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MTN, UTL Protest take over of fibre optic cable project PDF Print E-mail

 

Uganda’s two national telecoms operators have protested against a decision by the newly-formed ICT Ministry and industry regulator Uganda Communications Commission (UCC), to take over the development of a national communications backbone. 

MTN and Uganda Telecom have separately been developing a network of fibre-optic cables across the country, in order to fulfil part of their license requirements. The two firms claim that the government, through the Ministry of Information and Communications Technology, now wants to stop them in their tracks and take over the job. This, the two firms argue, will at worst mean the wastage of millions of dollars’ worth of network that they have already laid down and, at best, lead to a useless duplication of infrastructure.

 

“We have advised that such a route should avoid duplication of existing backbones,” Noel Meier, chief executive officer of MTN Uganda, the South African firm that runs the largest mobile phone network in Uganda, told The EastAfrican by e-mail last week. “MTN was surprised to hear that the government has now decided that it needs to build its own backbone after repeatedly pressing the operators to make use of infrastructure sharing arrangements.” 

He added: “We should avoid a situation where the funds we contribute are diverted to the maintenance of an idle ‘national’ backbone that duplicates existing infrastructure rather than being spent on stimulating demand and supply of ICT services in rural areas.

The backbone should not be a burden to the taxpayer.” At the heart of the matter are two government policies that seem at odds. The first is a policy enshrined in the licences that gave UTL and MTN a five-year duopoly starting in 2000, in which they were required, as national operators, to build communication infrastructure to cover at least 80 per cent of the country. The idea was that subsequent investments in the country’s communications sector would then ride on this infrastructure to avoid unnecessary duplication.

The two firms also contribute one per cent of their annual gross revenue to the Rural Communications Development Fund (RCDF), a government initiative to mobilise private sector investments in rural areas. Mr Meier said that, by the end of next year, MTN will complete the remaining fibre-optic link to the Kenyan border, linking up with Telkom Kenya’s cable which will eventually run from Malaba through Nairobi to Mombasa and form part of the East African Backhaul system (EABs). In the west of the country, MTN is in discussions with UTL to share capacity on the latter’s fibre links and thus avoid duplication of infrastructure rollout, he said. 

The company has a fibre-optic link up to Mbarara and it wants to extend to Rwanda by linking up Mbarara via UTL’s fibre-optic cable to Katuna, where it will join up with a fibre cable to be installed by MTN Rwanda to the Rwanda border. These initiatives are taking place under the EABs project, a joint venture among operators from Tanzania, Burundi, Rwanda, Uganda and Kenya. “We intend by the end of next year to have a regional East African link that will not only deliver regional traffic but together with EASSy, deliver international traffic that is of high quality and affordable,” said Mr Meier. 

The East African Submarine Cable System (EASSy) is a joint venture between countries in the region to lay an undersea fibre-optic cable along the eastern seaboard of the continent, from Port Sudan to Durban, to reduce connectivity and communication costs. However, Dr Ham Mulira, Uganda’s ICT minister, now says that the government has taken on the responsibility of building the national backbone, a vital national public communications infrastructure that will stimulate economic growth by reducing voice, data and video communication costs. 

The government’s position has been strengthened by the recent signing of a deal with the government of China under which Uganda will borrow $106 million from the China Export-Import Bank to build the national backbone infrastructure. A Chinese company, Huaiwei Technologies, will carry out the job, slated to take over a year. It has already started shipping in equipment for building the project, according to Edward Baliddawa, chairman of the ICT committee in parliament. 

Commencement of construction is awaiting completion of a technical feasibility study by the ICT Ministry. A similar study that was being carried out by UCC and supported by the World Bank has been suspended indefinitely. 

The government’s position has ruffled feathers in the two telecoms firms. “This government does not seem to have clear guidelines on who does what in this industry,” an official in one of the companies, who asked not to be named, told The EastAfrican. “Two technical feasibility studies were being done at the same time, now they are developing a national backbone without even involving the key stakeholders.” 

The operators say that before the government builds its backbone, there should be clear guidelines in place and commercial, cost-based reciprocal compensation agreed by all parties involved. “We would, of course, be happy to share our fibre with any national or even regional initiative such as EABs; our proposal to swap rather than duplicate fibre with UTL bears testimony to our thinking,” Mr Meier said. “We have already committed ourselves to hand over two fibres to the EABs initiative.” 

The government and the telecoms firms have been quietly sparring since the exclusivity period on infrastructure development granted to the latter expired in July 2005. After the duopoly, with no clear licence standards and requirements, UCC came up with a new licensing regime that allows for a better pricing system and ensures competitiveness in the ICT sector. The regime allows new players in the industry to develop infrastructure for the national backbone. 

This regime, contained in a new telecommunications policy, was authored by the Ministry of Works, Housing and Communications in April this year – before the creation of the ICT ministry. Independent stakeholders in the industry say it will improve competition and propel the ICT sector forward if government owned the national backbone infrastructure. 

“There would be cheaper and faster connectivity all over the country for voice, data and video. It would also enable e-government to be a reality because infrastructure would be developed,” said Daphne Kamukyeya of the Women of Uganda Network. Another stakeholder, who asked not to be named, said the government should take over infrastructure development since the national operators had failed to fulfil some of their licence obligations by the end of the exclusivity period. For instance, he said, MTN and UTL failed to make provisions for people with disabilities in the process of installing public payphones, a requirement clearly stated in the license obligations. 

The national operators are accused of concentrating on rolling out a GSM network, causing most of the fixed lines that have been set up to be based on mobile technology. The GSM lines that the network operators have installed are thus only usable in the urban areas with electricity. Although this technology has enabled the operators to fulfil most of their licence obligations and cover the bulk of the country, rural areas have been denied the access to Internet, e-mail and fax that would have been easily available on landlines, said an official from UCC.

However, Mr Meier defended the choice of technology, arguing, “The backbone we have put in place is based on technologies that are ‘self-healing,’ in that they are fully resilient to interruptions. 

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