Africa’s missing link

Posted by Kalyan Medapati Monday, December 8th, 2008

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If we get the global submarine cable systems plotted on a world map, we come across one very harsh absurdity - how extremely well connected the world is, and how bizarrely disconnected Africa is.

Currently Africa has one submarine cable system running on the west coast of the continent - SAT3, which is then extended by SAFE to South Asia. And for the countries in central and eastern parts of Africa, expensive satellite links are the only means to connect to the world.

Having a submarine fibre access doesn’t seem to be doing much of good to West Africa either. The last time I checked the retail prices for international calling and internet access, prices in East African countries were not so much more expensive than the SAT3 enabled West African countries. The exclusive access to SAT3 cable system at the country level hands effective monopoly on pricing for the company that owns the gateway. And monopoly prices seem to blunt any positive effect of extra bandwidth that West Africa has with SAT3 - keeping prices there not so much different from Satellite dependent East.

There are of course more fundamental inhibitors for Internet penetration to grow in Africa, particularly poverty and illiteracy. But limited and expensive bandwidth is also a major factor. Depending on who I talk to, the international bandwidths in West African countries are priced anywhere between $2,000-4,000 a month for a 1Mbps access, whereas the prices are less than $400 for similar capacity in countries like India, and around $50 in the developed world.

So the solution to the problem is not just more submarine cables, but also competition. Fortunately, this finally seems to be happening. At least two cable systems are on their way to completion by mid 2009. A project called Main One backed by Lagos based Main Street Technologies will stretch from Portugal to South Africa providing alternative international gateway to the countries along the west coast of Africa. GLO submarine cable promoted by Nigerian Globacom is another project also to be completed in 2009.

Some optimistic projections say that the wholesale international bandwidth prices in West African Countries can fall below $500/Mbps a month once these cables are commissioned.

Meanwhile, on the eastern corridor of Africa, there are three major constructions under way - Eassy, Teams and SEA, connecting countries along the east coast to Middle East, Europe and India. Eassy, Teams and SEA have significant over lap in their foot print, setting the stage for competition. In addition SEA also plans an additional cable linking South Africa to Kenya. All these cable systems bring capacities ranging above 600Gbps each, where as SAT3 currently carries 120Gbps. This is a significant capacity to flow into Africa within next three years.

As for the landlocked countries in the hinterland of Africa, they need to be wired up to the submarine cables via their coastal neighbours. East African Back-haul system connecting Kenya, Uganda, Rwanda, Burundi and Tanzania to Eassy is one of the projects intended to achieve just that. And there are few other terrestrial fibre optic networks (and possibly satellite) being planned under “Umajonet” program led by NEPAD - an organisation functioning under African Union.

Apart from connecting people, communication networks create wider markets for farmers; provide access to banking systems; help education and medicine by linking remote classrooms and hospitals via broadband networks. It is obvious that better communication networks spawn substantial positive economic externalities. So ideally there should be deeply entrenched public interest in pushing for expansion and modernization of telecommunication networks. It’s not such a bad idea for governments to seek investments via international aid, financing from World Bank and possibly a long term bond issue to fund any such ambitions. East African Back-haul system is a good case in point. Financially backed by World Bank and IFC, the project is under construction. More of these sorts can be done by the Governments, particularly in the landlocked regions of Africa.

With all these new developments addressing Africa’s missing link, we can expect profound implications for the evolving structures of access networks and services in African countries in coming years. And perhaps more importantly how these technological innovations shape socio-economics in Africa is going to be interesting. This column will follow the developments.