Opening the tap
Internet billionaire and Ubuntu Linux leader Mark Shuttleworth has likened SA’s reliance on the submarine telecommunications cable system that connects the country with Europe and Asia to “sucking bandwidth through a straw”.
The analogy is apt. Telkom’s tight control over access to Sat-3 and Safe has harmed the economy. Sat-3 links SA to Europe via West Africa while Safe links SA to India and Malaysia. The result of Telkom’s monopoly control has been high international bandwidth costs, which have stunted the growth of broadband in SA and undermined the development of new, information-based businesses.
Thankfully, things are changing – slowly. This month, second network operator Neotel gained access to capacity on Sat-3, though the company won’t say how much bandwidth it has been able to secure. Neotel has been able to access Sat-3 because its controlling shareholder, Tata Communications, is a member of the Sat-3 cable consortium – it has been since the cable was built seven years ago. Neotel has also been able to get the necessary licence from the Independent Communications Authority of SA to provide international communications links.
But Sat-3, which has a design capacity of 120 Gbit/s, is likely to become saturated in the next few years, making the construction of new cable systems essential. At least one such cable, a project backed by a consortium called Seacom, looks set to come online by mid-2009.
Seacom’s Sea cable, which has a design capacity of 1,3 Tbit/s (11 times Sat-3’s), will run from Mtunzini on the KwaZulu Natal north coast to Mumbai in India and Marseilles in France via Mozambique, Madagascar, Kenya and Tanzania.
Seacom’s investors include Industrial Promotion Services (25% stake), which is an arm of the Aga Khan Fund for Economic Development; Venfin (25%); and Herakles Telecom (25%). The system also enjoys the backing of Cyril Ramaphosa’s Shanduka Group (12,5%) and Andile Ngcaba’s Convergence Partners (12,5%).
Half of the equity is held by South Africans, meaning the consortium complies with a controversial proposed government policy document on equity ownership in undersea cable systems. The department of communications initially warned that cable systems landing in SA would have to be majority-owned by local companies. But that requirement came under heavy fire and the department has since softened its stance, insisting instead on majority African ownership.
The policy could still put the kibosh on another proposed cable system, the US$280m East Africa Submarine System (Eassy). The department says Eassy’s control structure does not comply with the proposed policy, which must still be published for public comment. Eassy, which enjoys the backing of the World Bank, is meant to connect SA with countries in East Africa and the Middle East, but if it is unable to secure landing rights in SA, the feasibility of the project becomes less clear.
Meanwhile, the $650m Seacom cable looks set to form part of a broader cable project, being developed under the auspices of the New Partnership for Africa’s Development (Nepad). Nepad’s e-Africa Commission, which is leading the project, wants to promote the construction of a $2bn system that encircles the continent. The new cable, if built, will have an eventual capacity of 3,8 Tbit/s, enough to serve SA’s needs well into the next decade. But funders must be still be found for the project, which communications department director-general Lyndall Shope-Mafole admits would be one of the most ambitious such projects undertaken worldwide.
Communications minister Ivy Matsepe-Casaburri hopes that a project to build a cable system connecting SA with Europe and Latin America, led by state-owned Broadband InfraCo, will be incorporated into the Nepad mega project. The project is being spearheaded by the department of public enterprises, whose minister, Alec Erwin, is understood to have come up with the idea out of frustration at the slow pace at which the communications department was dealing with SA’s high-priced telecoms.
Erwin has won backers – Shuttleworth among them – but has been criticised in some quarters for increasing the state’s role in the sector. Analysts blame the state’s investment in Telkom – it has 39% – for the slow pace of telecom liberalisation. If government tries to protect InfraCo in the same way it has shielded Telkom, it will worsen the problem.
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