[AfrICANN-discuss] Regulation, monopoly, hinders Africa interconnection

Anne-Rachel Inné annerachel at gmail.com
Wed Aug 10 22:39:18 SAST 2011

Regulation, monopoly, hinders Africa interconnection
Rebecca Wanjiku
10.08.2011 kl 15:55 | Computerworld Kenya

Stringent regulation and taxation issues between countries have stymied the
drive for affordable connectivity as regional companies seek ways to offer
services beyond borders.
   Stringent regulation and taxation issues between countries have stymied
the drive for affordable connectivity as regional companies seek ways to
offer services beyond borders.

Telecommunications firms in the region have been accused of failing to lower
connectivity costs even after the entry of fiber-optic cables bolstered
infrastructure in the region. Carriers say, however, that cross- border
connection policies and vandalism of fiber cables have added to the cost of
laying infrastructure, keeping costs high.

Sub-Saharan Africa is now connected with six fiber-optic cables and
extensive terrestrial fiber, but landlocked countries have been unable to
enjoy affordable services because governments demand license fees, tax and
other fees before allowing companies to offer services from one country to
another, according to industry insiders.

"It may be because of lack of understanding of Internet business but some
countries insist that fiber operators crossing the border must pay license
fees, which is some cases is prohibitive," said Muriuki Mureithi, CEO Summit
Strategies, a research firm based in Nairobi.

Muriuki, who was presenting at the Africa Peering and Interconnection Forum
in Accra, Ghana, said that some governments insist that because the telco is
importing capacity from one country to the other, then it must attract
applicable taxes and Value Added Tax, which makes the cost higher than
satellite services.

In some cases, governments appoint a fiber operator and insist that any
transaction must pass through that operator. In Ghana, MTN has laid fiber to
the border with Togo but it can not offer cross-border services.

"We have laid fiber up to the border with Togo, we can not cross over and
offer services because Togo Telecom has not laid its fiber in readiness for
interconnection," said Richard Densu, Acting Executive, MTN Business, Ghana.

In West Africa, there is extensive fiber laid but interconnection costs are
still high, due to a lack of competition among cross-border link providers
as well as the high cost of national capacity and local hosting.

"There are few wholesale/carrier licenses issued and in some cases
discrimination against new entrants, including alternative infrastructure
providers," said Mike Jensen, an independent consultant, who has been
involved in setting up IXPs in Africa.

 In his presentation at the peering forum, Jensen said that alternative
infrastructure providers such as electric power or transport utilities are
at times unaware of market trends, charging higher prices when telcos want
to use the power or transport lines to lay fiber.

While regulation and taxation has inhibited cross-border fiber connections,
companies that can lay and sell fiber often have monopoly positions, keeping
prices high.

In Malawi, the cost of connecting Blantyre, the commercial capital, and
Lilogwe, the capital city, is $1,000 per megabyte, which has made it harder
for Malawi IXP to set up a POP in Lilogwe.

"Malawi Telecom operates the fiber link between Blantyre and Lilogwe and it
will be very expensive for the IXP to pay -- we are in discussions with
Malawi Telecom, which peers at the IXP, to explore ways to interconnect
affordably," said Paulos Nyirenda, coordinator at SDNP Malawi, a government
program dealing with Internet and information services.

Nigeria poses a unique case, since there is more than one terrestrial fiber
provider, yet the cost of interconnecting between Lagos and Abuja is more
expensive than the cost of international transit to London.

Nigeria also has the problem of "community boys" who are people from the
local areas that expect to be paid in order for the fiber to pass through
the area. Failure to pay might delay the project.

"We have had to change the location of Nigeria IXP to a street where all
telcos were able to interconnect, which boosted the content; however, there
are other costs that are not for seen, 'community boys' expect to be paid
for fiber to pass through -- this is a challenge," said Yen Choi, a board
member at NIXP.

 Nigeria may be unique with the challenge of "community boys" but issues of
regulation and competition in cross-border and inland fiber sales has
contributed to the high cost and may need political intervention for
connectivity costs to fall.
  *Keywords:* Telecommunication<http://news.idg.no/cw/cat.cfm?cid=0E37E5A4-17A4-0F78-318BA852B07EC808>
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