Johnson I. Ejimanya is a one-man pony express. Walking
the exhaust-fogged streets of Owerri, Nigeria, Ejimanya,
the engineering dean of the Federal University of
Technology, Owerri, carries with him a department's
worth of communications, some handwritten, others on
disk. He's delivering them to a man with a PC and an
Internet connection, who converts the missives into
e-mails and downloads the responses. To Ejimanya,
broadband means lugging a big bundle of printed e-mails
back with him to the university, which despite being one
of the country's largest and most prestigious
engineering schools has no reliable means of connecting
to the Internet.
Owerri is a sprawling town hacked out of the jungle in
the heart of the oil-rich Niger Delta region formerly
known as Biafra. What galls Ejimanya and his colleagues
is that Owerri is barely 50 kilometers from the oil city
of Port Harcourt and Nigeria's recently inaugurated
5-Gb/s undersea fiber-optic connection to the outside
world. Since the cable landed in the commercial capital
of Lagos in December 2001, virtually nothing has been
done to hook up the many businesses, schools, and other
entities that could benefit from it. And so for Ejimanya
and millions of other Nigerians, the high-speed,
always-on Internet enjoyed by people in developed
countries remains a distant dream.
"If you look at Africa, it's got wonderful
telecommunications facilities around it now and some
serious capacity to the outside world," says William H.
Melody, managing director of LIRNE.NET, an international
telecommunications policy think tank. "But communication
within Africa has not developed, primarily because of
the barriers and restrictions protecting special
interests"—typically, the government-owned and
-operated telephone monopolies.
It's hard to overestimate the stifling effects of lack
of affordable, fast Internet access in a country like
Nigeria. Developing countries that are still incapable
of providing even one-tenth of the landline telephones,
per capita, of a developed country are now faced with a
potentially much more serious deficiency, one that they
must rectify to integrate themselves into the global
economy. Unlike the telephone, which primarily benefited
the business and social spheres, the Internet cuts an
enormously wider and deeper swath through the
educational, medical, intellectual, and cultural spheres
of a society.
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The Internet is a window to the outside world in
places where most international information is scarce.
For business people, it can mean the difference between
thriving and subsisting. For engineers and researchers,
it can propel a career that might otherwise languish in
a backwater. For doctors and their patients in a country
wracked by AIDS and other scourges, the impact of easy
access to good medical information might be tallied in
lives saved, or at least prolonged.
Of course, it's the same story in developing countries
from Laos to Ecuador, Afghanistan to Zambia. But among
countries on the wrong side of the so-called digital
divide, Nigeria, Africa's most populous country, now
commands attention in a way few others ever have. The
reason is a mouthful—the US $650 million, 120-Gb/s
South Atlantic Telecommunications Cable No. 3/West
African Submarine Cable/South AfricaFar East
(SAT-3/WASC/SAFE) Cable.
For many of the sub-Saharan countries where the cable
lands, it is the first high-capacity undersea
fiber-optic cable to connect them to the rest of the
world. Inaugurated into commercial service in April
2002, it was heralded by development officials and
others as the beginning of a new chapter in the tortured
story of African economic and social development. A
happy ending would have Africa skip industrial
development and go straight to the Information Age, with
customer-service call centers and software-outsourcing
businesses providing educated Africans a reason to forgo
overseas opportunities and take good paying jobs at home.
But so far, at least, this feel-good story remains
unwritten. In the aftermath of 9/11 and the war in Iraq,
Africa's petroleum resources are garnering far more
attention than its human resources from countries
looking to decrease reliance on Middle Eastern oil. And
Nigeria, a straight shot across the Atlantic to the
United States and already that country's fifth leading
supplier of oil, seems an attractive alternative. It's
no surprise that when President George W. Bush visited
Nigeria last July, a subsidiary of the Shell Group was
the only company using the SAT-3 cable in Nigeria.
