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03Apr
The World Bank’s Plan for Regional Open Access Infrastructure
In March 2007, the World Bank announced the approval of $164.5 million financing for Burundi, Kenya and Madagascar as the first tranche of the $424 million Regional Communications Infrastructure Programme (RCIP) for East and Southern Africa. CIPESA spoke to an RCIP team coordinated by World Bank RCIP Team Leader Laurent Besancon. What follows are excerpts:
Q. The World Bank has just announced financing of the initial tranche of $164.5 million. When will this money be available, and when is it hoped the projects it is going to fund will materialise?
The timing for the disbursement of the funds approved end of March may vary between countries covered by Phase 1 of the RCIP. It is nonetheless expected that disbursement will start in the course of July 2007. The activities financed for the Phase 1 of RCIP are expected to materialise over the next four years (Burundi and Madagascar) and next five years (Kenya), which is the planned duration of the respective projects. It is expected that the first two years will be particularly active based on the current momentum for swift implementation.
Q. Why are you financing the building of terrestrial fibre optics while the region does not have access to international fibre? What benefits will this create?
Based on the current number of international submarine cable initiatives aimed at connecting East and Southern Africa, as well as based on their advancement, it is fair to assume that the region will have submarine cable connectivity by 2009. RCIP supports countries in the region to ensure they will be able to take full advantage of that connectivity when it is available. RCIP also supports countries in accelerating terrestrial cross-border connectivity.
Q. Who will this money be given to in the various countries, and what exactly are they going to do with it?
Financing in Burundi and Madagascar is notably aimed at accelerating the roll-out of backbone infrastructure. This will be carried out in cooperation with telecommunications operators. Although the nature of the Public Private Partnerships will vary in both countries, the resulting infrastructure will be operator-run on an open access basis.
Financing in Kenya is notably aimed at financing (i) capacity purchase schemes for Government users, Universities (through the Kenya Education Network – KENET), and the Business Process Outsourcing industry; (ii) a government virtual private network and (iii) key eGovernment activities which are expected to increase transparency and quality of service provided to citizens and businesses.
Q. How does this programme feed into ongoing and planned fibre programmes in the region, both by governments and private entities?
The activities financed under RCIP, including the ones related to fibre connectivity in Burundi and Madagascar, have been designed by the respective Governments. Furthermore, the emphasis on leveraging investment by private entities will ensure consistency with their programs. As an example, five fixed and mobile telecommunications operators are participating in the formulation of the related public-private partnership in Burundi where activities are most advanced.
In Kenya, capacity purchase schemes financed under RCIP will take the form of capacity requirements being tendered out (i.e. any operator which can fulfil the capacity demand expressed can bid).
Q. Does this programme complement EASSy? Are they related at all?
While a separate proposal by International Finance Corporation (IFC is the private sector arm of the World Bank Group) is focused on the EASSy submarine cable, the World Bank-financed RCIP operation focuses on the terrestrial elements of the overall regional communications infrastructure and on activities generating demand for the infrastructure being put in place. As such RCIP and EASSy are complementary. It is important to note that RCIP will be equally complementary to EASSy, SEACOM, TEAMS or FLAG Africa, should any of these East Africa submarine cables materialise.
Q. Will the fibre built by RCIP financing be subjected to Open Access principles? Who will run this fibre, and how will the Bank ensure it is accessed at affordable terms?
One of the founding principles for World Bank financing under RCIP is indeed Open Access, broadly defined as an equal opportunity for operators to have unfettered access to given infrastructure or services under similar terms and conditions. It is expected that the principle of Open Access as well as cost-based pricing will be enshrined into the Public Private Partnerships arrangements referred to above.
Q. What is your take on the various marine cables (besides EASSy) which are planned on the east coast of Africa? Do you think all these planned cables will materialise, and if they do, will they all be feasible?
We do not expect all the current initiatives to necessarily materialise in the current timeframe but we note that the resulting competition means the various initiatives are racing to be the first to materialise. We believe this momentum is positive. It means the region will be connected by 2009. Should there be more than one cable, this would mean additional downward pressure on prices, which, from the policy angle, would be a welcome development.
Q. Why were Kenya, Madagascar and Burundi specifically chosen for this programme? And are there ways in which other countries in the region will benefit from the programme?
The countries participating in the first phase of RCIP World Bank operation (Kenya, Burundi and Madagascar) were chosen based on readiness and based on the timing of their official support request addressed to the World Bank (from their respective Ministries of Finance), which showed: (i) ownership of the activities beyond the Ministry of Telecommunications or its equivalent; (ii) the desire to work with the World Bank Group; and (iii) the activities to be financed are at the core of the country’s priorities. It is also worth noting that the three countries have subscribed to an open access platform and have advanced considerably in terms of ICT sector liberalisation and sector reform, both of which will enhance the impact of RCIP.
Overall, RCIP is open to other countries including: Angola, Botswana, Comoros, DRC, Djibouti, Eritrea, Ethiopia, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, Somalia, South Africa, Sudan, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe, provided these countries are eligible for World Bank financing at the time of request for support.
