Nepad, Eassy partnership ends in divorce

New Partnership for Africa’s Development (Nepad) and the consortium building the East Africa Submarine System (Eassy), a high-capacity undersea fibre-optic cable, have gone their separate ways after serious disagreements regarding the best approach to delivering much-needed international telecommunications links to countries in Eastern and Southern Africa.

Communications department director-general Lyndall Shope-Mafole said in a press conference, jointly hosted this afternoon by her department and the public enterprises department, that she was no longer aware of what was happening with Eassy as neither the SA government nor Nepad were still involved with it. (photo available at FMTech)

Instead, she said, Nepad, which had always planned to facilitate the construction of an elaborate backhaul network through Eastern and Southern Africa to complement the Eassy submarine cable, will now build its own submarine cable in competition with Eassy.

The cable will be funded by governments and by telecom companies in countries which are signatories to the Nepad broadband protocol, which governs how the networks will be controlled and managed. SA and 11 other countries are signatories to the protocol, the draft of which has drawn derision from the companies backing Eassy. They say the protocol undermines market liberalisation, instead centralising control of telecoms in governments’ hands.

“What is important to recognise, when we began with all of this, the idea was to have one cable,” Shope-Mafole said. “Unfortunately, the companies did not agree with what we were proposing, which is understandable. There is now no government involvement in the Eassy cable. [Eassy] might continue; it might not continue, I don’t really know.”

Asked specifically by FM Tech whether government would prohibit Eassy from landing in SA, despite the fact that Telkom is a signatory to the Eassy supply agreement, Shope-Mafole said no decision had been made in that regard. But, she said cryptically: “We are not envisaging an Eassy cable landing in SA.”

Shope-Mafole would not rule out the possibility of government barring Eassy from terminating on SA shores, reflecting the extent to which relations have broken down between the SA government and the companies behind Eassy. Shope-Mafole denied that a rift had emerged between African countries along ideological lines about the best way to decrease the cost of communications on the continent.

Shope-Mafole would also not say whether Seacom, a separate cable project backed by US private equity giant Blackstone and another rival to Eassy, would get the go-ahead to land in SA. But, she said, there would be news in this regard in about a fortnight.

Government, meanwhile, is forging ahead with plans to lay two high-capacity cables under the Atlantic Ocean. The first, which will connect SA with cable systems in Brazil, is expected to go live in 2009. The second, for which no timeframes have yet been set, will connect SA with Europe.

Both cable projects, which will be built by state-owned telecom operator Broadband InfraCo, will cost in the region of $700m to deploy, according to public enterprises director-general Portia Molefe.

The plan is that the west coast cables will connect to the proposed Nepad-backed cable along Africa’s east coast.

Government, through InfraCo, will provide funding for the west coast projects. But the hope, Molefe says, is that some funding will come from telecom operators in SA. However, the state’s equity in InfraCo will not be diluted under any circumstances.

“We have had significant interest [from companies interested] in taking equity in InfraCo but we have resisted it,” Molefe said. “If you have private partners, they need to have rates of return that are high enough to fund excess capacity, so then the fundamental reason for investing … would be taken away. Private investors require much higher rates of return.”

In justifying the state’s involvement in building the networks — despite a surfeit of private investors wanting to build cables — public enterprises deputy director-general Litha Mcwabeni said market liberalisation is “not sufficient” to ensure a dramatic fall in prices. “State intervention must be understood in its strategic context … to reduce the cost of [in-country] backhaul and international links.”

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First published on FMTech

 

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Nepad, Eassy partnership ends in divorce