Broadband networks have the potential to foster economic and social development as an endogenous source of growth. However, the extent to which the population will reap the benefits of this technology will depend on whether or not access to infrastructure is affordable.
The recent expansion in low-priced mobile communications in Africa has been mainly possible through the combination of strong competition and light regulatory intervention. Indeed, when the hurdles to effectively and efficiently enforce adequate regulation are too numerous, the costs of market intervention may overweigh the benefits. After decades of laissez-faire in mobile phone communications, government intervention is steadily rising in broadband networks in Africa where policy makers and experts often deem necessary public intervention. According to Mario Pezzini, Director of the OECD Development Centre, the extent to which policy makers select the most adequate market structure will determine whether or not the Internet in Africa will replicate the ‘’mobile revolution’’.
Under a joint effort, the African Union and the OECD Development Centre are bringing some light on the conditions under which policy makers can apply regulation in broadband networks given African specificities. In 2010, preliminary findings of this project were discussed at the OECD Development Centre/African Development Bank experts’ meeting in Tunis and were presented at the 3rd AU Ministerial Meeting in Nigeria. Final conclusions were endorsed by African Union delegates in the 4th AU Ministerial Meeting in the Republic of Sudan in 2012. African Union delegates had in fact directed the African Union Commission to develop a common understanding on regulation for the proliferation of the Internet through the Olivier Tambo Declaration back in 2009.
Why are these best practices so relevant today? Moctar Yedaly, Head of the Posts and Telecommunications Division at the African Union Commission, highlights it is a key timing for Africa to ensure fair access to the new infrastructure that private and public actors are deploying at the international and national levels. The arrival of new infrastructure need not deliver affordable Internet through market forces alone.
High-speed undersea cables arriving to African coasts enable to access the Internet at quite less than USD 300 Mb per month at the wholesale level compared to the average satellite price at USD 5 000 Mb per month. The extent to which these low prices are passed on to consumers varies from country to country, though. In Gabon, the public utility manages SAT-3 undersea cable wholesale pricing which remains at satellite levels.
It is unlikely that the arrival of the new ACE cable planned for November 2012 will enable to lower prices given that the control of wholesale rates should remain under the public utility. In other countries where policy makers have liberalized the telecommunications sector, it is still an open question whether lower international rates will be passed on to consumers. Many private operators are present across a large number of African countries and can control wholesale tariffs throughout much of West and East coasts.