Sunday, May 30, 2010

Burundi Signs Accords for Development of a National Fiber Optic Telecommunications Backbone

Burundi Backbone System Company SM (BBS), a joint venture between local telecommunications operators, has agreed with SETIC (Executive Secretariat for Communications and Information Technologies) and the ARCT (Burundi’s telecoms regulator) to install and operate over 1,000 km of fiber optic cable to cover the entire country and connect its telecom infrastructure to international networks enabling, for the first time, true broadband connectivity in this landlocked country. The documents signed include a PPP agreement (Public Private Partnership) and a 20-year concession agreement.

The World Bank has given a US$10.5 million grant under its Regional Infrastructure Programme and the operators involved in the consortium will come up with the balance, for what is likely to be a US$15-20 million project once the contractor’s bids come in. The share capital of the organisation will either be used to pay directly for the capital costs or be used as leverage to borrow the balance.

Burundi is unusual in that the incumbent Onatel controls about 80% of the market and is a shareholder in the consortium. However, on a like-for-like basis, they will be no discriminatory pricing for those outside the consortium.

Both Onatel and U-Com are shareholders in the WIOCC Consortium within EASSy as founding members. However, whatever advantage they might derive from this position is likely to be considerably weakened as rates are likely to fall relatively quickly.

WIOCC has also been responsible for setting up the East African Backbone System (EABS) which allows operators to piggy back at exceptionally low costs on other operator’s backbone systems to reach a coastal landing station. Deadlines for completion are within two years.

The World Bank money is in effect paying for connecting small towns where there is little commercial market and to ensure the maximum likely take-off from day one. The Government has played its part by giving 3G spectrum to all the operators involved in the consortium. The company will add this funding to its own resources to install a network that will interconnect Bujumbura to all seventeen provinces of Burundi – and beyond, to Rwanda, Congo DRC, and Tanzania.

Salvator Niyibizi, the Secretary General of SETIC said: “With today’s agreement, the Government of Burundi is a pioneer in the region. Never before have private sector operators teamed up to develop infrastructure in this way. The network to be installed is one of the main steps toward implementing our initiatives in the realm of e-government and e-education.”

Reverien Ntagaye, the Managing Director of the ARCT added that: “With the newly available connectivity that this project provides, Burundi is looking forward to higher quality services, higher connection speeds, and reduced prices across the board – particularly as concerns internet and data services.”

BBS has issued an international tender for the supply and installation of the fiber optic infrastructure, and bid are expected to be submitted by mid-June. The entire project is to take two years to complete, but consumers should already begin to benefit from new services and increased internet bandwidth as of the end of this year when the network will be connected to partner networks in Rwanda and Tanzania.
BBS is owned by Africell, ONATEL, U-COM Burundi, Econet Wireless Burundi, and CBINET.

George Akoury, CEO of Africell and current Chairman of BBS, explained that until recently, Burundi and most of its neighbors relied exclusively on satellite transmission for international voice and internet traffic. Though satellites will continue to play a backup role in Burundi, the new fiber optic networks being built all around East Africa, and the undersea cables to which these connect, will dramatically change the face of telecommunications in the region. The resulting new tariffs and service offerings will have the welcome side effect of spurring job creation and economic development.

Akoury further explained that as a part of the agreements signed, the GSM telecom operator shareholders of BBS will be issued spectrum in the 3G frequency band, allowing for the most modern high-speed services to be offered through the mobile networks.

Source: Russell Southwood [Balancing Act News]