While Shell employees blaze the Web, ordinary
Nigerians, who earn on average less than $1 per day, pay
$1 per hour to slog the Net at any one of the hundreds
of cybercafes that have sprung up all over the country.
For those fees they get a satellite connection that
crawls along at less than 2 kb/s during the day, with
rare bursts of 28 kb/s late at night.
The average Nigerian does not even know the cable
exists, I soon learned during a two-week visit last June
to Nigeria and South Africa. I talked to dozens of
students, entrepreneurs, government bureaucrats,
engineers, and professors to hear how cheap, reliable
high-speed Internet access could change their lives for
the better and how that potential, for many reasons,
remains unfulfilled.
What's gone wrong? Only a combination of factors could
thwart an opportunity as far-reaching as this one. In
Nigeria, any accounting has to start with the
bureaucracy and incompetence of the state-run telephone
monopoly, Nigerian Telecommunications Ltd. (Nitel) and
its government overseer, the Nigerian Communications
Commission, both in Nigeria's capital, Abuja. Together,
the two organizations hold the authority to create the
sort of infrastructure that could make the cable
accessible to ordinary Nigerian citizens, students, and
businesses, in addition to large multinational
corporations.
For now, the cable is perhaps one of the world's most
underutilized technological resources. Designed to
handle 5.8 million phone calls simultaneously, the cable
traces Portuguese explorer Vasco da Gama's 15th-century
journey from Portugal to India. The SAT-3 section of the
cable stretches 14 341 km from Sesimbra, Portugal, to
Melkbosstrand, South Africa, passing through eight west
African countries along the way. At Melkbosstrand the
SAT-3 hooks up with the 13 104-km SAFE portion, which
goes through Reunion and Mauritius islands, splitting
into two branches that terminate at Cochin, India, and
Penang, Malaysia. The cable is owned by a consortium of
36 companies, including many African national
telecommunications incumbents, among them Nitel, which
contributed nearly $50 million to the cost of the cable,
and Telkom SA, Pretoria, South Africa, which chipped in
$85 million [see map, "Out of Africa"].
Internet traffic from Africa has increased fivefold
over the last four years. But according to Alan Mauldin,
senior analyst at TeleGeography, a research division of
PriMetrica Inc., of Carlsbad, Calif., a year after the
SAT-3 cable was "turned on," the continent's total
Internet capacity was only 3.226 Gb/s: 1.351 Gb/s
between Africa and the United States; 1.875 between
Africa and Europe. With more than 13 percent of the
world's population, Africa accounts for only 0.2 percent
of the world's total international Internet capacity.
While TeleGeography pegs usage on the cable at less
than 3 percent of its design maximum, the consortium
sees the glass fiber as half full. "The usage is already
beyond expectations, not only for South Africa, but the
whole of western Africa," says Kobus Stoeder, acting
executive, Global Capacity Business, International and
Special Markets Segment for Telkom, the administrator of
the cable for the consortium. "The only aspect that may
be causing some growth stagnation is that in many of
these countries, the backhaul network is not quite
accessible or may not be fully in place or may not have
the capacity to support international access."
In other words, it's one thing to lay a fiber-optic
undersea cable and bring it to shore; it is quite
another to create the internal infrastructure—be it
fiber-optic cable or wireless broadband radio
nodes—necessary to distribute its bandwidth.
Where it Exists at
all, the Nigerian telecommunications
infrastructure is dilapidated. Even the main switching
station of the SAT-3 in Lagos is in poor shape, and it
isn't even two years old.
Accompanied by members Oyewole Funso-Adebayo and Tunde
Salihu, I venture to Nitel's headquarters in the Ikoyi
district of Lagos, a hulking black and blue concrete
building that looks like a decrepit stadium. The
elevators don't work, so we climb four flights of stairs
to the vast, well-appointed but sweltering office of
engineer O.B. Okusanya, the deputy general manager of
the Lagos International Gateway. Okusanya steps out from
behind his huge desk and marches 10 meters down a red
carpet to greet us.
