Market Reform and Regulation
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east coast of Africa, following the introduction of three new cables with different owners in 2009 and 2010. Within a year of the launch of the first of these cables, SEACOM, international bandwidth prices had already begun to drop. Wholesale bandwidth prices on submarine cables in East Africa are not published; therefore, it is difficult to obtain definitive benchmark prices, particularly in regions where the market is new. Discussions with operators in the East Africa region indicate that prices had fallen by 50 percent in the first year since the launch of SEACOM, and even further for purchases of large capacity units. Market observers expect prices to fall further as competition intensifies. For the majority of African countries, the high levels of current and planned future investment in submarine fiber-optic cables will meet the capacity requirements of the market for the foreseeable future. Customers will benefit from this, however, only if effective competition is established. The ownership of the new cable infrastructure in Africa is relatively diverse (see chapter 2), which means that one of the factors that allowed operators to retain high international prices—exclusive control over access to the cables has been removed. Such competition is already beginning to have an impact. In South Africa, for example, the wholesale price of an STM-115 link between Johannesburg and London cost nearly $1 million per month in 2005 but had fallen to $145,000 per month by the end of 2009. A similar drop in prices could potentially take place across the region with the emergence of a competitive submarine fiber-optic cable market. Despite the positive outlook for users of the submarine fiber-optic cable infrastructure in Africa, some challenges remain. The first of these, affecting many countries, relates to regulation of the landing facilities. If competition across submarine cables is to be effective, users need to be able to access the cables easily and at low cost. Cable-landing facilities are an essential part of this equation because they are points of access to each cable. In countries where there are multiple landing points, one for each cable, for example, there is likely to be competition among the landing stations, which in turn benefits customers. However, if multiple cables land at a single facility and that facility is owned by a single party, it creates the conditions for that party to exploit its position. It also leaves the cables vulnerable to any technical problems at the landing point. In such cases, strong regulation is needed to ensure that the owner gives all users equal, costbased access, but international experience indicates that this is difficult to implement. The government of Singapore, for example, spent several years trying to impose regulated access conditions on the incumbent operator Singtel’s cable-landing facilities, until finally including access to them on