Why African governments need to listen to the case for "open access" to international communications infrastructure

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By Lisa Thornton for APCNews

SAXONWOLD, South Africa, 25 September 2008

Abiodun JagunAbiodun Jagun The African continent is one of the least connected – and when it is connected the costs tend to be higher than in most other parts of the world.

In May 2008, the Association for Progressive Communications released the results of the study – The Case for “Open Access” Communications – Infrastructure in Africa: The SAT-3/WASC Cable. The briefing report, written by Abiodun Jagun, summarises the results of the study, conducted in four African countries, Angola, Cameroon, Ghana and Senegal, which examined the impact of the SAT-3/WASC cable on communications markets.

The SAT-3/WASC cable is a submarine cable running from Portugal to South Africa, landing in a number of west African countries, including the four studied. It was built in 2002 by a consortium of communications companies in each of the countries that the cable lands, which were, at the time the cable was constructed, largely protected state-owned monopolies.

The study found that the SAT-3/WASC cable has not met its potential due to its ownership structure and the anti-competitive aspects of the agreement between the signatories. And although some regulatory reform has changed the market structure since 2002, the cable still remains under-utilised due to the commercial arrangement amongst the signatories.

In an interview with APCNews, Jagun clearly sets out recommendations to unlock the potential of the SAT-3/WASC cable and to increase competition in African markets, that eventually will enable the continent to reap the economic benefits of increased access to electronic communications.

Facilitating Competition

Countries must encourage and facilitate competition in their markets. Encouragement and facilitation, however, must be more than words. Most, if not all, African governments agree that liberalisation is the way to move forward. This, however, must be translated into action. Jagun makes some practical suggestions.

Governments must eliminate barriers to entry. One way to do this is to decrease or eliminate the high application and licence fees required to land and operate undersea cables. Jagun says that although there is not much information available on new construction of undersea cables on the west coast of Africa, it has been reported that one of the reasons for the relatively slow pace of progress is the high costs of obtaining necessary licenses to land and operate cables in certain jurisdictions.

Governments must, in addition to eliminating barriers, affirmatively encourage investment. One way to do this, used universally, is with tax breaks – perhaps tax holidays or deferments. There are many successful models that have been used worldwide.

Other mechanisms, although not explored in the study, might include facilitating the use of communications by supporting education, and content and application development, and consolidating government use of network infrastructure.

All of these measures, however, assume a regulatory framework that actually allows for competition. If a country is still protecting a monopoly, then first and foremost, those policies and laws must be amended.

Jagun emphasises that regulatory frameworks must allow access not only to the SAT-3/WASC cable, but also provide for non-discriminatory, cost-based access to landing stations, the right to land international traffic (both voice and data), and access to national backhaul infrastructure.

In the report, Jagun states that any intervention by governments or relevant regulatory authorities in opening up access to SAT-3/WASC must be directed at the “concentric circles” that reinforce the signatories’ influence in markets of each of the countries (the concentric circles being the submarine cable, landing stations, national backhaul and the local loop).

Maximizing Use of the SAT-3/WASC Cable

The second category of recommendations made by Jagun concern the use of existing infrastructure. Competition will eventually lead to better use of the SAT-3/WASC cable. In the meantime, however, access to the SAT-3/WASC cable needs to be facilitated. It seems clear from the results of the study that what is needed is regulatory reform.

The SAT-3/WASC cable was built in an era when there were protected monopolies in most nation states in west Africa. In creating the consortium to build the cable, it is understood that a contractual arrangement was agreed that only the consortium member from a particular country could sell access to the undersea cable in that country. So, even though markets have been liberalised in some countries, access to the SAT-3/WASC cable is still governed by the contractual arrangements creating a de facto monopoly in each country.

Now governments could void that part of the agreement, but warns Jagun this could discourage future investment in infrastructure in Africa. The most successful strategy is likely to be an effective regulatory regime – ensuring non-discriminatory, cost-based access, and ensuring that the information necessary to enforce cost-based access is made available by the signatories.

The Importance of Information

Jagun points out that the biggest hurdle to effective regulation is the lack of information available to regulators. Jagun’s briefing report opens with this – “The possession and control of information offers considerable strategic advantages”. The statement is true not only for individual companies, but also for countries and regions, such as Africa. Without the necessary information to regulate industry effectively, countries and regions will continue to suffer strategically. By allowing information to be locked up within a few companies, Africa will never be able to exploit the developmental advantages of accessing communications.

One of the key successes in African communications is the mobile communications market segment. That segment makes information about access freely available. The undersea cable market segment players would do well to learn from the successes of the mobile industry.

A Case for Open Access

So, is there a case for open access to international communications infrastructure in Africa? Absolutely, says Jagun, although an open access strategy will have to be effected in stages.

So what needs to happen to ensure “open access”? Jagun summarises that countries must facilitate investment in undersea cables, they must liberalise their markets to allow competitors to land and sell access to undersea cables, they must liberalise the national back haul market, and they must require open access to this new infrastructure.

But first, with regard to existing infrastructure, countries must require non-discriminatory access to the SAT-3/WASC cable at cost-based prices.

The need is clear. The will to enforce it must follow. The economy of African countries will not prosper any other way in this information world in which we live. Jagun says that governments might just have to take their losses in respect of monopoly profits, in order to enjoy the far greater benefits to their countries that open access will bring.

Read the briefing paper [pdf]

Access the “case studies”:http://www.apc.org/en/pubs/research/openaccess/africa/case-open-access-communications-infrastructure-afr

(END/2008)

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