Funso-Adebayo presents a memo from a Nitel
administrator authorizing my visit. After a few
suspicious glances at me, Okusanya leads us back
downstairs to the first floor and down a long, dank
hallway lined with broken chairs, blue paint peeling
from the walls and ceiling. Finally, we reach the main
switching station for the SAT-3 in Nigeria. From here,
at least in theory, high-bandwidth connections will feed
out to the rest of the country.
As the door creaks open, an engineer abruptly stops
playing PacMan on his PC and stands to greet us. A dozen
others emerge from around the racks of switching
equipment and from an adjacent room where several
meter-tall batteries stand in rows like soldiers at
attention, ready for action the next time the power
fails. This could happen at any moment, thanks to the
stunning ineptitude of the National Electric Power
Authority, the state-owned power monopoly.
Alcatel SA, Paris, France, brought the cable ashore in
December 2001 [see photo, "Networking Nigeria"] and
left the Nigerians to their own rather limited devices
to get this station up and running. A dearth of funds,
equipment, and experienced telecommunications engineers
meant the cable didn't start handling traffic to and
from Nigeria until April 2003, two months before I
visited.
Two wavelengths are available at Lagos, each 2.5 Gb/s,
though only a tiny fraction of one is being used now.
Each 2.5-Gb/s bundle is subdivided into 16 synchronous
transport mode 1 (STM-1) frames, each capable of
handling 155 Mb/s, which can be broken down into smaller
units for sale to customers. According to U.I. Nwokocha,
chief of transmission, as of last June Nitel was using
78 percent of the capacity of only one of the 13
available STM-1 frames. The sole customer was Shell,
which takes advantage of Nigeria's lone major
fiber-optic connection, running from Lagos to Port
Harcourt, where Shell has oil and gas production facilities.
The paucity of paying customers for the cable
certainly isn't due to lack of interest; Nwokocha says
Nitel gets inquiries every day from companies that want
access to the cable. But the same problems that delayed
the cable from going into service—lack of funds,
equipment, and experienced engineers—has retarded
Nitel's ability to meet demand for high-speed Internet
access, not to mention plain old telephone service. In
40 years of monopoly control of Nigeria's
telecommunications, Nitel managed to put in only 500 000
landlines to serve 130 million people. Combine those
shortcomings with Nitel's inability to market its
services, and it's little wonder that the company has
blown such a major opportunity.
Realizing that Nitel's managers were squandering a
national resource, the Nigerian government took two
steps—it introduced competition, and it brought in
management help for Nitel. In 2002, a private company,
Lagos-based Globacom, paid $200 million for a license
from the Nigerian Communications Commission to become
the second national fixed line and wireless operator.
The company, which started wireless operations last
August, has promised to lay 10 000 km of fiber-optic
cable to distribute SAT-3 bandwidth. As the second
national operator, Globacom is guaranteed access to
SAT-3, but it must negotiate the logistics and pricing
of that access with Nitel.
To fix Nitel, the government last year brought in
Pentascope International BV, in Amersfoort, the
Netherlands, to manage the company. Pentascope is
cleaning up the books, trying to collect tens of
billions of naira (140 naira is US $1) from delinquent
customers, and, according to Nwokocha, planning a
promotional campaign around the SAT-3.
For now, though, those few Nigerians who even know
about the SAT-3 are frustrated by their inability to get
on it. Perhaps no one is more impatient than Aloy Chife,
the president and CEO of portal and application service
provider Socketworks, based in Lagos, and a former
information technology (IT) director of the collapsed
Houston-based energy-trading giant Enron Corp.
Chife's office is decked out with a complete Wi-Fi
network and his own satellite connection to a server
farm in California, a paltry 256 kb/s for downloads and
an even tinier 64-kb/s pipe for uploads. Socketworks
doesn't rely on the inept National Electric Power
Authority but on its own 16 diesel power generators.
Chife dreams big: starting with his company, he wants to
nurture Nigeria's neophyte IT industries into an
outsourcing powerhouse to rival India's.
