26 07 13 EIU: DRC connected to submarine fibre-optic network

Analysis

The WACS,
which runs from the UK to South Africa, became operational in 2012, but
the DRC has not been connected until now, partly because of
administrative delays. The access to the submarine cable should help to
increase the country's connectivity by providing faster Internet access,
more reliable connections and access to more advanced services. In
theory, it should also help to bring down Internet costs and thus have a
positive effect on the business environment and job creation. These
would all be positive developments for the DRC, which, even by regional
standards, has very low Internet penetration and high costs.

However,
there are several pitfalls ahead. The connection to an international
submarine network needs to be matched by adequate investment in domestic
backbone networks. The quality of the current transmission networks in
the DRC are in doubt. According to Internet providers in the country,
three‑quarters of the electronic data transfer is lost between the
landing station in the coastal city of Muanda and the capital, Kinshasa,
about 400 km inland. The government has acknowledged some technical
shortcomings but says that these are being addressed. However, given the
authorities' poor record in maintaining and upgrading public
infrastructure, this is unlikely to reassure operators.

Moreover,
the connection point in Muanda is controlled by a state‑owned company,
the Société congolaise des postes et télécommunications (SCPT).
Experience elsewhere suggests that countries that have only one landing
station, and where access to the network is controlled by a state‑owned
company, fail to bring about price reductions. Indeed, most operators in
the DRC have so far opted to continue to provide Internet services via
satellite connections, which are considered more reliable but are
considerably more expensive. They will urge the government to launch a
public‑private partnership to manage the fibre‑optic system, although
the authorities will be reluctant to give up what it sees as a promising
source of fiscal revenue. With the SCPT lacking the human and financial
resources to operate the system, significant improvements in terms of
Internet connectivity in the DRC are unlikely in the short term.

Impact on the forecast

The
connection to a submarine fibre‑optic system could boost long‑term
growth. However, state control over the connection point and weak
infrastructure are likely to dampen the impact in the short to medium
term and our current forecast will therefore remain unchanged.