VZCZCXYZ0007
RR RUEHWEB

DE RUEHSA #1393 1130912
ZNR UUUUU ZZH
R 230912Z APR 07
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 9283
INFO RUEHNR/AMEMBASSY NAIROBI 6375
RUCPDC/DEPT OF COMMERCE WASHDC
RHDIFCC/FCC WASHDC

UNCLAS PRETORIA 001393 
 
SIPDIS 
 
SENSITIVE BUT UNCLASSIFIED 
SIPDIS 
 
FCC WASHDC FOR PBOATENG, DEPT FOR EB/CIB TCARNEGIE 
 
E.O. 12958: N/A 
TAGS: ECON ECPS SF
SUBJECT: SOUTH AFRICA GOVERNMENT AND REGULATOR WEIGH IN ON 
UNDERSEA TELECOM CABLE 
 
REF: 06 PRETORIA 02711 
 
¶1. (SBU) Summary.  The South African Department of 
Communications (DOC) and the New Partnership for South 
Africa's Development (NEPAD) may build an undersea 
telecommunications cable to replicate the planned East Africa 
Submarine System (EASSy) cable.  A decision by the CEO of 
monopoly telecom operator Telkom to invest in the EASSy 
cable, in opposition to the government's position, is 
believed to have led to his resignation.  South Africa 
telecom regulator, Independent Communications Authority of 
South Africa (ICASA), is considering declaring the planned 
undersea cables and the existing SAT-3 cable as essential 
facilities and therefore subject to ICASA price regulation. 
End Summary. 
 
¶2. (SBU) South Africa DOC Director-General Lyndall 
Shope-Mafole confirmed April 3 that DOC, together with NEPAD, 
may lead an effort to build an undersea telecommunications 
cable to rival the planned R300 million ($43 million) EASSy 
cable according to press reports.  (Note.  The EASSy 
consortium is comprised of private investors who want to 
build an undersea telecommunications cable with terrestrial 
landing points in countries along Africa's east coast to help 
meet high bandwidth demand.  End Note.)  Shope-Mafole claims 
that EASSy consortium investors are more interested in 
profits than providing affordable bandwidth and is looking 
for investors in the competing cable which has been dubbed 
the NEPAD Network.  The competing system would combine an 
undersea cable with a terrestrial network to cover landlocked 
countries. 
 
¶3. (SBU) NEPAD's e-Africa Commission Executive Deputy 
Chairperson Henry Chasia told ICT officer in December 2006 
that it was conducting feasibility studies to build two 
terrestrial loops to connect with an undersea east-coast 
cable that would feature connection points for countries not 
currently participating in the NEPAD initiative, most notably 
Kenya.  South Africa and NEPAD want pricing for the undersea 
cable to be set so that users will pay the same price for 
bandwidth access as the companies that invested in the 
infrastructure. 
 
¶4. (SBU) NEPAD's pricing scheme would prevent cable investors 
from charging exorbitant rates for bandwidth access like 
those charged by SA parastatal telecom monopoly Telkom for 
use of its west coast SAT-3 cable.  Telkom CEO Papi Molotsane 
signed an agreement to invest in the EASSy cable, saying his 
company wants to make a decent return.  President Mbeki, in 
an interview with the Financial Times, said that Telkom was 
"profiteering" from charges on the SAT-3 cable that are 
"absolutely phenomenal".  Industry analysts claim that 
Molotsane's signature on the EASSy cable deal and his 
opposition to the government's position on pricing led to his 
unexpected resignation on April 5. 
 
¶5. (SBU) ICASA Councilor Tracy Cohen told ICT officer April 
19 that the regulator is considering declaring both the SAT-3 
and future undersea cables as essential facilities.  This 
would place pricing of the cables under ICASA regulation. 
Cohen said the council expects to release a document for 
public comment on the topic of cable regulation within the 
next four months. 
 
¶6. (SBU) Comment.  ICASA's ability to deal with undersea 
cable regulation and other matters has improved slightly 
because its council is now fully staffed.  The regulator had 
struggled since last year to implement a new Electronic 
Communications Act with half of its council positions vacant. 
(See reftel for additional background).  End Comment. 
BOST