Darth Garth
Executive Member
- Joined
- Oct 29, 2004
- Messages
- 6,207
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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 $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% to 75%. 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.
Fiber 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% 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.
http://www.ralden.com/C1/EASSy/default.aspx
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 $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% to 75%. 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.
Fiber 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% 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.
http://www.ralden.com/C1/EASSy/default.aspx
