Race for fibre optic cable heats up

Battle lines have now been drawn as major players jostle for space in the hitherto uncompetitive international submarine fibre-optic industry.

Notably, the industry has been witnessing growth since last December, with a number of projects on the cards. Whereas two cables are currently undergoing construction between China and the US, various cables are nearing completion between East Africa and India.

The result is that, all have now embarked on a race, with each jostling to be the first one to install a fibre-optic link connecting East Africa to the rest of the world.

But the most vicious competition revolves around connections to Europe, a destination for 85% of international bandwidth traffic in Africa.

Among the projects embroiled in the unprecedented competition are the controversy-riddled East African Submarine Cable System (EASSy), The East African Marine Systems (TEAMS) fronted by the Government of Kenya, America's Seacom and the Indian-based Reliance Consortium.

Fears, however, abound that despite the stiff competition, none of these projects will be launched on schedule. It is instructive that three vendors, namely Alcatel-Lucent, Tyco International and NEC, who manufacture undersea cables and are in possession of vessels to install the cables dominate the international submarine cable industry.

Reports have it that due to the high workload the three companies are currently handling, it is unlikely that the cable projects will be completed by the end of next year as promised by both EASSy and TEAMS.

It does not help matters that early this month, Kenya turned down an offer from Seacom, currently constructing an undersea fibre-optic cable connecting South Africa to Europe, India and the Middle East, to have a joint venture with TEAMS and reap from economies of scale resulting from shared facilities.

However, TEAMS, which was fronted by Kenya following frustrations with the ownership of EASSy, has been courting bad press over a US$2.7 million tender through single sourcing and shadowy owners.

In January, the Attorney-General's chambers raised alarm following the award of the survey tender to Tyco International without competitive bidding, contrary to public procurement regulations.

Hardly a month later, TEAMS, the US$110 million connecting between Mombasa and Fujairah in the Gulf of Oman, was in the news again when Solicitor General Wanjuki Muchemi blew the whistle upon discovering that records at the company's registry showed TEAMS had already been registered by two individuals namely, Jason Wachira, a businessman and Dickson Kahoro, a quantity surveyor.

However, it later emerged that the two individuals had been asked to reserve the name TEAMS in equally mysterious circumstances by the Communications Commission of Kenya (CCK, and also one of the project's implementing agencies).

Whereas the two individuals have since transferred the ownership of the project to the government, with Information and Communications Permanent Secretary Dr Bitange Ndemo and his Treasury counterpart Joseph Kinyua holding the shares on the government's behalf, questions are being raised as to why the government, having its own lawyers and investment advisers, opted to register the company in such mysterious circumstances.

EASSy, the first submarine cable project, has also been dogged by endless controversy over ownership and management. The 9,900 km (6,500 miles) EASSy network to be built on Dense Wavelength Division Multiplexing Technology (DWDM) is an initiative to connect countries of eastern and southern Africa via a high bandwidth fibre optic cable system to the rest of the world.

EASSy, considered a milestone in the development of information infrastructure in the continent, is expected to reduce unit costs for global connectivity, leading to increased profitability and lower tariffs and charges for end users.

Above all, EASSy is expected to facilitate inter-Africa trade that will lead to better communication in the continent. It is planned to run from Mtunzini in South Africa to Port Sudan in Sudan with landing points in six countries, and connected to at least five landlocked countries which will no longer have to rely on expensive satellite systems to carry voice and data services.

In September 2006, the Kenyan cabinet gave a nod to the establishment of its own under-sea fibre optic cable known as TEAMS.

An upbeat Information and Communications minister Mutahi Kagwe praised TEAMS' viability, saying that the government is not worried about the emerging competition.

"A government-sponsored feasibility study in this project clearly showed there is a positive business case for TEAMS, in spite of other parallel submarine cable initiatives such as EASSy and Seacom," he states confidently.

Echoing similar sentiments, Dr Henry Chasia, the Executive Deputy Chairperson of the Nepad eAfrica Commission says that having more fibre optic cables will increase competition and lower the cost of bandwidth even further.

Kagwe adds that the government is determined to see TEAMS succeed, noting that the successes of the Asian Tigers were based mainly on heavy investments in ICTs, particularly in the development of high bandwidth fibre backbone networks.

He is also confident that the project will be complete by December 2008, given that the government has already committed KES 1bn in the current financial year.

Besides, the government has already contracted Standard Chartered Bank as a lead arranger to assist raise additional funding from private sector and other sources.

On its part, CCK says the time for fibre-optic cable is ripe and there is no looking back. "We are determined in our efforts to fast-track access in international fibre-optic connectivity to meet the fast growing national requirement for affordable and high capacity bandwidth," says John Waweru, CCK Director General.

Interest in the construction of submarine cables has been growing for the last two years. India's Reliance Group, which failed to clinch Kenya's Second National Operator (SNO) licence after Dubai's VTEL was disqualified, has also promised to provide a third cable along the East African Coast, linking South Africa, Kenya, Tanzania, Mozambique and Madagascar. A few landlocked countries are also set to benefit. The cable, expected to cost US$1.5 billion is billed as the world's biggest network.

But given the controversy that continues to dog the projects and the fact that only three companies have cable-installing facilities, the deadline of 2008 promised to consumers remains a tall order.

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