The World Bank hopes the South African government allows all competing undersea cables to have equitable and reciprocal landing rights. It also says private sector competition is the way to reduce telecommunications prices.
The comment is in reaction to communication minister Ivy Matsepe-Casaburri's remarks that any undersea cable landing here must be majority South African-owned, and that her department was developing guidelines that would deal with this.
The World Bank, through its International Finance Corporation (IFC), in August, invested $32.5 million in the East African Submarine Cable System (Eassy). The project aims to lay a cable along the east African coast. It is the only region with a major population in the world not to be connected in this way and is heavily dependent on expensive satellite connectivity.
Mohsen Kahlil, director of the World Bank's global ICT department, says: "IFC respects that every government has the prerogative to set its own policies that will benefit its citizens. At the end of the day, we all have the same goal - to bring affordable high bandwidth connectivity to the people of Africa, as urgently as possible."
Kahlil says the World Bank hopes the South African government and other regional governments will adopt open access policy by allowing all competing cables to have equitable and reciprocal landing rights.
"This will bring about the best benefits to the consumers through access to affordable broadband. Such undersea cables should provide the much-needed missing broadband capacity and contribute to regional and economic integration," he says.
Equal treatment
The Department of Communications is championing the Nepad ICT Broadband Infrastructure Network (NBIN), which plans to lay its own submarine and terrestrial networks in the east African region. This project is being run under the auspices of the African Union, through the eAfrica Commission.
The Eassy cable was supposed to be part of it. However, the two projects are configured differently, with Eassy being a commercial consortium, while NBIN is based on a special purpose vehicle (SPV), with government representatives holding "golden" shares.
Both projects, and a third driven by Seacom, which is being funded via private-equity, say they adhere to the principles of open and non-discriminatory access, meaning that all customers are treated equally.
Money matters
The IFC financing for the SPV is in the form of a loan and not a direct stake. The SPV is essentially an investment company with a 40% stake in the Eassy consortium and represents many of the smaller African telecoms companies.
Most investors have stakes in the Eassy SPV, which in turn, owns 40% of the Eassy consortium. South African investors, including Telkom, Neotel, Vodacom and MTN, own about 27% of the Eassy consortium.
Other international development financing institutions have also extended such financial facilities. These include the European Investment Bank, the African Development Bank, the Development Bank of Southern Africa, Agence Francaise de Developpement, and the German government-owned development bank KfW.
Ready to begin
Kahlil says the construction contract with Alcatel Lucent has been signed and construction is expected to begin in the next few weeks. The cable is expected to be operational by the end of 2008 or early 2009 simultaneously in all markets.
As far as potential competition goes, such as the Seacom project, Kahlil says the IFC, as a development institution and firm believer in private sector competition, welcomes any new initiatives that will help to bring much-needed affordable connectivity to the people of Africa.
"Ultimately, we believe that competition is the best way of promoting investment and controlling prices," Kahlil says.
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