networks capable of reaching the Internet, it needs urban and inter-regional and crossborder fibre optic networks, to tie together network islands and countries. It needs Internet
exchange points where networks can efficiently exchange data with each other and allow a flow
of ideas and transactions to occur across borders. It needs the costs for all these things to be as
low as they are elsewhere in the world; so that African students, who do not have schools with
many books, or many teachers, or any luxuries, can at the least have all the world’s knowledge at
their fingertips. All these things are needed for to aggregate the business and cultural
opportunities of its many relatively small countries so that they can interact with the world as
larger blocs with some power, and equipped with access to knowledge and information. If
Europe needed the Euro then surely needs regional organizations that really exist, function and
make things happen. Strong telecommunications networks are a key enabler. Mobile phones
everywhere are a first step, but they are not enough; not nearly enough.
Because the job is so large, and capable, wealthy and powerful private sector companies are so
rare in sub-Saharan , there is a strong temptation to ask governments and global financial
institutions to do the “heavy lifting.” This is understandable, and may be justified. But, we must
understand that in telecommunications in particular, there is a long and established tradition of
such resources being used to support a single, unproductive, and corrupt monopoly company. It
goes by different names in different countries, but it is known generically as the “telephone
company.” To this day, the skeletons of these corporations, and the government regulatory
bodies that oversee them, do continuous harm to the marketplace for telecommunications in .
They block the investment of private capital in order to insure that competition is restrained.
EASSy is but one example of these forces at work.
If public resources are to be used to intervene in the telecommunications sector, what should the
criteria for these investments and projects be? Surprisingly, the criteria are not terribly complex,
and there are only three. Readers not familiar with the sector and its traditions will be surprised
to know that almost any project on the table today, such as SAT3 and EASSy, violate all of the
following “principles”.
Public money should be used to create resources that are open to all customers, including
future customers who may not yet exist. When private capital creates a resource one of the forms
of “Return on Investment” can be exclusion of future competitors. Private investors can give a
price advantage to “early” customers or they can simply deny “late” customers a chance at all.
Either form of exclusion is a fine strategy for private businesses investing private money. On the
other hand, public money should be used to create opportunity, not exclude it or reserve it for a
select group. To the degree that public money finances telecommunications, the network so
created should be open to all customers, for all time, on equal terms. This does not mean early
contributors of capital should not be paid a fair rate of interest for making their investment early,
when risk is higher. It does mean that customers who come along five or ten years later should
have access on terms that are determined by the global and regional economy as a whole. Fibre
optic systems like EASSy in particular have very long operating life spans, 20 years or more, so
they have the ability to grow their benefits to a region if given a chance; to have such a powerful
resource controlled by a monopoly consortium is especially damaging.
Resources created with public money should be sold on a cost-recovery basis. Private
investors in telecommunications seek a financial return (profit). They must charge the highest
price they can get or they will eventually be pushed out by a competitor. Governments should
endeavor to insure that private investors in telecommunications enterprises operate in a
competitive market; that will hold prices down; but government should not regulate prices or
regulate the market in other ways. Only the free market is powerful enough to defend the
customer from the natural tendency for private companies to charge the highest price they can.
Conversely, when public money is used to create telecommunications networks the situation
changes; governments become active participants in the market; but the objective of government
participants should not be to charge the highest price they can. The objective of investing public
money in telecommunications should be to create the highest benefit to the citizens and economy
as a whole. Government needs to satisfy “investors” too, but in different ways. Government
needs to deliver results, not profits. Because telecommunications is a high-technology product,
the cost of capacity-creation is constantly dropping in real dollars. Certain layers of the
telecommunications business involve extremely high levels of technical skill and expertise, so it
is never a good idea for government to try and run a telecommunications network. However,
parts of modern telecommunications networks, such as fibre optic “backbones,” have all the
physical and economic characteristics of roads and waterworks and other “heavy infrastructure.”
