As SAT-3 Opens Up, Neotel Makes Its Move

Now that the SAT-3 undersea cable has opened up to competition, with South African communications network operator Neotel gaining access to the network, industry insiders hope that prices will come down.

Neotel's access to the cable means that consumers have a wider choice of operators, which could lead to lower prices for international calls. Since 2002, cable consortium members with landing points had an effective monopoly on providing cable bandwidth in their own countries and to countries without landing points. As a result, the cost of bandwidth remained high.

Neotel, however, will be offering bandwidth between South Africa and the U.K., without having to touch the Telkom S.A. network. Local landing rights to the cable were held exclusively by Telkom, a South African government-owned provider, allowing the company to operate the cable as a monopoly.

The South African government and other African countries where the cable had landing points had control over who got direct access to SAT-3 cable system.

Neotel Chief Technology Officer Angus Hay said Neotel gained access to the cable last week, enabling the company to carry international voice and data traffic to London at competitive prices and giving consumers a choice of operators.

SAT-3 cable links South Africa to Portugal, Spain, India, Malaysia, and West Africa including Nigeria, Cameroon, Angola and Senegal.

South African Minister of Communication Ivy Matsepe-Casaburri declared last year the termination of all exclusive provisions contained in SAT-3 agreements.

Neotel's Hay said, meanwhile, that the company has deployed its own equipment at the Melkbosstrand and Mtunzini landing stations of the SAT-3 cable system, connected directly over its own high availability fiber-optic network.

"Neotel is now able to obtain international capacity on the cable and is able to pass the cost benefits to customers," Hay said via e-mail.

African policymakers, nongovernmental organizations and consumers had been pushing for SAT-3 to include more operators to make the market more competitive and bring down telecom costs.

The end of the SAT-3 monopoly over access will now subject the cable to international bandwidth business competition and is likely to bring down the cost of telecommunication in the region.

Already, Telkom has announced it is considering bandwidth price reductions for the second time this year.

There are fears, however, that a bandwidth rush may occur among African countries following the opening of the cable, causing it to run out of capacity.