"The idea is to leapfrog industrial development. We
haven't even scratched the surface of IT in Nigeria,"
says Chife, who also points out that the markets for PCs
and peripherals are saturated in the developed world and
that Nigeria is still virgin territory.
Unfortunately, the ability of overseas companies to do
business in Nigeria hinges on gaining access to the
SAT-3, the same fat pipe that could make Socketworks a
global competitor. And Nitel has done little to install
fiber so businesses in Lagos can get on the broadband
bandwagon. Chife had to pay $13 000 to install his own
satellite system, including dish, modem, and router, and
monthly fees of around $1000. "This country could
blossom, but the cost of the Internet is too expensive,"
he says.
Cutting those costs won't be easy. Any attempt to
distribute SAT-3 bandwidth will be hindered by a host of
challenges, including huge investment overhead. With
interest rates for business loans of 25 percent,
companies prefer activities that will turn a quick
buck—like prepaid wireless, which since 2001 has
brought telephone service to more than three million
Nigerians through Econet Wireless Nigeria; Globacom; MTN
Nigeria Communications Ltd.; and Nitel's cellular unit,
Nigeria Mobile Telecommunications Ltd. (M-Tel).
"There can be explosive growth in the Nigerian telecom
market," says Titi Omo-Ettu, a telecommunications
consultant and director of Executive Cyberschuul, an IT
training center in Lagos. "But without the commitment to
long-term infrastructure development, the whole sector
could come crashing down," as customers lose confidence
in their providers' ability to give them quality service
at reasonable prices.
In Lagos, there's an Internet cafe on just about every
block, and in the busy streets, warbling polyphonic ring
tones compete with honking horns. To get a taste of the
telecommunications situation out in the country,
Funso-Adebayo and I hop a flight to Owerri in what used
to be called Biafra, where a bloody civil war claimed up
to two million lives in the late 1960s.
From the Owerri airport, we share a cab with E.C.
Iroakazi, an engineer contracted by M-Tel and MTN to put
up cellphone base stations in the area. As the beat-up
Peugeot snakes along shattered roads that meander
through thick brush broken by the occasional palm tree,
we borrow Iroakazi's cellphone to call Funso-Adebayo's
roommates, some of whom cannot afford rent but still
manage to scrounge up enough cash for prepaid mobile
service.
Owerri proper pulsates with people in cars and on
motorcycles, others on foot hurrying through the
streets, some in and out of sidewalk shacks that offer
the use of a mobile phone for 30 naira per minute.
Hundreds of people jam the huge market in the town
center, while others frequent the numerous, bustling
Internet cafes [see photo, "Southwest by West"].
Dawn breaks the next day with Funso-Adebayo knocking
on my hostel room door to take me on a walk around
suburban Owerri before our scheduled visit to the
Federal University of Technology (FUTO) [see photo,
"Networking
Nigeria"]. As we stroll down the rutted
red-mud streets, he points out a house that had been set
ablaze by an angry mob just a few years ago after it got
out that it was sheltering a cult, known as the Otokoto
Seven. After being convicted of ritual killing and
trafficking in human flesh, the seven men had been
sentenced to death by hanging just months before; three
policemen had also been condemned in 2002 after being
convicted of killing the informant who had brought the
Otokoto's crimes to light.
My unease intensifies as we approach the ruined house,
and the armed policeman standing near its front gate. We
get about 10 meters past him and then a shot rings out,
a thunderclap that echoes off the surrounding houses
with a sharp crack. I nervously peer over my shoulder
and then at Funso-Adebayo.
"He's just showing us that he has bullets in the gun,"
he reassures me.
Nigerians like Funso-Adebayo manage to deal with many
dangerous, disturbing things over which they have little
control: random gunshots, debilitating malarial fevers,
constant power outages, endemic corruption, the
occasional military dictatorship, and perpetually
retarded economic and technological development.
But sometimes the frustration can be too much to bear,
especially when there's someone there to listen.