They are the kinds of resources government can help finance without getting into something too
complex for governments to manage. But to achieve maximum benefit these resources need to be
made available. That means public money should not seek a financial return, but should buy the
delivery of capacity into a fair market at the lowest price possible (which is a price that seeks to
recover cost and no more). In fact, public money should not be involved unless the explicit
outcome will be a reduction in prices to customers. If public money can’t deliver that, then we
have to ask if the free market is not already operating efficiently and if there may be no role or
need for public money. However, is very far from this position today.
Public money should not be invested in markets that are distorted by anti-competitive
regulatory regimes. As stewards of public money, governments should not invest resources in
an environment where customers and competitors are not treated fairly by law. Unfortunately in
every African country today telecommunications regulations are a systematic labyrinth of laws
that create unfair advantages for certain companies, drive costs up for many companies, and
drive costs up and deny service to almost all customers. Investment of public money into projects
which must operate in these distorted “sub-economies” is a mistake; the vast quantity of
telecommunications capacity created by a project like SAT3 or EASSy can only be productively
sold in a fair and free market. Therefore, a precondition to large scale projects financed by global
donor and World Bank money should be that governments clean regulatory house and create a
business climate for telecommunications that is open and fair.
The last point may be the hardest for Africa. The web of advantages created by the regulators,
advantages that accrue to employee unions, government officials, and a handful of selected
companies, is so grossly unfair and economically distorted that the backlash will be severe for
any government bold enough to try and dismantle this powerful bureaucratic apparatus. It is an
indicator of how important telecom is to the economies of that such interests have been created
in the first place; and an indicator of how much creative energy might be unlocked when these
corrupt and hegemonic structures are finally dismantled.
November 8, 2005
Ronald Alden is a telecommunications consultant active in Africa and the Middle East; he can be
reached at ralden@ralden.com. http://www.ralden.com/C1/EASSy/default.aspx
ANNEX 5: STATEMENT OF THE PARTICIPANTS TO THE OSIWA WORKSHOP ON
ACHIEVING AFFORDABLE BANDWIDTH, SALY, SENEGAL, 2 DECEMBER 2005
We the participants to the Open Society Institute of West Africa (OSIWA) on Achieving
Affordable Bandwidth held in Saly, Senegal, from 30 November to 2 December, recognising that
the World Summit on the Information Society (Geneva 2003 and Tunis 2005) was an
empowering process for civil society, private sector, national regulatory bodies and other parties;
Acknowledging that Africa’s challenges cover poverty, disease, widespread illiteracy, anticompetitive environments, unwieldy bureaucracies, poor basic infrastructure, high prices, lack of
recognition of roles of civil society and media in development;
Emphasizing that access to telecommunication services such as voice, data and internet is a basic
human right;
We call for multi-stakeholder partnerships that will:
 identify the local needs and local applications
 set up local, national and regional internet exchange points (IXPs)
 develop human capacity to develop local content
 encourage local e-mail and web hosting
 empower rural communities with access to ICTs and via universal service and incentives
to private sector
 develop the capacity of the media and journalists to report on ICT
 call for rationalising the provision of bandwidth in the public interest
 enable landlocked countries should to be able to connect to SAT-3 to generate more
traffic hence better economies of scale.
 harmonise different West & Central Africa projects like Infinity Fibre, Intellicon Fibre,
and WAFS.
We call upon governments to:
 recognise Universal Access and to monitor this rigorously
 declare telecommunications to be a public utility like water, electricity and roads
(contradiction with liberalisation)
 establish independent national regulators and to empower the national regulators where
they exist
 take responsibility to place ALL operators on the same competing level
 address the impact of national monopoly access to Sat 3 with the stakeholders involved.
 ensure national internal fibre cables are laid from the coast to the north to enhance SAT3 utilization.
 we call upon governments to plan for the ending of the SAT3 agreement in April 2007
We call upon national telecommunications regulators/ universal service to:
 create license and service obligations mandating all ALL operators to address i) access
gaps and ii) service gaps
 practise transparency and accountability
We call upon civil society to:
 conduct an identification/audit of civil society organizations in ICT
 engage in capacity building/Development /Education
 engage missionary corps that understand the complexities of ICT
 be involved in ICT processes from start to finish
 effectively communicate civil society positions
 diffuse information on comparative costs of access
 consumers organisations.
