A study examining the impact the SAT-3 fibre-optic submarine cable has had on telecommunications in four African countries has found that the potential of this major cable has not been properly exploited. Instead, ownership of the cable by telecoms incumbents in the countries researched has reinforced their market positions.
The study, conducted by the Association for Progressive Communications (APC), set out to analyse the effect ownership of the South Atlantic 3/West Africa Submarine Cable (SAT-3/WASC) has had on the communications markets in Angola, Cameroon, Ghana and Senegal. It focused on the Africa section of the submarine cable running along the west coast of Africa down to southern Africa, with a specific emphasis on access and cost.
The study came to several conclusions. Firstly, the cost of Internet access to consumers has decreased over time. However, this has not been to levels anticipated by the market. Secondly, while the cost of international calls and international bandwidth has also decreased - both for SAT-3 and for the satellite alternative - this has also frustrated market expectations. Thirdly, the markets for Internet and international services in each of the countries have experienced an increase in the number of legal and grey market operators providing services, and the ensuing competition has had a positive impact on reducing prices. Fourthly, while a review of the telecom regulation and laws of countries such as Angola and Senegal gives the impression that their telecoms markets are (for the most part) fully liberalised, in reality, this is not the case.
With the exception of Senegal's incumbent Sonatel, none of the other signatories to SAT-3 studied as part of this research was privatised. These 100% government-owned entities often constitute a conflict of interest in the markets that they operate in and (usually) dominate, impeding sector reforms and constituting operational bottlenecks. In fact, in all the countries studied the SAT-3 signatory is the largest user of its capacity. In Cameroon, Camtel is estimated to use approximately 50% of Cameroon's allocated capacity, which corresponds to more than 80% of all capacity used in the country. The bulk of the remaining capacity is used by only a handful of large companies that are connected directly to the cable. Overall, with the exception of Ghana's incumbent Ghana Telecom, all other SAT-3 signatories studied in this research are legally the sole providers of international connectivity in their countries.
This scenario, in most cases, constitutes a reinforced monopoly, ie, state-owned operators who are sole providers of international connectivity in un-competitive markets face little incentive to offer fair access and prices to other operators and consumers. The APC study recommends fresh measures to liberalise the telecommunications markets in the four countries, with the specific aim of opening up access to SAT-3 to more operators, so that its real potential can be realised in Africa.
The study, which consists of a briefing that synthesises the results of the four country studies from Angola, Cameroon, Ghana and Senegal, plus the full case studies, can be downloaded from the first of the three links below. It will be translated into French and Portuguese shortly. The subject of SAT-3 and pricing regimes has been discussed on the Developing Telecoms website. Readers may wish to consult EASSy does it - will East Africa learn from West Africa? by Michael Schwartz (December 7, 2005) and Mobile Development in Africa by Gabriel Solomon of the GSM Association (July 7, 2006).