"As a nation, we are saying we want to catch up, but
how can you catch up when your government spends less
than 5 percent of GDP on education?" asks Dean Ejimanya
when Funso-Adebayo and I finally arrive at the FUTO
campus.
In his dark office, which has not had power for two
days, Ejimanya explains his improvised e-mail system. He
also tells us that each of the 13 departments in the
school of engineering has a single computer, which 8000
engineering students use at one point or another to do
projects. The one in Ejimanya's office is partitioned to
handle Windows 98, 2000, and Linux. It also holds the
student database. And there's no backup. "If the hard
drive goes, that's it," Ejimanya sighs.
Given the anger many Delta residents harbor for the
oil companies that pump crude out of their region and
leave behind nothing but environmental devastation, it
would probably be a good public relations move for one
of them to invest what amounts to pocket change to buy a
few computers for FUTO. Ejimanya says several companies
have broken promises to donate computer labs and
Internet access. Indeed, a few weeks after I returned
from Nigeria, Sola Omole, an official in Nigeria of
Chevron Texaco Inc., New Orleans, La., assured me that
the company had committed $1 million to build a computer
center there. But as of December, it was still just
talk.
The Introduction of
Competition in the Nigerian market in the
form of both Globacom and a booming, though illegal,
trade in voice-over-Internet protocol (VoIP) at
cybercafes is already forcing Nitel to compete. In
December the company announced that it would take
advantage of reduced bandwidth costs afforded by its
SAT-3 connection to lower its international calling
rates by 50 percent.
The benefits of even the limited competition now
starting in Nigeria still elude consumers in Africa's
most potent economy, South Africa. Here
telecommunications is dominated by the former state
monopoly, Telkom. The International Telecommunication
Union, Geneva, Switzerland, estimates that the average
South African would have to pay 40 percent of his
monthly income for Telkom's ADSL (asymmetric digital
subscriber line) broadband service, while a person in
the UK would pay about 1.5 percent of her monthly income
for the same bandwidth.
South Africans can blame their lack of affordable
high-speed Internet access on their elected government.
The government's partial ownership of Telkom has long
stifled efforts to introduce a second national operator
to compete in fixed-line voice and data services.
Critics contend that the South African government's
ownership position damaged the credibility of its
telecommunications policy and regulatory process, and
made potential international investors think twice, or
not at all, about taking on Telkom in a market rigged in
its favor.
The irony is that Telkom would be a formidable
competitor even without a public policy warped to its
advantage. Much as Nigeria turned to Pentascope for its
management expertise, in 1997 the South African
government sold 30 percent of Telkom to a strategic
investor with managerial control, Thintana
Communications LLC, a joint venture of SBC
Communications Inc., Austin, Texas, and Telekom Malaysia
Berhad, Kuala Lumpur.
In financial terms, the deal has been a bonanza. Under
the guidance of an SBC management team, the bloated
Telkom shed tens of thousands of jobs to become an
efficient, and very profitable, telecommunications
dynamo. In March 2003, the South African government
cashed in some of its chips by selling off 27.7 percent
of the company in an initial public offering, keeping a
39.3 percent stake.
Private investors and the South African government
have been richly rewarded. For the fiscal year ended 31
March 2003, basic earnings per share increased 33.5
percent; the price per share has more than doubled since
the company went public.
Telkom's monopoly has had far-reaching consequences
for all South Africans. On the one hand, the company has
invested billions of rand in Africa's most
technologically sophisticated telecommunications
network. On the other hand, the company has kept such
tight control of bandwidth that to many ordinary South
Africans, Internet access is still as precious as the
country's famous diamonds.
Keeping watch over that valuable resource are the
engineers I meet in Melkbosstrand, a quiet seaside
suburb about 30 minutes drive from Cape Town. This is
where the SAT-2, SAT-3, and SAFE cables all land and
feed into Telkom's cable station. There's a national
switching room here, too, through which flows all of
South Africa's overseas voice and data traffic.
