EASSy progressing well
Mohsen Khalil, Director for the Global ICT Department of the World Bank Group, told MyBroadband that the EASSy project is progressing well and that it is expected to be operational by late 2008 or early 2009.
Khalil said that EASSy has already signed a contractor agreement with Alcatel Lucent, and pointed out that he expects that everything is in place for the rollout of the cable to progress as anticipated.
Questions have been raised about the availability of ships – which are booked out well in advance – but Khalil is confident that Alcatel has a vessel available for the EASSy project.
Spanner in the works
The Department of Communication has however raised concerns that the EASSy cable may not be permitted to land in South Africa. Communications Minister Ivy Matsepe-Casaburri recently announced that only cables which are majority-owned by South African companies will be allowed to land on local shores.
This however creates an immediate problem for international cables like EASSy and SEACOM where there are multiple international shareholders. These international cable systems generally have multiple shareholders in various countries, which mean that the minister’s policies do not make much sense.
Matsepe-Casaburri’s ‘majority-owned policy’ creates the obvious mathematical conundrum that when two or more countries where an international cable must land have the same policy it will make such a cable unfeasible. Matsepe-Casaburri’s policy will in fact make the SAT3/SAFE landings illegal because this system does not have a majority local ownership.
Khalil describes Matsepe-Casaburri’s recent statements regarding landing rights as regrettable, especially since the EASSy cable is seen as an African initiative of which South Africa is a big part.
South Africa currently has a 27% shareholding in EASSy through Telkom, MTN and Neotel – the largest of any single nation. This – and an African shareholding of 90% – does not seem to be enough to satisfy Matsepe-Casaburri, and if Government blocks EASSy from landing in South Africa it will indeed be a knock to the project.
Competition is key
Khalil points out that supply and demand drive any commercial venture in the telecoms space, and the large demand for international bandwidth in South Africa it will be a big driver for high usage and lower prices on EASSy.
As a firm believer that competition is the key to creating a vibrant telecommunications environment, Khalil is perplexed as to why the South African Government would put obstacles in place of any cables that want to land in the country, especially if it is funded by industry players. “It will be a shame if competition will not be allowed in South Africa,” Khalil said.
While Khalil would not be drawn into speculation as to whether the Department of Communications may be reacting to their rumored failure to hijack the EASSy system, the World Bank director did say that they could not allow Governments to have a veto right in this commercial, open access venture.
Throughout the world it is competition which drove down prices and improved telecoms services, and “market forces must dictate price” Khalil said.
Prices will come down
While the Department of Communications seems to think that another cable system may not necessarily result in price reductions, Khalil said that current estimates will mean initial bandwidth price reductions of between 60% and 75%. Prices will however reduce even further over time.
With increased competition from other cable systems like SEACOM, the basic commercial principle of supply and demand may even result in far larger savings.
The previous President of the World Bank Group, Paul Wolfowitz, said that “Improving broadband connectivity will add tremendous public value for Africa. Low cost, high quality communications is essential for economic competitiveness.”
These words are often echoed by both the South African Government and Nepad, but its reluctance to fully support projects like EASSy and SEACOM raises questions about the commitment of these institutions to true competition in the telecoms space.
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