We call upon ISPs to:


pool resources and engage in collective bargaining so as to negotiate cheaper prices on
Sat-3
develop a basic strategy to create national IXPs, then regional IXPs, then a continental
IXP
ANNEX 6: TELETOPIA: A NEW REGULATORY AGENDA FOR AMERICA
While this article is US focussed, it serves to highlight the issues around ensuring widespread
access to bandwidth and discusses the dynamics of incumbent operators faced with march of new
technologies.
SEPTEMBER 3, 2005 BY JOHN EGER
TELECOMMUNICATIONS UTOPIA OR “TELETOPIA”—A TERM FIRST COINED BY
THE JAPANESE MINISTRY OF POSTS AND TELECOMMUNICATIONS TO DESCRIBE
WHAT 21ST CENTURY JAPAN WOULD LOOK LIKE WHEN ITS NEW BROADBAND
COMMUNICATIONS INFRASTRUCTURE WAS IN PLACE—WAS LAUNCHED ALMOST
TWENTY FIVE YEARS AGO. TELETOPIA—THAT BOLD NEW INFORMATION
MECCA—HAS YET TO MATERIALIZE IN JAPAN, THE U.S., OR ANY OTHER NATION.
TO BE FAIR, OUR VISION OR “FIELD OF DREAMS,” LIKE JAPAN’S TELETOPIA, ONLY
GAINED MOMENTUM A LITTLE OVER A DECADE AGO WITH THE ELECTION OF
PRESIDENT CLINTON AND VICE PRESIDENT GORE. AL GORE PARTICULARLY, WAS
SO PERSUADED OF THE IMPORTANCE OF NEW ROBUST TELECOMMUNICATIONS
INFRASTRUCTURE THAT HE AND CLINTON LAUNCHED THE NATIONAL
INFORMATION INITIATIVE (OR NII) WITHIN A
MATTER OF WEEKS OF THEIR NEW ADMINISTRATION, AND SOON AFTER
ANNOUNCED ”INTERNET II”, THE NEXT GENERATION OF THE STILL-TO-BEDEFINED INTERNET REVOLUTION.
UNLIKE JAPAN’S APPROACH WHICH WAS TANTAMOUNT TO A HUGE PUBLIC WORKS
PROJECT, THE UNDERLYING PREMISE OF WALL STREET MONEY MANAGERS,
TELECOM EXECUTIVES AND REGULATORS ALIKE WAS THE SAME: IF THE
REGULATORS WOULD OPEN THE GATES AND THE CAPITOL MARKETS TO THEIR
POCKETBOOKS, WITHIN A RELATIVELY SHORT TIME, WE WOULD BUILD A NEW
BROADBAND FUTURE USHERING IN A CORNUCOPIA OF NEW-AGE INFORMATION
PRODUCTS AND SERVICES.
AT THE HEART OF THE POLICY DEBATE WAS TO FIND A WAY TO ALLOW BOTH
COMPETITION AND MONOPOLY TO COEXIST. BUT THAT TASK WAS NEITHER EASY
NOR SUSCEPTIBLE TO SIMPLE SOLUTIONS, ALTHOUGH THE COMMISSION TRIED ITS
BEST TO STEER A CAREFUL COURSE BETWEEN THE WASTEFUL EXTREME OF
UNREGULATED MONOPOLY AND THE KIND OF REGULATED COMPETITION THAT HAS
AILED US IN THE PAST.
SINCE 1980, THE FEDERAL COMMUNICATIONS COMMISSION, AND TO A CERTAIN
EXTENT THE CONGRESS, HAS CERTAINLY TRIED TO FIND WAYS FOR MONOPOLY
AND COMPETITION TO COEXIST, AND ALLOW THE BELL SYSTEM OPERATING
COMPANIES TO PARTICIPATE IN MANY WAYS IN THE DEVELOPMENT OF THE NEW
INFORMATION INFRASTRUCTURE AND ITS PRODUCTS AND SERVICES.