After working together for a decade, Karl Jones and
Eddie Croeser, both submarine cable specialists, have an
almost marital rapport, and they rattle off facts about
the SAT-3 cable like proud parents talking about their
very precocious child. The SAT-3, like the SAFE and the
SAT-2, has only two fiber pairs conducting all that
bandwidth through 191 submerged repeaters spaced about
80 km apart. Jones and Croeser monitor the SAT-3 and
SAFE underwater plant—cable, repeaters, and branching
units—from this station to check for problems like line
breaks [see photos, "Keepers
of the Cable" and "Maintenance at Sea"].
Croeser shows me one workstation where he could view
all the other cable stations. The fiber-optic cable
needs light of a specific wavelength pumped into it to
excite the erbium atoms in optical amplifiers, which in
turn emit the right wavelength when the erbium atoms
fall to a lower energy state. More bits require more
power. I asked to see Lagos, which, no surprise, was
putting about 1/1000 the amount of power into the line
as Melkbosstrand.
Clearly, technology and the money to pay for good
engineers and a world-class infrastructure aren't the
problem in South Africa. Cost is. That's why Christo van
der Rheede keeps his 64-kb/s ISDN modem under lock and key.
Van der Rheede is principal of the Silversands Primary
School in Kuilsrivier, a township formerly known as
Plastic City, in Cape Town, South Africa. He shows me
his setup in a locked room at the back of the computer
lab. The lab was paid for and installed by a
two-year-old project called Khanya. Silversands is just
one of some 300 Khanya schools in the Western Cape
district that by the end of 2004 will be similarly
equipped with new Pentium 4 and Celeron PCs running an
array of educational software packages.
Van der Rheede keeps the Internet locked away for good
reason. Access costs 400 rand per month (about US $60)
and the cost of usage over the bare minimum would have
to come out of another Silversands program's budget. So
every day van der Rheede comes to this glorified closet
to download e-mail, which he then distributes via the
school's internal network.
For now, the Silversands lab and the school's limited
Internet connectivity are enough to give kids a huge
confidence boost and substantially improve their math
and science test scores: in 43 Khanya schools surveyed,
the number of students earning A's more than doubled in
2002 over 2001, while the number of those earning
passing grades jumped 42 percent. By increasing
students' chances of moving on to university, the
computer lab has come to be seen as a community asset,
the kind of resource that nonwhite South Africans were
denied for so long under apartheid.
Van der Rheede would like nothing better than to get
all the kids more access to the Internet. That might
happen in the next few months, but students will
probably surf the Internet via satellite.
0.2% of the world's internet Traffic comes from africa
Géza Z. Fagyas, a technology consultant to the Western
Cape school district, told me he's so frustrated with
Telkom and its high prices that the Western Cape school
district is now negotiating with satellite provider
Sentech (Pty) Ltd., Honeydew, South Africa, which has
promised a deep discount and a minimum of 64 kb/s to
each of the district's 1500 schools.
"There's a lot of multimedia that we'd like learners
to have, but that's horrendously expensive on dial-up,"
says Fagyas. ADSL is a wonderful alternative, he says,
but Telkom restricts traffic volumes as well as
bandwidth. Telkom's DSL is limited to 512 kb/s, for 800
rand (about $120) for business customers per month.
Telkom also caps downloads for its 11 500 ADSL customers
at 3 GB per month, after which a customer is switched to
a slower connection in the 14.428.8-kb/s range. By
contrast, business DSL (1.5 Mb/s) in the United States
is about $90 per month for three times the bandwidth and
no volume restrictions. Prices in a few countries, such
as Korea and Canada, are even lower.
Such high pricing in the face of dramatically reduced
bandwidth costs is "almost criminal," according to
LIRNE.NET's Melody, who is also a professor at the
Technical University of Denmark. "It is crippling for
these people. And it's not just a failure to take
advantage of an opportunity to develop a sector which
can then develop the whole economy, they're actually
destroying value," he contends. "Education is a good
case in point. In order to get any minimal connections
at all, people have to make enormous cutbacks in other
things they do. The whole business of e-education turns
out to be a bit of a farce under these conditions."
