Vodacom drops broadband rates in Africa

Stiff competition in Africa's broadband market between undersea cable providers has forced South Africa's largest mobile service provider, Vodacom, to halve its rates for broadband connectivity, a move that will reduce the high cost of communication in Africa.

Vodacom has a presence in several African countries including Mozambique, the Democratic Republic of Congo (DRC), Tanzania and Lesotho.

Competition in Africa's broadband market has been heightened by the arrival of the Seacom optic-fiber cable that runs under the Indian Ocean from India to Africa and Europe. The Seacom cable went live in July last year and has landing stations in the Indian Ocean.

"Business clients would now pay half the previous rates for their broadband use," said Vodacom managing executive Ermano Quartero. The company's rates differ from country to country. Vodacom's announcement is likely to have a ripple effect in other countries where service providers are still charging high fees for broadband services despite cheaper bandwidth being provided by the undersea cables.

The Seacom cable that became active last year provides bandwidth at a speed of 1.28TB per second and is currently competing with SAT-3 and Team cables in the Indian Ocean. The bulk of African international voice and data traffic had previously been routed via the SAT-3 cable, a closed-access pathway controlled by South Africa's fixed service provider Telkom, which was criticized for keeping prices artificially high.

A further cut in rates by Vodacom is expected in June when another undersea cable, the East Africa Submarine Cable System (EASSY), will go live.

While the Seacom and Teams cables operate purely on commercial lines, the EASSY project is funded by the World Bank, Africa Development Bank, German Development Bank and African governments, premised on the need to open up access to as many people as possible. The capacity of the cable will be distributed on an open-access basis, allowing service providers to have equal access to the cable and a uniform bandwidth price, which is not available in the region at the moment. EASSY will also be the first cable in the region to have a direct connection to Europe, and that will make the cable capacity cheaper.

African governments are also pushing for further reductions in connectivity prices as a result of cheaper bandwidth in order to allow more people to access the Internet. Additionally, many governments in Africa want to start implementing or offering some of their services online through e-governance and e-learning programs to promote citizens' participation in the running of their countries' affairs.

Africa's largest mobile service provider, Mobile Telecommunication Network (MTN), is also expected to reduce rates in response to the massive rates cut by Vodacom, and the winner will be the consumer. Governments in the region hope to use new broadband capacity to transform their economies as land infrastructures are being laid to bring capacity in from the coast, an especially important project for landlocked countries including Zambia and Zimbabwe.