SADLY, MOST OF THEIR EFFORTS TO CREATE NEW ENTRY INTO THE FIELD—SUCH
AS THE CREATION OF VALUE-ADDED CARRIERS LIKE THE DATRAN CORPORATION
WHICH FOLDED AFTER A US$100 MILLION INVESTMENT; SPECIALIZED COMMON
CARRIERS MIMICKING MCI’S SUCCESS; AND VARIOUS INTERCONNECTION
PROCEEDINGS WHICH WOULD ALLOW BOTH TERMINAL EQUIPMENT AND OTHER
COMPETITIVE ACCESS CARRIERS TO GET A FOOTHOLD IN THE MARKET—HAVE
FOR THE MOST PART, FAILED.
EVEN TODAY, ALMOST A DECADE AFTER PRESIDENT CLINTON PROMISED “LOWER
PRICES, BETTER QUALITY AND GREATER CHOICES IN TELEPHONE AND CABLE
SERVICES,” PRICES ARE CONTINUING TO ESCALATE, GENUINE CHOICES HAVE BEEN
NARROWED, AND SERVICE QUALITY HAS REACHED AN ABYSMAL LOW. AT THE
LOCAL LEVEL, AS COMMUNITIES AROUND THE WORLD BEGIN TO SKETCH OUT THE
FIRST DRAFTS OF THEIR DIGITAL FUTURE, U.S. CITIES ARE AT A LOSS AS TO HOW
TO PROCEED.
MOST OF THE MAJOR TELECOMMUNICATIONS PROVIDERS WOULD PREFER TO
KEEP IT THAT WAY. INDEED, THE TELECOMMUNICATIONS REFORM ACT OF 1996
WAS WRITTEN LARGELY BY THE TELECOMMUNICATIONS COMPANIES THEMSELVES
WITH VERY LITTLE PUBLIC SUPPORT OR INVOLVEMENT FROM NON-TELECOM
FIRMS, STATE OR LOCAL MUNICIPALITIES OR THE GENERAL PUBLIC.
TO TELECOM COMPANIES, THE IDEA THAT THE PUBLIC MIGHT AWAKEN TO THE
SOUNDNESS OF REBUILDING LOCAL COMMUNICATIONS INFRASTRUCTURES AND
CREATE A SORT OF LOCAL PUBLIC TELECOMMUNICATIONS UTILITY—A MONOPOLY
IF YOU WILL—IS ALARMING.
NOT SURPRISINGLY, STATE LEGISLATURES AROUND THE COUNTRY ARE NOW
LOBBIED DAILY FOR LEGISLATION TO PROHIBIT ANY MUNICIPALITY FROM EVEN
ENTERTAINING SUCH A NOTION. ELECTRIC, GAS AND WATER UTILITIES, EACH OF
WHICH IS ALSO IN A POSITION TO PROVIDE THE NEW BROADBAND
TELECOMMUNICATIONS INFRASTRUCTURES, ARE ALSO BEING TARGETED WITH
LAWS THAT WOULD BAR THEIR ENTRY INTO THE TELECOMMUNICATIONS BUSINESS
IN ANY MANNER.
IN THE LONG VIEW OF HISTORY, SOME ANALYSTS ARGUE, THE CABLE, WIRELESS
AND SATELLITE INDUSTRIES WILL OFFER REAL ALTERNATIVES TO THE
TRADITIONAL MONOPOLY CARRIERS AND EVENTUALLY, AS ECONOMIES OF SCALE
ARE ACHIEVED, RATES TOO WILL FALL.
IN THE LONG VIEW OF HISTORY, HOWEVER, MORE BUSINESSES LARGE AND SMALL - INCREASINGLY DEPENDENT UPON THE UBIQUITOUS BROADBAND
TELECOMMUNICATIONS NETWORKS—WILL ATROPHY OR DIE. IN THE LONG VIEW,
CONSUMERS WILL GROW MORE WEARY AND WARY OF OUR INTERNET FUTURE.
