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Race is on to lay undersea fiber optic cable on eastern Africa coast

NAIROBI, Kenya (AP) – Plans to lay an undersea fiber-optic cable off eastern Africa could be the beginning of the end of crackling long-distance calls, slow dial-up Internet connections and universities without e-mail.

Four projects are in the works to link 22 eastern, central and southern African countries to the world’s network of submarine cables and 21st century communications. They would enable cheaper international calls with no static and fast Internet access.

The first cable could be finished as early as March.

At the moment, the Indian Ocean’s eastern African seabed is the only one in the world without a submarine fiber-optic cable, forcing the region to rely heavily on limited and expensive satellite links. As a result, countries along the coast and in its hinterland have some of the highest communications costs in the world.

Even though fiber-optic links would drive down communication costs for businesses and consumers, it also could be a big opportunity for entrepreneurs.

”We think in general that the high price of satellite communication is creating a high-price, artificially low-demand market and because of that we think there is pent-up demand,” Brian Herlihy, vice president of New York-based Herakles Telecom LLC, which is leading one of the projects.

A 2005 study by a U.N. task force found that 90 percent of calls between African countries are routed by satellite through Europe or North America at a cost of US$400 million a year. Direct calls would be cheaper, though the study did not say by how much.

The cost of laying the fiber-optic cable – stretching up to 8,000 miles (about 13,000 kilometers) along selected points in the Indian Ocean – is estimated to range from US$100 million to US$200 million. Individual countries will spend even more laying fiber-optic cables inland and connecting their networks to the submarine cable.

State-owned and private African telecommunications companies, the World Bank and other international financial institutions, governments and foreign private investors are funding the projects.

The oldest, the four-year-old Eastern Africa Submarine Cable Systems, or EASSy, was conceived by a group of East African businessmen in November 2002.

The cable can ”contribute to the expanding intra-Africa trade by providing better communication in the region,” Abiodun Jagun, a researcher in information communication technologies at the University of Manchester, said in a February paper.

Competition among companies rolling out the new cables could drive prices down even further and deliver results faster.

One project would not necessarily cancel another out – India, for example, has several submarine fiber-optic cables linking it with the international telecom infrastructure.

Ethiopia, the most populous country of the region, thinks the rival cables offer it choice and the opportunity to negotiate favorable prices.

”The more alternatives, the better,” said Ethiopian Prime Minister Meles Zenawi, who leads the Horn of Africa nation of 77 million. The landlocked country will be linked to the undersea cable through neighboring Djibouti or Kenya.

The countries involved are: Angola, Botswana, Burundi, Comoros, Congo, Eritrea, Ethiopia, Kenya, Lesotho, Malawi, Madagascar, Mozambique, Namibia, Rwanda, Seychelles, Somalia, Sudan, Swaziland, Tanzania, Uganda, Zambia, Zimbabwe. South Africa, Mauritius and Djibouti also are involved in the four projects, though they are already connected to other undersea cables.

Kenya, one of the most dynamic economies in the group, wants to drive down telecommunications costs to tap into the multibillion dollar outsourcing industry and make Kenya an information technology hub, said Bitange Ndemo, the country’s information and communications permanent secretary.

Kenya’s nascent call center business has grown from employing 200 people last year to 3,000 this year, despite relying on expensive satellite-based communications.

To get more companies to give their business to Kenyan call centers, the country needs to increase its bandwidth up to 500 megabits per second by year’s end and subsidize the cost until a submarine fiber-optic cable is working, Ndemo said.

For Kenya, the fiber couldn’t come fast enough.

The Eastern Africa Submarine Cable Systems project has been held up because of negotiations over its ownership and funding, and debate about whether it will be for-profit.

Worried the project was taking too long, Kenya teamed up with the United Arab Emirates telecommunications company Etisalat, and set up the East African Marine Systems, or TEAMS, project in November. Kenya will finance 40 percent of the project, Etisalat 20 percent, and still to be identified private Kenyan investors the remaining 40 percent.

Ndemo said that the government will soon invite bids for a company to lay the cable between Kenya’s Indian Ocean port of Mombasa and Fujairah in the United Arab Emirates and have Kenyans connected to it by March 2008.

Kenya also remains a participant in the Eastern Africa Submarine Cable Systems project.

Meanwhile, a private company – Kenya Data Networks – is involved in a third initiative and is negotiating with a subsidiary of the Indian conglomerate, Reliance Group, to lay a cable between Mombasa and near the coast of Yemen. Kenya Data Networks Managing Director Kai Wulff said that his company would not invest in laying cable, only guarantee clients for it.

The most recent project is led by U.S.-based Herakles Telecom. In April, the company commissioned a survey of the Indian Ocean and expects its cable to be in place and in use by March 2009. Herlihy, Herakles’ vice president, declined to identify the private investors who make up the company.

He said the company will not only be laying an undersea cable but also connect major urban areas of Kenya, Madagascar, Mozambique, South Africa and Tanzania. The undersea cable and inland networks, called SEACOM, will cost US$300 million, Herlihy said.

”Laying our cable will lead to a low price, high-demand market and change the price paradigm in the region,” Herlihy said.

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