Monday, January 19, 2004

SAT-3/WASC - Nigeria's Well-Kept Secret

Here's an IEEE article from a few months back discussing the fact that Nigerians are still starving for high bandwidth, low latency connections to the rest of the world, even though the SAT-3 undersea fiber-optic cable, with 120Gbps capacity, has long been completed.

20 June 2003, Lagos, Nigeria–It lies 7 meters beneath the sand, protected by four concrete walls, painted sky blue but topped with concertina wire, and surrounded by snack shacks and concession stands. It’s the sealed access point to the so-called SAT-3 sub-sea communications cable, now the country’s major broadband link to the outside world. The terminus is covered by a concrete slab, strewn with garbage and an omolangidi female idol carved out of driftwood. But most Nigerians have no inkling of the cable’s existence–even those who make their living around the landfall site, on this beach on Victoria Island, one of four islands that make up the sprawling city of Lagos, with some 13 million inhabitants.

Built and laid at a cost of US $640 million, the submarine SAT-3 fiber-optic cable is 14 350 km long and links 9 African countries. It connects to the wider world just outside of Cape Town, South Africa, via a cable that terminates in Cochin, India, and Penang, Malaysia. SAT-3 has a capacity of 120 Gb/s, enough to carry 5.8 million phone calls simultaneously, and the link to Nigeria was established here on Victoria Island a year ago. Yet after a year’s availability, it has just one confirmed customer, Shell Oil, with another oil company, Chevron, showing some interest.

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In a story published earlier this week in Nigeria’s largest-circulation newspaper, The Vanguard, communications columnist Reuben Muoka claims that recently re-inaugurated Nigerian President Olusegun Obasanjo is considering wresting control of the cable from NITEL and handing it over to Globacom, the second national carrier. (Muoka is a stakeholder in MTS, a small private telephone company here.)

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Confronting its critics, NITEL talks a good game. U. I. Nwokocha, director of transmission for the NITEL International Submarine Cable Gateway, speaking with IEEE Spectrum, said plans call for NITEL to "launch Nigeria into ISDN [integrated-services digital network]" for applications like telemedicine and inter-univerisity communications. Nwokocha said a public awareness campaign is planned for the SAT-3, which he said no one here knows about–except, apparently, all those Nigerians who are frustrated by their inability to get on it.

Yet Chife and Muoka are scarcely the only ones skeptical about whether NITEL ever will be able to truly deliver. Titi Omo-Ettu, a telecommunications consultant, a director of the IT training center Executive Cyberschuul, and a former NITEL engineer, feels that NITEL has poorly serviced all 130 million Nigerians. He thinks that as a government entity, it doesn’t have the business and marketing acumen to provide mass access to the SAT-3.

Omo-Ettu doesn’t like the idea of turning SAT-3 over to Globalcom, because this would just put the cable into the hands of a different ill-regulated national monopoly. Vanguard columnist Muoka, agreeing, has written that "no private operator should be given the undue benefit that also conveys ownership in the shape of a monopoly, as is being proposed to your [Obasanjo’s] exalted office. It would amount to transparency in reverse if Mr. President uses his office to sign off a national asset into private pockets."

So, Muoka and Omo-Ettu do not think that unbridled privatization is the answer. Omu-Ettu argues, rather, that the Nigerian Communications Commission (NCC) needs to demand more from the companies it licenses.

For instance, none of the cellular networks are interconnected, meaning that many business people carry two and even three mobile phones that operate on MTN, Econet, and NITEL. A more active NCC should encourage, if not enforce, interconnectivity, says Omo-Ettu.(emphases added)

The telecommunications business, in which increasing returns are ubiquitous, is one industry in which a dogmatic libertarianism simply will not do. Some measure of regulation is required, but the problem is getting the balance right, as governments are far more likely to impose too many regulations than too few. Miss Omo-Ettu is right in criticizing any policy that would privatize infrastructure while leaving the NITEL monopoly's current structure intact, but I wouldn't take quite the same route as the one she endorses. I think NITEL ought to be privatized, but where access to the SAT-3 cable is concerned, there ought to be a separation of infrastructure maintenance from access provision. Barring the maintenance firm from providing any retail voice or data services would remove the perverse incentive currently in place to keep bandwidth artificially scarce and expensive, in order to protect monopoly profits on international voice calls.

As for the mobile phone networks, well ... there it gets a bit more difficult. My initial inclination would be to let them do as they please, and allow the market to push them in the right direction; forcing them to interconnect will have a dampening effect on the will to construct network infrastructure, as part of the allure of building an extensive network is the prospect of enjoying monopolistic profits if one is able to outlast the competition. It just isn't clear to me that the gains from mandating interconnection would outweigh the losses in terms of foregone network construction. I am open to alternative approaches, however.