New Undersea Cables Brings Competition
| Posted in Broadband Internet | Posted on 05-09-2009
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THE battle for territorial superiority in the information and communication technology terrain now shifts to the provision of bandwidth.
The coming of SEACOM in July and the impending landing of two other undersea cables, The East African Marine System (TEAMS) and the East African Submarine System (EASSY), has seen telecoms and service providers rattle and outmaneuver each other with quick monopoly deals in what is seen as a lucrative industry.
But the hopes of an expectant public who looked forward to a sudden decline in bandwidth price rates (from about $3,000 to $100) is being scampered by these exclusive service provider contracts.
While SEACOM has boosted capacity and enhanced speed through more availability of bandwidth, the market still awaits a open declaration of price reductions by service providers.
Last week, WIOCC, a special purpose investment vehicle owned by a group of 12 African telecoms who also own 30% stake in the EASSY set to land at the coast in June 2010, was unveiled again indicating a new ownership paradigm.
Donald Nyakairu, the Uganda telecom chief legal counsel, explained that the convergence of these telecoms under WIOCC was to enable them access bandwidth cheaply from EASSY. utl is the only shareholder in WIOCC in Uganda.
“The more shares you have, the lower the price,” explained Nyakairu.
Experts now believe that when EASSY enters, service providers who want to buy broadband must go through the local shareholders of WIOCC and those who have direct shareholding in EASSY.
Most of the companies that combined to bring undersea fiber optic cables made huge investments into the venture. SEACOM and the upcoming EASSY project have borrowed money from the World Bank.
Market watchers say because these companies need to recoup their monies and pay off the loans, the last mile end user consumer may just have to wait a little longer for cheaper internet.
The issue of actual prices to the end user is also a matter that service providers and investors bringing the undersea fiber cables are dodgy about discussing.
EASSY bandwidth is designed in such a way that users do not pay upfront for the service.
“You will pay as you use, not pay upfront,” said WIOCC chief executive officer, Chris Wood.
Wood believes that in one way or the other, pressure will be exerted on the service providers and end user bandwidth prices will have to come down.
Nyakairu says within a month, utl, which is a market leader in data service, will revise its rates downwards.
In the meantime, uganda telecom has reportedly been forced to buy SEACOM bandwidth direct as a short term solution as it awaits the entry of EASSY in which the telecom has invested.
Information available indicates that because Infocom has a monopoly over cheap SEACOM bandwidth, it has been able to slash prices.
This has in turn forced other service providers who invested in the other cables that have not landed to connect to SEACOM.
“Infocom has been taking away our clients because they have a monopoly over SEACOM,” said a top telecoms executive.
The executive director of Uganda Communications Commission, Patrick Masambu, described the impending entry of EASSY as a major milestone for the industry and the country.
“Their (EASSY) efforts are not a coincidence, they are meant to take our economies forward,” he said.
The monopoly by service providers, the underdeveloped infrastructure, together with the huge financial undertakings of these companies might mean access to cheap internet is a distant dream.
source Individual.com – 3 September 2009