CHALLENGES OF BROADBAND INFRASTRUCTURE DEVELOPMENT IN AFRICA

Presentation to GovTech 2010 Durban, South Africa, September 5-8, 2010 Dr. Edmund Katiti Policy & Regulatory Advisor, and Acting Head of the NEPAD e-Africa Programme

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Challenges of Africa’s ICT Broadband Infrastructure • Inadequate investment in ICT Broadband Infrastructure. • Broadband capacity is a scarce resource that priced exorbitantly. • Many African countries rely on satellite communication for regional and international connectivity. • Most of the satellites serving Africa are foreign owned, leading to capital flight in transit fees

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Elaboration of Disparity in Broadband costs Monthly Cost of E1 (2 mbps); –Developed Countries –India –African average

$10-20, $100 -250 $4,000

There is a need to bring down the cost of communication to level where Africa can compete with the rest of the world.

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NEPAD e-Africa Commission The NEPAD e-Africa Commission is the ICT Task Team of the NEPAD Planning and Coordinating Agency (NPCA). The Commission has a mandate to develop a broad ICT strategy and comprehensive action plan with the objective of, among others: • Accelerating the development of African intercountry and global connectivity • Promoting conditions for Africa to be an equal and active participant in the Global Information society

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ICT Programmes of the NPCA Pillar 1: ICT Infrastructure • NEPAD ICT Broadband Infrastructure Programme – Uhurunet submarine cable and Umojanet Terrestrial cross-border network Pillar 2: ICT Skills • NEPAD e-Schools Initiative - with objective of harnessing ICT technology to improve the quality of teaching and learning in African primary and secondary schools Pillar 3: ICT Applications: • The African Payment Gateway.

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NEPAD ICT Infrastructure Programme: tacking Challenges of African ICT Infrastructure •

Bridge the digital divide: – –

Between Africa and the rest of the world, Amongst African countries

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Ensure increased African investment in broadband Infrastructure across the continent

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Bring down the cost of communication / bandwidth to a level where Africa can compete in the global knowledge economy

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Ensure that the African ICT Infrastructure is reliable and secure 6

THE NEPAD ICT BROADBAND INFRASTRUCTURE OBJECTIVE To

ensure that all African countries are connected to one another by a broadband fibre-optic cable network that is, in turn, linked to the rest of the world. This needs to be done in a way that addresses the challenges already identified. The NEPAD Heads of State and Government Implementation Committee (HSGIC) decided to prioritise the establishment of such a broadband network 7

WHAT WILL THE NEPAD ICT BROADBAND INFRASTRUCTURE OBJECTIVE ACHIEVE FOR AFRICA It will bring down the cost of communications by: • reducing Africa’s reliance of foreign-owned satellite systems. A terrestrial cross-border network will remove the need to pay exorbitant satellite transit fees. • Ensuring that the continent has abundant bandwidth • Ensuring that a substantial portion of this bandwidth is available to Authorised Service Providers on a Non-Discriminatory Open Access basis. An enabling policy and regulatory environment, is key for the establishment of network(s) that will achieve the objective of the NEPAD ICT Broadband Infrastructure Programme. 8

Development of NEPAD’s ICT Infrastructure Flagship Projects Initially the development of the ICT infrastructure programme was in 2 parts; 1. NEPAD ICT Broadband Infrastructure Network covering 23 countries in Eastern and Southern Africa 2. NEPAD ICT Broadband Infrastructure Network for West, Central and North Africa.

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WHERE WE STARTED EASTERN & SOUTHERN AFRICA NETWORK

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submari ne cable system

New Terrestrial cables New Submarine cables Existing fibre links

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WHERE WE STARTED… West, Central & North Africa.

LINK S:Existing Planned / Funded Required Proposed Submarin e cables

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Southern & Eastern Links

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DEVELOPMENT OF THE POLICY AND REGULATORY FRAMEWORK • The development of a transparent policy and regulatory environment was needed: • To remove regulatory barriers to the establishment of the cross-border network. • To encourage private sector investment in the network. • To achieve developmental objectives. • Address Stakeholder concerns.

