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Closing the Digital Divide

Just before Christmas, I was honored to present an overview of Global Crossing’s experience in the planning, deployment, and operations of submarine cable systems to the Development Fund Commission of the European Union in Brussels.

In its efforts to reduce poverty in Africa, the European Council defined a strategy to speed up and provide continued support for the African infrastructure. The EU-Africa Partnership was established in 2006. This Infrastructure Partnership encompasses many elements that are considered standard by most of us: Some 42% of the 900 million Africans do not have access to safe water; 20% of Africans have no access to electricity; Less than 6% have access to internet.

In a five year period from 2008 onwards, the European Development Fund will invest €5.6B (US$7.3B) in the African infrastructure. A significant percentage of this amount will be for the expansion of African communications networks and international connectivity. This will greatly assist in closing the Digital Divide, as mentioned by former United Nations Secretary-General Kofi Annan in his opening speech of the World Summit of the Information Society (WSIS) in Tunis in November 2005.

Despite the lack of access to electricty, Africa is the world’s fastest growing market for mobile telephone services. In remote areas, smart entrepreneurs have even started battery-loading services for people with mobile phones that do not have electricity at home. Mobile phones have taken over from wireline services, for which an infrastructure is basically absent outside the main cities. The mobile penetration rate, which I estimate to be around 16% at present, is still massively behind Western-European countries, where penetration in some cases exceeds 100%. Fixed phone penetration is less than 5%. You can find details on the African market at the African Regional Office web site of the ITU.

The growth of the mobile market offers great potential to boost business, but Africa still lacks the international bandwidth to support this growth. To stimulate new business as well as to handle international traffic, key improvements need to be made in the interconnection between African countries and between Africa and the rest of the world. The two main options are: Expansion of satellite links and/or submarine fibre cables. Due to high latency problems with satellite connections (up to 600 ms), submarine connections are the preferred choice for voice and internet services, while satellite connections are selected for broadcast-type services.

Some of you may remember the Africa ONE project, which involved the installation of 39,000 km of submarine fibre cable around Africa. The project implementation, for which Global Crossing was selected for project management and undersea construction, was planned to start in 1999 and be completed in 2002. The project eventually was abandoned late 2001 when international funding evaporated.  At the time, a main reason for Global Crossing not to participate as either investor or owner in this project was based on the absence of deregulation in African countries as well as on difficulties reaching the many landlocked nations. Experience from GC’s other submarine projects in Europe, US, South-America, and Asia is that the full growth potential only emerges once deregulation comes into effect.

Mid-2002, the SAT-3/West African Submarine Cable (WASC) with a capacity of max 120 Gbps was taken into service between South Africa and Portugal. The SAT-3 cable is a club cable owned by a consortium of over two dozen incumbents. Besides in South-Africa, the SAT-3 cable lands in eight other West-African countries. Unfortunately, like many other consortium cables, the SAT-3 cable system suffers from cooperation issues between the club cable owners. At present, few countries have benefited from its existence.

In 2003, an East-Africa Submarine Cable System project (EASSy) was initiated for linking eight East-African countries to the rest of the world. The completion of this new club cable system is targeted for 2Q07: Less than six months to go. According to the EASSy website, some 23 carriers have signed the project MOU. According to other sources, however, the protocol approving the construction of the EASSy cable has only been signed by twelve carriers up to now. Completion of the project before 2009 is unlikely. We can further expect that this club cable will face similar problems as exist with the SAT-3 system today.
EASSy will not provide a direct connection of these eight East African countries to the rest of the world, but will only connect them to the SAFE and SeaMeWe-4 consortium systems. A significant reduction of capacity costs for the consumer is therefore not to be expected. A total investment of around US$300M has been indicated at present for EASSy. In July 2006, the European Investment Bank approved its participation in this investment.

When trying to gather data from the EASSy website in preparation for my presentation to the EC, I immediately perceived the problems that burden so many of these projects: Both content and data access are poor. Many web pages and images do not exist or cannot be loaded due to hosting problems. This phenomenon already shows the desperate need for many African countries to get better internet connectivity. For a future investor, however, it will be difficult to understand why a US$300M project does not offer a professional looking website. Most high school students on this side of the digital divide will be able to create such sites in a few days and have them hosted by an ISP for under US$50 per annum.

My advice to the Development Fund Commission of the EU, and to any other investor in projects like EASSy, is to add the learnings from SAT-3 high on their 2007 Resolutions List: Especially the aspects related to open access to these scarce resources deserve detailed study.  The unique situation that exists in Africa (e.g. the virtual absence of a fixed in-country telecom infrastructure) requires maintaining a careful balancing act between telecom regulation, deregulation and incumbent privatization. A direct connection of EASSy either to countries with a deregulated telecom enviroment and/or to privately owned submarine cable systems is a must. The funding should further be governed by tight control structures to ensure that aid actually ends up where it is needed most: With the African enterprises and consumers. From my perspective, this is the only way that Africa will be able to cross part of the digital divide in the next five years.

Gert Nieveld 2007/01/02


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