SA Goverment Struggles with Private Investment, like SEACOM

Johannesburg

THE government's attitude to private sector investment in infrastructure is becoming ever more bizarre.

It complains that the private sector is not coming to the infrastructure party. But as soon as private sector operators show their willingness to invest billions of rands in any kind of network infrastructure that SA desperately needs, the government hastens to put obstacles in place that seem aimed at driving private sector investors away. Even more bizarre is that if the private sector comes along with huge sums to invest, in a new fuel pipeline or an undersea telecommunications cable, the government says, in effect: "No, don't you do that, we want it for ourselves." After all, why should local and international financiers pay when SA's taxpayers can be hit for the money instead?

The tangled undersea cable story is the latest instance of this peculiar approach to the world. There can be no question that SA and Africa desperately need more bandwidth to connect to the outside world, or that it needs to be a lot cheaper than what we have now if telecommunications costs in this country are to come down to anything close to an international norm.

And it is urgent: not only is the dearth of international bandwidth holding back the development of industries such as the call-centre industry, but there's also the 2010 Soccer World Cup to contend with, not to mention the prospect that SA may win the tender for the bandwidth-hungry international telescope, SKA ( square kilometre array).

The Rest @ AllAfrica.com

Neotel Promisses Cheap Broadband in South Africa After SEACOM Arrives

Jani Meyer
August 19 2007 at 12:04PM

Access to cheap broadband in South Africa is no longer a pipe-dream, after multi-billion-dollar deals were signed to construct underwater cables connecting the East Coast of Africa to India and Italy.

Neotel, the second fixed-line operator in the country, said the project would be up and running by early 2009 and it would slash Telkom’s prices.
Telkom controls the ADSL (Asymmetric Digital Subscriber Line) and the local loop that links homes to the telecommunications exchanges in South Africa.

The “connecting” plant of Neotel will be at Mtunzini in Northern KwaZulu-Natal.
The Seacom (Sea Cable System) is being developed at a cost of more than $550-million (R3,8-billion).

The Rest from Telekoms & Providers, South Africa

EASSy Cable costs more per Kilometer the SEACOM

Kenya: Eassy Investors to Pay More for Fibre Optic Cable

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Business Daily (Nairobi)

17 August 2007Posted to the web 16 August 2007

Okuttah Mark

Investors in the South Africa-fronted undersea fibre optic cable will pay the highest price for its construction, signalling the fact that accessing it may cost as much.
Telecommunications experts said construction of the East African Submarine System (EASSy) will cost investors Sh2,000 more per kilometre than the building of East African Marines System (TEAMS) and private sector-driven SEACOM.

People familiar with the matter told the Business Daily that while the laying of the EASSy undersea cable has been priced at $26,161 per kilometre, TEAMS and SEACOM will spend only $23,275 and $23, 076 per kilometre espectively.
The high cost of constructing EASSy is seen to be particularly burdensome to investors because the project managers recently declined a co-building offer from SEACOM- the South African firm that plans to build an undersea cable along the same route.
Such a partnership would have allowed each party to own individual fibre pairs on the desired route while making significant saving through sharing of key facilities such as repeaters, landing and power stations.

Senior telecoms industry officials have previously indicated that it would cost EASSy customers $500 mega bites a month in bandwidth- more than twice the cost of bandwidth in India where the cost stands at $200 mega bites a month.

Simon Olawo of the EASSy secretariat says the cost of laying out cables is mainly determined by the distance covered, equipment installed, the number of landing stations and tax payable to respective governments.

Plans by EASSy initiative to construct and operate a submarine fibre optic cable along the Eastern coast of Africa has faced a number of hurdles, including disagreement over the mode of access.

The cable, which will cover the longest distance, is expected to have an initial equipped capacity of 20 gegabits per second and an ultimate capacity of 320 gegabits/second. It will run from South Africa to Sudan through Mozambique, Madagascar, Tanzania, Kenya, Somali and Djibouti.
TEAMS, a partnership between the Kenya government and the United Arab Emirates telecom company Etisalat, will connect Mombasa to Fujairah in the Gulf of Oman. The total cost of the project that is expected to be complete by end of next year is $110 million.

The Government has 40 per cent stake in the project while Etisalat has 20, leaving the other 40 per cent to local private investors. During this year's budget, the Government allocated Sh1billion for the project and has been on an agressive hunt for private investors.

The International submarine cable industry has been growing at unprecedented pace. Several projects are under way, with two being undertaken between US and China while the other is between US and Australia- with three projects for Africa and two from the Caribbean to US.
With ongoing number of projects and taking into account that only three companies have the ability to manufacture and construct the cables, namely Alcatel, NEC and Tyco, meeting aggressive time line for some of the project such as Teams might be difficult.