Q. In your view, what needs to be done to improve the uptake of Internet in East/Southern Africa? And besides this programme, are there other initiatives the World Bank is engaged in/plans in this regard?
We believe uptake of Internet in the region will be seriously boosted provided (i) the cost of Internet access is dramatically reduced; (ii) cost of personal computers available in the region is reduced; and (iii) the literacy challenge is tackled.
RCIP is targeting the cost of Internet access by contributing to solve the connectivity issue. For Burundi and Madagascar, RCIP will also finance domestic Internet Exchange Points so as to allow national internet traffic to remain national (instead of having to transit through Europe or the US, consuming expensive international bandwidth along the way). In Kenya, RCIP will also support the roll-out of “digital villages”, essentially a one-stop shop for e-government services and Internet access.
Q. One of the stated outcomes of RCIP is that “bandwidth costs are projected to decline more than tenfold from between USD 5,000-8,000 per month for 1 Megabit today to around US$150 per Megabit in 2008 at retail level, and to rapidly decline further.” What other initiatives are planned under RCIP to help achieve this?
RCIP will accelerate national infrastructure roll-out, encourage traffic demand and support eGovernment applications. The proposed RCIP is designed to: (i) accelerate the roll-out of the terrestrial regional and related national backbone infrastructure to extend the reach of submarine cable traffic to consumers in all the countries of the Eastern and Southern region, rather than only the coastal countries; (ii) finance purchase of capacity for use by Government and by other targeted users (schools, universities, hospitals, etc.); and (iii) finance related activities such as eGovernment.
We expect that the combined outcome of RCIP-financed activities, availability of submarine cable connectivity, similar connectivity efforts funded by other development partners, private sector entities and Governments will be the commoditisation of international bandwidth capacity.
Q. How do you plan on stimulating demand for the infrastructure which RCIP is putting into place?
RCIP support is tailored to the individual country’s request. For instance, in the case of Kenya, the Government would like to use RCIP to finance capacity purchase schemes for targeted user groups (Government users, universities, Business Process Outsourcing industry), as well as to accelerate the roll-out of digital villages. – May 2007
03Apr
Q&A with South Africa’s Communications Director General
Lyndall Shope-Mafole, Director General of South Africa’s Department of Communications, spoke to CIPESA on August 29 2006 about what her government is doing to increase affordability of telecom services, the East African Submarine System (EASSy) and the future of the SAT 3 cable. Excerpts:
Q. What is the South African (SA) government doing to enhance affordability of telecommunications services?
A. One of the objectives of our government is to make SA competitive and broaden participation of the poorest citizens in our economy. To increase competitiveness in the economy the cost of communication has to be much lower, so we want reliable communication that is affordable. From experience, the cost of communication is cheaper where there is infrastructure and where governments have taken a specific role to see that infrastructure is built and is affordable. Governments can do this using public funds, or tax exemptions.
For SA the challenge is that we are big geographically; we are not small like Singapore where you can put up fibre overnight and cover the whole country. Yet the state has to make infrastructure available. So we have licenced a Second National Operator (SNO), but even then unless you take a deliberate policy to ensure that the network goes beyond big towns, you will not cover all the country.
Q. How does EASSy fit into this picture, and how will you reconcile with private sector players that accuse governments and the New Partnership for African Development (NEPAD) of sidelining them in the EASSy project?
A. It is difficult to argue with people who have invested their own money but our role as governments is to set the policy framework under which the cable will be built. The telecom companies are not terribly thrilled with governments because the governments are saying this cable is not only for profits but has developmental objectives too. Besides, governments will assist to get funding for EASSy under the NEPAD framework. Even the smallest African telecom company can have equity to put in the network. That will promote competition and affordability of EASSy bandwidth.
Q. What benefits will the SNO bring to SA?
A. More competition often leads to lower prices. But the more important thing is that South Africans will have an alternative to Telkom and the mobile operators. It is in the exercise of choices that companies are then forced to attract people, reduce tariffs, and provide a variety of services.
We have already promulgated regulations to enable number portability. What this means is that a customer keeps their number regardless of the mobile operator they are subscribed to. If one is fed up with Cell C, or Vodacom or MTN, they cross to another provider but keep their number. The cost of communication can only go down if you have choices. And if it is easy to make for subscribers to switch, operators will strive to get more customers and to keep those they have. [The Independent Communications Authority of South Africa (ICASA) in early September decided that Mobile Number Portability (MNP) would take effect on November 10 2006 rather than on September 18 as had earlier been announced. Telecom operators had asked to be given up to October 30 or November 30 to ready themselves for MNP – CIPESA].
Q. Telecom companies also need to share infrastructure to lower their capital inputs.
A. There could be government regulations that there should be sharing, because it is rare that those who build their infrastructure allow others to use it. But in some areas in SA there are trials by companies to share infrastructure under the Digital Video Broadcasting venture though which television channels are received via cellphone. For this to be possible you have to build a network afresh. Companies are saying if government says a parastatal will build the network and then they are able to use it, they will be happy. Also, operators also increasingly realising that you don’t have to build five highways to Durban.