• NEPAD e-Africa Commission requested African Governments to nominate experts who deliberated and proposed 5 policy principles 12

DEVELOPMENT OF THE POLICY AND REGULATORY FRAMEWORK The policy principles were: 1. The application of open, non-discriminatory and affordable access to these networks. 2. Equitable joint ownership of the backbone infrastructure across the region 3. Acceptance that cross-border terrestrial and submarine segments can be developed, owned, and maintained by Special Purpose Vehicles (SPVs): Legal entities 4. Basic Broadband Infrastructure viewed as “public good” 5. Application of the principle of public private partnerships (PPP) to these networks. These principles were to apply to the submarine as well as the terrestrial segments of the network, and it was proposed that a protocol be signed by African countries to underpin their collaboration in developing the network. 13

Policy & Regulatory Framework for Development of the NEPAD Network Framework signed into Protocol in Kigali, on 29 August 2006, under AU auspices. By November 30, 2006, 12 countries had signed the protocol. Most of these countries have since ratified it. Botswana Rwanda Uganda

Lesotho Malawi Tanzania

South Africa Zambia Zimbabwe

Mauritius Madagascar DRC

Kigali Protocol took effect in February 2008, after it had been ratified by more than half of the countries which sign it. Countries that did not sign the protocol may now accede to it since it is now in force.

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KIGALI PROTOCOL: Key provisions on Policy, Legal & Regulatory Aspects •

The principle of Open Access should be applied on terms that are transparent and affordable.

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The principle of non-discrimination should be applied in relation to Authorised Service Providers getting access to the NEPAD Network.

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Urges Governments to facilitate the licensing of the SPV(s) that will own, operate and maintain the regional network.

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Urges Governments to amend, where necessary, their existing legal, policy and regulatory frameworks to be consistent with the Protocol, thereby enabling the SPV(s) to provide open access connectivity to all ASPs.

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Urges Governments to consider license fees for the SPVs that will cover only the administration costs incurred by regulators

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The charges for wholesale bandwidth should be independent of distance 15

Plan to development NEPAD Network presented to Ministerial IGA Meeting •

Ministers welcomed NEPAD-led collaboration on high capacity submarine cable with potential to connect every coastal and island country in Africa, and to Europe, Middle East and India.

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Named the submarine cable system Uhurunet

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Named the NEPAD Terrestrial Network Umojanet

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Recommended name for submarine company to be Baharicom

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Request AU Commission to develop modalities to enable any African country to accede to the Kigali Protocol

NOTE 1: Legal Counsel of AUC confirmed that any African country can accede to the Kigali Protocol. NOTE 2: Kigali Protocol is being reviewed by stakeholders across the African continent. 16

Uhurunet Submarine Cable System To UK

To Brazil

5-

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BAHARICOM SHAREHOLDING STRUCTURE

NEPAD SPV 30%

AFRICAN TELCO AND NON TELCO INVESTORS 45%

INTERNATIONAL INVESTORS

25%

BAHARICOM (Developer of Uhurunet)

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Co-Building of ACE Submarine Cable In Oct 2009, Baharicom signed MoU with ACE Consortium to co-build the Africa Coast to Europe (ACE) submarine cable. As co-builder of the ACE/Uhurunet system, Baharicom will reduce the cost of market entry on the West African cost. The ACE/Uhurunet submarine cable system, is led by France Telecom, one of the most experienced submarine cable developers. It will stretch 14,000 km from France to South Africa, providing opportunity for connectivity to every country along the West coast of Africa. Supply contract for ACE/Uhurunet was signed in Paris on June 5, 2010. ACE/Uhurunet will be operational in mid 2012.

ACE/UHURUNET SUBMARINE CABLE SYSTEM

The Way Forward for Uhurunet in East and North Africa •

Discussions are on-going with cable developers (Seacom, TEAMS, EASSy, and LION) for Uhurunet collaboration on the Eastern and Northern Coast of Africa.