Business Daily (Nairobi)

Neotel Gets Exclusive Seacom Landing Rights

Neotel has secured the exclusive landing rights for the $550 million (R3.8 billion) Sea Cable System (Seacom), which aims to reduce internet costs by 80 percent.Seacom is a privately funded cable that will connect south and east Africa to Europe and India.The Seacom cable system routes will pass along the east coast of Africa and through the Red Sea before terminating in Italy. In addition, it will land in Mozambique, Madagascar, Tanzania, Kenya and the United Arab Emirates.

Construction starts later this month for the cable to be operational in 2009. - Thabiso Mochiko, Johannesburg

Source: Business Report South Africa

Bandwidth Cost Estimations Resulting from Seacom

[ Cape Town ITWeb, 6 August 2007 ] - East coast cable company Seacom will charge 80% less for bandwidth compared to Telkom, it says.This, if realised, could knock the socks of SA's incumbent telecommunications operator and government-sponsored rival Infraco.

Seacom, a privately-financed venture, is surveying the planned route for its cable that should connect all countries on the East African seaboard to Sicily, in Europe, and India to the international telecommunications grid.

• It says its cable will have an initial capacity of 1.28Tb, four times as much as planned for rival Eassy (East African Submarine Cable System).
• Working out the exact comparative pricing proposed by Seacom, with potential rivals such as Telkom and Infraco, is difficult because all players keep this a closely guarded secret. However, Seacom representatives have been canvassing local Internet and telecommunications providers to gauge their reaction.

Connectivity Pricing

According to an industry source who has attended one of these briefings, Seacom is offering connectivity from Johannesburg to Sicily on the basis of an indefeasible right of use (IRU) – the exclusive right reserved for a client.

• It also offers a lease for STM-1, the standard telecommunications unit for a 155 Mbps chunk of bandwidth – rising to STM-4, through to STM-64, amounting to 10Gbps.
• “If a client takes the equivalent of STM-64 on an IRU that is based on 20 years of ownership, this works out at R475 per megabit per month,” the source says.
• Telkom's equivalent fee is about R100 000 per megabit per month, but the source cautions this is not an exact comparison.“
• Whatever the rate, it seems as though Seacom will be pegging itself far lower than Telkom and even that of Infraco, which has so far indicated it will be only 20% cheaper than Telkom.
• This should knock socks off,” the source says.
• Seacom has admitted it is looking to supply bandwidth at 80% cheaper than prevailing market rates and says:
• “The Seacom [investors] believe there is a large amount of pent-up demand in the market.
• They expect a fundamental shift in how international bandwidth is procured and expect that the actual volumes will be substantial enough to encourage and support a low and declining bandwidth price.”

SA Government Response

• Industry and government have become increasingly critical of the high bandwidth costs associated with doing business in SA.
• This is the major reason given by the Department of Public Enterprises for the creation of Infraco, which will become a broadband wholesaler to rival Telkom.
• Hearings into the law that will govern Infraco are under way in Parliament. The department's rationale is that the situation is the result of a market failure at the facilities level and that a strategic intervention is required by government to rectify the issue.
• Among Infraco's projects is to lay two 3Tb cables – one to Brazil and one to Europe.“Eighty percent of our Internet costs are because of international connectivity charges,” says Raven Naidoo, chairman of independent telecommunications consultancy Radian.
• “Say an individual subscriber's costs are 10c per megabyte, and Seacom's pricing is right, then the cost should go down to about 4c. Infraco's pricing will mean that it will only go down to 8c.”
• However, whether SA would be allowed to enjoy the benefits of a private cable company is open to question, as the Department of Communications seems to be lukewarm to the idea.
• Communications department director-general Lyndall Shope-Mafole stated last week the country would give priority to the Nepad Broadband Infrastructure Network, that guidelines for landing foreign cables have not been drafted, and that it feels private ventures would not necessarily reduce the cost of telecommunications.
• Seacom believes its model meets the requirements of an open access, non-discriminatory cable system based on a low-cost, high-volume business. Related story: Telkom price cuts take effect

See the rest @ IT Web

Four Fiber Cable Projects are Coming Into Africa

There are four projects to build an international fibre cable to connect the east coast of Africa. There’s EASSy, the Kenyan Government’s TEAMS, Flag Telecom…and the fourth project? Sithe’s SEACOM has been working quietly on the fringes to put together a privately funded “carriers’ carrier” project. News has been filtering out about it but Sithe’s Brian Herlihy made his first public presentation of the project at a United Stated Trade Development Agency Africa conference ten days ago in San Francisco. Russell Southwood spoke to him about what SEACOM will be and how it will work.

There is much more here from Ballancing Act