SEACOM arrives but where is the cheap bandwidth

Three or four years ago when we first heard news of an undersea fibre optic cable and the benefits that would come with it, Internet users could not wait to enjoy the super speeds and uninterrupted access at a fraction of what they paid for internet services then.
On July 24, 2009, SEACOM, one of three undersea fibre optic cables at different stages of development on the eastern seaboard of Africa went live in Uganda, South Africa, Kenya, Tanzania and Mozambique.
Internet users were excited about the prospect of the super speeds, lower prices and all the nice things that come with enough bandwidth at lower prices than they pay today. What many users wanted to see was an immediate change in surfing experience because of increased speeds and a drop in the cost of internet services.
During the launch on July 23, Fred Moturi, the SEACOM Uganda representative said, "everyone should expect the cost of Internet service to come down as the cost of international bandwidth will become cheaper."
Until hitherto, communication operators in this part of Africa have relied on expensive satellite connectivity for telephones and the Internet.
As a result, supply of bandwidth has been constricted – a factor that explains the slow Internet speeds and high prices.
However, SEACOM and indeed all the other fibre optic companies expect ISPs to buy more bandwidth capacity as the price is expected to come down by about 80% what a megabit costs from a satellite provider.
Africa like the rest of the world is experiencing enormous growth in capacity demand due to the Internet’s ability as a medium for communication, providing information and entertainment and fibre connectivity is a necessity and not a luxury.
That is why SEACOM, a privately funded and three-quarters African owned cable is expected to provide bandwidth on an open access basis, allowing all operators to have equal access to the cable 1.28 terabytes per second (Tb/s) cable system that links south and East Africa to global networks via India and Europe.
Reaction to availability of high speed broadband has been mixed with users largely irked by the fact that prices have or will not move down immediately as was expected.
With only Infocom Uganda as the only ISP that initially signed onto SEACOM, users have also been unhappy about the fact that ISPs who supply them internet have reacted in a rather cold way to the availability of high-speed broadband.
“From my personal opinion, I see two reasons why we are not about to see a big drop in prices,” George Lule commented on the I-Network mailing list. “Seacom is insisting on long term contracts moreover with established ISPs.”
“That simply means that the market is not yet open enough to initiate a price war that will bring the prices tumbling down. It’s the same traditional players that can afford the type of commitment that Seacom is demanding and since they are the same players, why are you expecting a change in the game?”
Badru Ntege said the discussion on whether Ugandans will see a decrease in internet prices when optic fibre arrives has been had earlier but the difference is that only the rosy picture was painted.
SEACOM’s offer to operators is based on them buying bandwidth in units of 155 megabits (Mb), which is what is called an STM1 in technology speak.
And according to Ntege, operators are being asked to buy leases of capacity for prices ranging from $2million to $3.5 million and that they are locked in these contracts for as many as 20 years.
Ntege argues this does not make internet access cheaper in terms of price considering annual maintenance fees and other overheads that ISPs as businesses have to factor into their calculations.
Ntege did a quick calculation and he says that an operator who will take the option of leasing capacity worth $3.5 million for 20 years, they would accumulate annual maintenance costs of $210,000, which works out to be $17,000 per month for an ISP that has bought 155Mb of capacity.
Ntege suggested that the Uganda government needs to buy capacity from SEACOM, place it on the Uganda internet exchange where especially small ISPs would buy it at reasonable rates as opposed to them having to go to the banks to borrow to be able to purchase SEACOM capacity as it is.
“Ugandans would overnight end up with affordable capacity and this would actually enable a fair playing ground for small and big ISP's and ultimately mean that we all come out as winners,” Ntege said.
James Wire disagreed with Ntege saying it is competition alone that will bring down prices and reliability of service and not government intervention.
He said that government, which funds the semi-autonomous regulators, is more inclined to immediate revenues that accrue than the long term social impact of bridging the so called digital divide.
Paul Asiimwe said the ministry of ICT or the Uganda Communications Commission (UCC) needs to come out and tell the public the state of the existing private sector infrastructure in terms of distributing the data capacity that will be provided when ISPs sign up with the fibre optic companies.
“As a consumer, I would like to specifically ask UCC what it is doing to reduce asymmetry between prices that are being charged and the supposedly cheaper broadband,” Asiimwe said.
During its launch, Brian Herlihy, the chief executive officer SEACOM said the broadband network will open up opportunities for governments and business to use the network as a platform to compete globally and drive economic growth and enhance the quality of life across the continent.
But what does the fact that users in this part of Africa now have access to fibre optic connectivity as opposed to satellite connectivity that has been branded expensive?
President Jakaya Kikwete of Tanzania who presided over the switch-on function in Dar es Salaam couldn’t have put it any better when delivering the launch speech.
“With this technology in place, a doctor at Johns Hopkins hospital in New York will be able to supervise and direct a doctor at Muhimbili hospital through a complex operation that today requires one to travel to the US,” Kikwete said.
With a broadband connection, someone will be able to download an application form for a passport, fill it out and send it back to immigration. Within a few days, they will pick up their passport from the post office. It will reduce movement, contact with people and above all corruption.
For rural Tanzania, Kikwete said farmers will be able to sell their beans as far as President Hugo Chavez’s (Venezuela) kitchen.
Broadband connectivity means that Uganda will have no problems linking to medical and education institutions all over the world for telemedicine and tele-education."What is more important is that e-commerce and e-business will now be taking place in the region and Internet connectivity will definitely spread to rural areas because of increased capacity," Herlihy said.
Since its launch, Uganda’s largest ISP, Uganda Telecom has joined Infocom and Warid Telecom by purchasing capacity from SEACOM. Infocom Uganda holds SEACOM’s point of presence (PoP) tenancy agreement in Uganda and this did not initially go down well with other players in the market.