THE “TELETOPIA” FIELD OF DREAMS OF E-COMMERCE, E-GOVERNMENT, EHEALTH AND OTHER VISIONS OF AMERICA IN AN INFORMATION ECONOMY WILL
WITHER AWAY AS WELL.
THE FUTURE OF TELECOMMUNICATIONS IN AMERICA IS EVERYONE’S BUSINESS.
EVERY INSTITUTION LARGE AND SMALL, EVERY CONSUMER GROUP AND
MUNICIPALITY THROUGHOUT AMERICA HAS TO TAKE OWNERSHIP OF THIS
FUNDAMENTAL FACT: ”INFORMATION HAS REPLACED GOLD AS THE NEW
MONETARY STANDARD,” AS WALTER
WRISTON, FORMER CHAIRMAN OF CITIBANK ONCE PUT IT, AND INFORMATION
TECHNOLOGIES ARE THE TOOLS OF WEALTH CREATION.
TO SUCCEED AND SURVIVE IN THE NEW ECONOMY, AMERICA—ITS INSTITUTIONS
PUBLIC AND PRIVATE, LARGE AND SMALL, AND THE GROWING NUMBER OF
ENTREPRENEURS AND CONSUMERS ALIKE THROUGHOUT THIS COUNTRY—MUST
INVOLVE THEMSELVES IN THE PUBLIC POLICY PROCESS AND IN THE PUBLIC ARENA,
WHICH WILL HELP SHAPE TELECOMMUNICATIONS POLICY IN THE 21ST CENTURY.
THOSE WHO CARE CAN DO SEVERAL THINGS. FIRST, BEGIN THE CALL FOR NEW
FEDERAL LEGISLATION. THE NEW MARTIN FEDERAL COMMUNICATIONS
COMMISSION AND BUSH ADMINISTRATION HAVE HEARD FROM BUSINESS AND
CONSUMER GROUPS ALIKE THAT THE 1996 ACT WAS BORN IN AN ANALOG AGE.
OVER FIVE YEARS AGO, ADAM B. THIERER, DIRECTOR OF TELECOMMUNICATION
STUDIES AND A MEMBER OF THE BUSH/CHENEY TRANSITION TEAM, WROTE THAT:
“THE TELECOM ACT WITH ITS BACKWARD-LOOKING FOCUS ON CORRECTING THE
MARKET PROBLEMS OF A BYGONE ERA HAS BEEN A FAILURE. INSTEAD OF
THOROUGHLY CLEARING OUT THE REGULATORY DEADWOOD OF THE PAST,
LEGISLATORS AND REGULATORS HAVE ENGAGED IN AN EFFORT TO REWORK
REGULATORY PARADIGMS THAT WERE OUTMODED DECADES AGO.”
SURELY THERE IS NEED FOR NEW TELECOMMUNICATIONS REFORM IN WHICH
EVERYONE HAS A STAKE. SUCH REFORM SHOULD NOT MOVE FORWARD, HOWEVER,
WITHOUT THE REAL STAKEHOLDERS, THE USERS AND CONSUMERS OF
TELECOMMUNICATIONS, ACTIVELY INVOLVED.
IT IS ALSO IMPORTANT THAT THE STAKEHOLDERS ORGANIZE THEMSELVES TO
EXPLOIT TELECOMMUNICATIONS, PARTICULARLY ACCESS TO BROADBAND
INTERNET SERVICES, AS AN ESSENTIAL INGREDIENT TO TRANSFORMING THEIR
BUSINESS OR SERVICE, AND TO THEIR ULTIMATE SUCCESS AND SURVIVAL. SHORT
OF MEANINGFUL REGULATORY REFORM, NEW ALLIANCES AND COALITIONS NEED
TO BE ENCOURAGED IN ORDER TO ENSURE ACCESS AT REASONABLE RATES AND TO
ENSURE MAXIMUM QUALITY OF SERVICES, WHICH COULD MANIFEST ITSELF IN
MANY WAYS.