Q. What will happen after the monopoly which companies like Telkom SA have in SAT 3 ends next year?
A. Already some of the companies in SAT 3 have indicated that the NEPAD principles that we have adopted for EASSy should apply to SAT 3 at the end of the contract period. But they will have to consult on this. I am sure EASSy [bandwidth] will be a lot cheaper and they will want to benefit from that. The ownership protocol we signed [in Kigali on August 29) puts all those things in context and provides for cables on the continent being inter-linked. Government could also spell out what companies that were party to SAT 3 before we signed the protocol can do, and what those that wish to access it after the signing can do. I don’t envisage major problems in that regard. In SA we shall make sure our international infrastructure is harmonised with the new cable (EASSy).
03Apr
Q&A with SEACOM President On Fibre Rollout
Construction of the 13,700 km Sea Cable System (SEACOM, www.seacom.mu) is underway and expected to reach completion by June 2009. The cable will comprise two fibre pairs, connecting South Africa, Mozambique, Madagascar, Tanzania and Kenya, to India and Egypt, with an option for connectivity into the UAE and Djibouti. CIPESA/Fibre-for-Africa (www.fibreforafrica.net) spoke to SEACOM Ltd. president Brian Herlihy.
Q. Who are the partners in SEACOM and how much are they investing in the network?
SEACOM has publicly announced its investors, it is 75% African owned with Agha Khan Economic Development Group (IPS) out of East Africa, Venfin, Convergence Partners and Shanduka group from South Africa. The remaining 25% is owned by Herakles Telecom, our New York based development company. Herakles management is also the management of Sithe Global (developer and investor of the Bujagali Hydro in Uganda) and Global Alumina, a $4.5 billion alumina refinery in Guinea.
Q. What do you envisage will be the prices for SEACOM’s bandwidth?
SEACOM’s pricing is the equivalent of $100 to $170 per Mb/s per month.
Q. In what ways will SEACOM be competitive compared to other fibre initiatives in the region, such as TEAMS and EASSy?
SEACOM is the only cable offering a PoP (Point of Presence) to PoP solution for Europe and Asia. I believe this is a large advantage and the purchase of onward capacity is a difficult process. SEACOM understands that TEAMS has very competitive pricing to Fujairah. SEACOM believes that its pricing to Europe is more competitive than EASSy’s pricing to Sudan.
Q. How will SEACOM assure affordability of services, and how has it been responsive to NEPAD’s calls for Open Access?
SEACOM has structured each landing point as an open access unit. This has been accomplished in two formats. First, the capital cost of the landing stations is a sunk cost for SEACOM, in other words SEACOM does not seek to recover the investment costs of the landing station through co-location fees.
Secondly, each landing station is built with an additional building whereby customers can put their own equipment at the cable station. SEACOM has published its prices through many different forums. The pricing is an 80% discount over current satellite charges and is the only cable offering capacity directly from a PoP in Nairobi to a PoP in Europe or India without the requirement to purchase onward capacity.
Q. Would you say the fact that SEACOM is not a local company in the countries where it is going to land fibre places it at a disadvantage compared to other cable systems such as EASSy and TEAMS?
Depending on each country’s regulatory regime, SEACOM has either established a local entity to operate the cable or partnered with an existing cable. SEACOM will bring experienced operators to the cable to ensure that the local entities maintain world class quality service.
Q. What are your comments to the assertion that it is not viable for the eastern coast of Africa to have three competing cables? Do you see a need for the cables to cooperate in some areas rather than duplicate everything?
The current capacity demand on the East Coast of Africa is very small. However, we believe that the future demand will experience exponential growth. Having said that, the three competing systems would create a large over-supply, which could create a short-term glut.
Q. What is Herakles Telecom and where does it operate from?
Herakles Telecom is a development company set in New York. The management is the same management that works with Sithe Global (www.sitheglobal.com) and Global Alumina (www.globalalumina.com)
Q. There has been talk that Herakles staff were involved in the Africa One project which did not materialise, and that they collected money from African telecom, which money has purportedly not been refunded. How true is this, and how could it affect SEACOM’s operations?
I have noted the slander towards myself and JP (Jean Pierre de Leu) out of Kenya. I can confirm that both of us worked and spent many years with Africa ONE for the hope that this project would go forward. However, neither of us were principals of this project and left the project from 2002. It was our understanding that the only countries that made a deposit were Eritrea and Mauritania.
We understand that the sales person for Eritrea was able to help that money be returned. It should be noted that the Africa ONE name was sold by AT&T to a private investment group in 1998 and it was this group who was responsible for that money. ¬JP and myself have nothing to do with this entity. Since Africa (2002) I have worked as a developer on over $5 billion of projects in Africa, each of which have excellent reputations and large impacts in their respective countries, including Bujagali in Uganda.
– January 2008