South Africa's new Internet cable link could bring economic boom

A new $650 million cable system connecting southern Africa with West Africa and Europe will double the capacity of South Africa's mobile phone and Internet networks.

When the $650 million West Africa Cable System landed in South Africa last week, it was a major step forward for a region that remains the one of the least-connected in the world.

With one East African sea cable connecting South Africa with high-speed Internet systems in Asia and the Middle East, and now a second sea cable connecting southern Africa with West Africa and Europe, South Africa's capacity of mobile phone networks and Internet networks will double. When the two systems are fully operational, South Africans will be able to send and receive up to 500 gigabytes per second.

For South Africans who have gotten accustomed to slow dish-satellite Internet service, complete with restrictive “caps” on their monthly downloads, all of this will be very good news indeed. And if Kenya’s current economic boom is a gauge, then South Africa’s economy stands to benefit from a boom both from foreign and local business investment, as businesses become more efficient in sending information, and as foreign investors see South Africa as a more attractive place to invest.

“I think you’ll see the economic benefits across all sectors of the South African economy,” says Duncan McLeod, editor of Tech Central, a South African technology news service. “If you look at Kenya five years ago, it was undeveloped in terms of Internet access. There was no undersea cable, and the only way to get connectivity was through satellite systems. Now they have 3 or 4 sea cables and there is investment in fiber cables between cities."

But is South Africa really about to enter an economic boom spurred by technology?

High-tech companies certainly hope so, and they’ve invested millions of dollars to create the fiber-optic cables and infrastructure to take advantage of that boom.

A World Bank study from 2009 found that with a 10 percent increase in high-speed Internet connections, economic growth increases by 1.3 percent. It is almost certain that customers will see huge benefits from this investment, in faster Internet service at least. Whether it brings lower prices, as it has in Kenya, remains to be seen.

8,700 miles of cable

The West Africa Cable System (WACS) stretches 14,000 kilometers (8,700 miles) and links up 15 established terminal stations from London to Portugal, and onward to Canary Islands, Cape Verde, Ivory Coast, Ghana, Togo, Nigeria, Republic of Congo, Democratic Republic of Congo, Angola, Namibia, and finally now to South Africa. Its capacity is 5.12 terabits per second (Tbps), equal to the carrying capacity of the Seacom, EASSy and SAT-3/WASC/SAFE cable systems combined.

"WACS will meet the demand for capacity well into the 1st quarter of the 21st century,” says Dr Angus Hay of Neotel, co-Chair of the WACS Management Committee.

Internet boom coming

Some investors see Africa – a continent with vast untapped resources and relatively cheap labor – as ready for an Internet boom.

Less than 10 percent of people in Africa use the Internet, compared with 65 percent of Europeans and 70 percent of US citizens.

“Africa has, until now, been a cyclist on the information superhighway,” says Karel Pienaar, MTN’s South Africa managing director, in a recent press conference."We sincerely believe that the commercialization of WACS and other submarine cables will set the stage for a mobile revolution that will enhance the quality of life for millions of people across the continent.”

But what about Internet costs?

Following the normal rules of supply and demand, when there is an increase in supply of a good or service, and demand remains equal, then prices for that good or service should drop. It’s not going to work that way for Internet costs in South Africa, however – at least not right away.

Some Telecom experts interviewed by Monitor dismissed the public excitement surrounding the arrival of the second sea cable last week, saying the immediate effect will be higher speed, not lower costs.

"WACS will not immediately mean a dramatic drop in bandwidth prices for consumers,” says Tshepo Ramodibe, Vodacom’s acting chief officer for corporate affairs. ”For Vodacom, the WACS will significantly increase network capacity and positions us to provide our customers with superior data connectivity. The WACS is just one in a series of investments that Vodacom has made to expand our network over the past year."

But Tim Walter, head of marketing for Nashua Mobile, says that the additional undersea cables have already brought increased speed and lower costs.

"We are already seeing improvements in general data speeds ...” says Mr. Walter, in an interview. "Due to the excess capacity, the cost per MB of international bandwidth has also reduced dramatically. The additional capacity and lower costs have also allowed us to see a lot more innovation in the marketplace."