THIS REQUIRES RECOGNITION, COMMITMENT AND ACTION—A SUSTAINED EFFORT
ON THE PART OF ALL THE STAKEHOLDERS TO EDUCATE A NEW GENERATION OF
USERS AND CONSUMERS AND CITIZENS ALIKE. UNLESS WE DO THAT, THERE WILL
NOT BE A “SECOND AMERICAN CENTURY,” BECAUSE THERE WILL NOT BE A
TELECOMMUNICATIONS UTOPIA OR ANYTHING NEARLY RESEMBLING IT. THE
HOPES AND DREAMS OF AN AMERICA IN THE INFORMATION AGE—A LEADER OF
THE NEW GLOBAL KNOWLEDGE-BASED ECONOMY AND SOCIETY—WILL HAVE
BECOME CAPTIVE OF THE GNARLED BUREAUCRACY AND POLITICS OF OUR TIME.
JOHN M. EGER, A TELECOMMUNICATIONS LAWYER AND VAN DEERLIN
PROFESSOR OF COMMUNICATIONS AND PUBLIC POLICY AT SAN DIEGO STATE
UNIVERSITY, WAS TELECOMMUNICATIONS ADVISOR TO PRESIDENTS RICHARD
NIXON AND GERALD FORD, AND DIRECTOR OF THE WHITE HOUSE OFFICE OF
TELECOMMUNICATION POLICY.
HTTP://WWW.GOVTECH.NET/NEWS/NEWS.PHP?ID=96535
ANNEX 7: GLOSSARY OF TERMS
Backbone
Bandwidth
BPS
The trunk routes of a network used as the path for transporting
traffic between different lower-level networks
The size or capacity of a communications channel to transfer
data, usually measured in bits per second (bps).
Bits per Second. The number of bits passing a point every second.
The transmission rate for digital information, i.e a measure of
how fast data can be sent or received. Often expressed as Mbps,
Broadband
DFI
Fibre optic cable
Gbps
Gigabit
International gateway
Internet
Connection Redundancy
ISP/ Internet Service Provider
Leased Line
Mbps
Megabit
Petabit
PSTN
PTO
Special Purpose Vehicle (SPV)
Terrabit
for Megabits per second for broadband links.
A high speed (multi-megabit) data connection
Development Finance Institution
A technology using glass fibre for the transmission of data. The
signal is imposed on the fiber via pulses (modulation) of light
from a laser or a light-emitting diode (LED). Because of its high
bandwidth and lack of susceptibility to interference, fibre optic
cable is used in long-haul or noisy applications. With advances in
modulation technology, international fibre cables are now usually
deployed with terrabit capacities.
Gigabits per second
One billion bits.
Technically, this is a facility to consolidate and share the cost of
international links and termination points. In practice it is a
licensing term used by many developing country governments
who only allow the state owned monopoly operator to carry
international traffic. In some countries, one or two additional
international gateway operators have been licensed, often the
mobile operators.
A global mesh of computer networks sharing a common
communications protocol called TCP/IP. The Internet's national
and international backbones are high-speed fiber trunk lines
owned by telecommunication companies. National Tier-1 service
providers aggregate data traffic and pass it over the backbones.
They work with local service providers who connect to customers
via digital links or modems.
Two or more connections via different network providers.
Redundancy ensures continued links to the Internet in the event
of one connection going down.
A generic term for organisations providing Internet services such
as web site hosting and Internet access. Internet Service/Access
Providers purchase bandwidth from other companies that have
direct links to the Internet. The Internet Service/Access Providers
in turn sell that bandwidth to consumers and businesses in smaller
chunks. For example, an ISP may take the bandwidth of a
45Mbps connection to the Internet and sell it to thousands of
56Kbps dial-up modem users.
A telecommunications circuit leased between two or more
locations.
Megabits per second. A unit of traffic measurement.
One million bits.
One thousand terrabits
Public Switched Telephone Network - the standard voice
telephone system.
Public Telecom Operator, usually refers to the incumbent stateowned monopoly operator, although technically, the distinction
between fixed line, cellular operators and ISPs is increasingly
blurred
A specially structured company designed to provide services at
cost to its shareholders.
One thousand gigabits