Essaying doubts about Africa's new EASSy cable
Following our very interesting discussion in class on the spread of the Internet in the developing world, and the effects thereof, I wanted to highlight this interesting news article about the deployment of a new fiber-optic cable project, funded by the Africa Development Bank, that will connect 22 East African and landlocked African countries to one another and to the rest of the world through high-quality Internet services. The cable is expected to transform telecom services for 250 million Africans.
While West Africa is relatively well connected by undersea cable, the Indian Ocean’s eastern African seabed is the only one in the world without a submarine fiber-optic cable, forcing the region to rely heavily on limited and expensive satellite links. As a result, countries along the coast and in its hinterland have some of the highest communications costs in the world (about 2000 to 3000 times that of developed countries).
The East Africa Submarine Cable System (EASSy) project is a joint initiative of 25 African communications providers. To me, this is very significant, because by controlling the “backbone” cable (which is what the undersea cable is), these companies can be independent of the bigger international backbone providers, who generally charge local companies exorbitantly for connecting to their cable - a problem that many developing and underdeveloped regions face. Further, from the article,
“Unlike previous cables that were built on the “closed-club” structure, EASSy is built on a Hybrid SPV Development model. This model will allow smaller operators to participate in the cable consortium at reduced individual entry investments. EASSy also adheres to the main development objectives of “open access”, “non-discriminatory” and “affordable pricing.”“
All good things. So one would think that everyone was happy about this. Apparently not. Ethan Zuckerman (who we read in our first class, sending emails to his buddy in Mongolia, while enlightening us on the intricacies of Internet protocol) writes in his blog that cartel-like behavior among the investors in the undersea cable project will keep broadband services overpriced. From his blog -
“Why’s the connectivity likely to be so expensive? Because EASSy is currently planned to operate financially with the same cartel structure used for the West African SAT-3 cable. While this high-capacity cable connects over a dozen nations with moderate to high bandwidth demands, it’s very sparsely used. Why? Because the owners of the cable - former state-owned telecom companies in Africa and major international telcos - have agreed to fix the prices for bandwidth so high that most African entrepreneurs choose to use expensive, slower satellite connections than pay the extortionate monopoly rents demanded by the SAT-3 owners.
Those of us who hope that the revolution in voice connectivity we’ve seen on the African continent, brought by entrepreneurial cellphone companies, spread to data connectivity can’t help but be frustrated that EASSy is based on such an uncompetitive structure. Telecommunications companies have been suing the SAT-3 consortium for competitive access to their cable; early evidence suggests that the SAT-3 pricing structure is preventing businesses from using the capacity of the cable. Why would EASSy try to replicate the same bad situation?”
This clearly reinforces a point that was made in class - internet connectivity can do wonderful things, but a strong government, infrastructure and transparent regulating bodies are absolutely essential for ensuring that businesses operate in the interests of the customers. This is true not only for the internet, but for all new technologies and services. A very non-libertarian view, no doubt, but that is the truth in much of the underdeveloped world.