Wally Beelders, Telkom managing executive for
international and special market services, counters that
bandwidth prices in Africa will never be in the same
league as those in Europe and the United States. "It is
all a question of scales of economy," he says. "In
Europe and the U.S.A. there are hundreds of millions of
users who share the high-cost layout of submarine
cables, whereas in Africa a much smaller number have to
pay for vast infrastructure to get connected to the
Northern Hemisphere."
Telkom's restrictions cost users money in other ways.
Most notably, it blocks the use of VoIP services. Across
Africa and around the globe, businesses and consumers
have been finding ways to turn otherwise expensive
telephone calls into data packets, which can then be
transmitted over the Internet at much lower cost or even
free. But as South Africa's telecommunications monopoly,
Telkom is the only company licensed to carry voice
communications, and current legislation prohibits
Internet service providers and value-added network
services companies from providing VoIP services. Such
services could provide stiff competition to Telkom by
driving down costs for both local and international
calls, a potential boon for companies trying to imitate
the international outsourcing success of India.
Telkom can hardly be blamed for taking advantage of
the monopoly powers granted by the South African
government. The five-year government-mandated monopoly
position was supposed to end on 7 May 2002, and with it
a number of restrictions on competition, but the
communications minister has so far refused to sign the
necessary documents. This prodigious cash cow has left
the government with a clear conflict of interest. How
can the government regulate a company in which it has a
vested, and very lucrative, interest and at the same
time license a second national operator, in which it
will own at least a 30 percent stake, to compete with
that company?
The short answer is: not very well.
In the last year, the South African ministry of
communications twice rejected consortia that were vying
to be the majority shareholder in the second national
operator the ministry was supposed to license three
years ago, claiming that their international partners
didn't have the wherewithal or commitment to compete
with Telkom. That left the three other shareholders, two
of which have already made substantial infrastructure
investments, swinging in the wind: Nexus Connexion in
Marshalltown, a holding company that represents
traditionally disadvantaged (nonwhite) South African
investors; Transtel in Joubert Park, a unit of the state
transportation monopoly; and Eskom Enterprises (Pty)
Ltd. in Johannesburg, a unit of the state energy
monopoly.
Transtel and Eskom have between them invested more
than 1 billion rand ($150 million) in building
fiber-optic infrastructure along railway and power lines
in anticipation of operations beginning last year. Their
investment lies idle, a cost in terms of cash and lost opportunity.
Now those investments might just pay off. After months
of indecision, at the beginning of January, the ministry
of communications gave two groups it had previously
rejected, CommuniTel and Two Consortium, each a 13
percent stake in the second national operator. The South
African government will hold onto the remaining 25
percent stake. The new company is expected to launch
fixed-line, Internet, and cellphone service sometime
this year.
Even as South Africa launches a second national
operator, the ultimate effect on the market could be
minimal at best, says Melody. History shows managed
duopolies don't improve a country's telecommunications
landscape, he says, especially when the government is a
significant owner of both companies.
Still, it's important to remember that the new South
Africa wrote its first telecommunications law in 1996.
Given time, many South Africans believe market
liberalization will eventually come to a country that
has undergone a remarkable transformation in the one
decade since its first democratic elections.
Indeed, fast, affordable telecommunications is the
linchpin for the economic and social transformation of
Africa as a whole. Good telecommunications can make
other basic services—health care, finance, clean water,
electricity, housing, transportation—run more
efficiently and cost effectively. But before those
benefits can ripple through the broader economy, serious
reforms must take hold all over the continent.
"What's happening in Africa isn't any different than
what's happened everywhere else," Melody concludes.
"Very often it takes a decade or more for people to
learn from good and bad experiences and to gradually
bring about and effectively implement the necessary
policy changes."