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Biz Plan for Uhurunet East is available and is being shared with interested Parties

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Investment in Uhurunet being aggressively sought, and several MoUs have been signed with interested Parties

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Uhurunet will be achieved in segments

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Segments will be completed at different times

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Segments may have different specifications and capacities but will operate seamlessly 21

UMOJANET: Terrestrial Cross-Border Network Detailed Feasibility Study for Eastern & Southern Africa. The study focussed on the following: „ Identifying all broadband optical fibre infrastructure in region. „

Identifying gaps in existing fibre optic infrastructure along the routes of the proposed NEPAD network.

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Identifying plans to close such gaps.

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Determining cost of leasing fibre optic cable capacity from existing operators / cable owners and building of new fibre optic cable infrastructure where necessary.

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Estimating the cost of operating a Regional Operations Centre and data centre from which the entire network would be monitored, managed, and controlled.

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Estimating the costs of establishing and equipping nodal points in each country.

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Undertaking a detailed study of traffic flow in the network.

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Proposing an optimum network in terms of network economics, configuration and costs.

Network Design Options and Associated Costs 1.

An entirely new network to be built in the 21 countries in the region.

2.

A network for the 21 countries using a maximum of capacity leased from optical fibre infrastructure owners and a minimum of newly built infrastructure. NETWORK OPTION Build an network

entirely

TOTAL CAPEX

TOTAL OPEX

(NPV over 15years)

(NPV over 15years)

$1.3 bn

$2.1 bn

$0.7 bn

$1.9 bn

new

Maximise lease / Minimise new build

Available and Required Segments of the Proposed NEPAD Network in Eastern & Southern Africa Status

Km

%

17,400

60%

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Operational

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Under Construction

2,300

8%

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Planned

6,600

23%

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Required new build

2,900

9%

Total Km required

29,200

Above figures are thought to be typical of what pertains in other regions of Africa.

The map below illustrates a possible network configuration for initiating the establishment of the NEPAD ICT Broadband Infrastructure Network for Eastern and Southern Africa:

RNOC Country Node Country IP Router Landing Station

Connectivity (STM-1s) leased from operators in the ratified countries

Start of Umojanet in Southern Africa The table below shows the estimated costs of establishing this preliminary Umojanet Network in Southern Africa: Maximum Lease/Minimum Build scenario: Cost item Unit / Facility Total cost US$ Regional Network Operations Centre $8 000 000 $25 000 000 Country Nodes CAPEX: Add-Drop Mux (Country nodes) $560 000 Total CAPEX: $33 560 000 STM-1 ports at all country nodes Leased capacity: Total Annual Lease Costs: $12 000 000 Regional Network Operations Centre $935 000 OPEX (Annual O & M costs): Country Nodes $2 800 000 Total Annual OPEX: $3 735 000 The NEPAD SPV owns and operates its country nodes and RNOC but leases STM-1s from national operators.

Development of Umojanet cross-border terrestrial network The Special Purpose Vehicle (SPV) that will develop Umojanet was incorporated in March 2010 as Umojanet Corporaion. Umojanet Corporation has developed a business plan for rolling out the network in 10 countries in Eastern and Southern Africa, and now is looking for co-investors for the development of the cross-border network Umojanet Corporation is to start the roll-out of Umojanet in countries that have signed & ratified the Kigali Protocol, and welcomes investors from across the continent. 27

Extension of the Policy and Regulatory Framework •

In order to get as many countries as possible to accede to the Kigali Protocol, the NEPAD e-Africa Commission in 2010 embarked on a campaign to present and explain the protocol to stakeholders in all regions of the continent.

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The campaign will involve a review of the protocol with stakeholders in all regions free to propose amendments to the protocol.

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Stakeholder workshops have taken place or are planned as follows: • ECOWAS region – March 15-16, Abuja, Nigeria • ECCAS region – April 20-22, N’Djamena, Chad • North Africa region – September 21-22, Cairo, Egypt

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Regional stakeholder workshops are followed by in-country workshops to obtain country positions regarding review of protocol.

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Regional Inter-Governmental Working Committee (IGWC) meetings will be held to obtain regional consensus positions on the review of the protocol before the protocol is amended.

Contacts: Dr. Edmund Katiti Tel: +27.12.841.4661 Fax: +27.12.841.4094 Email: [email protected]

Thank You