25 September 2020

Telecoms Tender Process to Start Next Month on Unlevel Playing Field

originally published in the The St Helena Independent Volume XV, Issue 42, Friday 25th September 2020, p. 26

On Tuesday SHG announced it will continue the tender process for the next telecommunications provider/s for the Island after Sure‘s license term ends on December 31st, 2022. The tender process will commence as early as next month and is set to be completed in the first half of 2021. The press release states “earlier this year SHG tested the market for new service providers through the issuing of an Expression of Interest (EOI).”

Indeed SHG published such EOI in February - on the eve of the Covid-19 pandemic – which was supposed to attract the interest from alternative service providers who would bid against Sure.

But were SHG‘s requirements in the EOI realistic or could they perhaps have deterred alternative bidders? Are there any other potential bidders at all? Will there be a level playing field during the tender process?

Moreover, is it the right time to perform the tender process amidst a global pandemic when the island is effectively inaccessible for alternative bidders who would need to come for site surveys before they can commit to a 10-years contract?

Comparing the draft telecommunications policy published in July with the EOI from February reveals concerning discrepancies and raises the question if the same requirements will apply to Sure as were presented in the EOI.
And most notably, does the tender process and our new policy on which it is based comply with the obligations of the European Development Fund‘s (EDF) grant of € 21.5 million, € 4.5 million of which have not been paid out yet and might be withheld if we violate the underlying conditions?

The EOI issued in February required that alternative providers „would commit to provide affordable unlimited internet access for subscribers at least at 15 Mbps speeds and reduce pricing”. It further listed SHG‘s desire for “affordable hardware available for senior citizens to help them access the internet”, “4G service at a price similar to UK (6GB at £10 per month)”, “introductory discount to get more users into internet use”, a “50% annual internet price reduction to government alongside an improvement in speed and reliability” and additional “price reductions over time”.

The new policy, however, does not stipulate any price reductions but only says that prices can‘t be “increased unduly” implying that cost would continue to increase rather than being cut by half as desired in SHG‘s EOI.

Similarly the policy doesn‘t require unlimited internet access but in the very opposite reserves the right to restrict internet access to protect the provider‘s business model by blocking OTT services such as Skype. This new concession to the provider also reverses another requirement of the EOI, that Internet-based calls (VoIP) become “a standard provision to manage overseas communication”.

The policy‘s intent to allow banning OTT services would also conflict with the EU‘s principle of “net neutrality” which considers access to OTT services as integral part of the internet. Worse, it would go against the spirit of the EDF programme which highlights the importance of OTT services by saying that “access to high speed internet access will permit [St Helenians] to maintain close family relations, especially through Skype and other low-cost internet [communication services].”

Another imbalance can be found in the bandwidth requirements. While the EOI required an increase to a minimum of 15 Mbps the policy only seeks to meet the EDF target which has a wide range of 10-17 Mbps which would need to be available to only 70% of users.

Whereas the EDF programme requires SHG to create “a predictable regulatory environment that keeps pace with technological developments, stimulates growth and innovation and fosters competition and consumer protection”, the new policy leaves many aspects in the dark and shows a strong inclination towards prohibiting competition hampering entrepreneurship, another goal of the EDF programme. Neither does the new policy “keep pace with technological developments” or “foster innovation” but rather seeks to stop the same by allowing the ban of OTT services and so protect Sure‘s outdated business model.

Another curiosity is that the EDF programming document clearly says that the capacity on the submarine cable worth millions (so-called “indefeasible right of usage” or “IRU”) would be bought by SHG with the EDF funds and leased to the local telecoms provider. The proposed new policy from July also clarifies that “SHG will be responsible for purchasing the IRU for this capacity”.

But why did SHG‘s EOI from February require potential bidders to “pay for an up front IRU from SHG for the international connectivity” and “cover the initial Equiano trunk capacity costs”? Might such additional financial burden have deterred potential bidders and most notably does the EDF programme allow SHG to resell the capacity paid for by the EDF?

It is unclear why SHG made these intense demands in the EOI which disappeared in the recent policy or changed to the contrary in Sure‘s favour. Certainly the requirements of the EOI had a deterring effect on any potential bidder that would be interested to take over operations from Sure in 2023.

All these discrepancies, the attempt to make a potential bidder pay for the capacity already paid for by the European Union and the fact that overseas bidders are deterred by both, the excessive requirements of the EOI and the current inaccessibility of St Helena, are raising questions, particularly if SHG uses its best efforts to improve telecommunications and if the tender process will be transparent, non-discriminatory and actually competitive.

The resulting danger that we do not realise the benefits of the submarine cable project, e.g. by trapping ourselves in another uncontrolled abusive monopoly, is one of the key risks identified in the EDF programming document.

Therefore the European Commission reserves the right to “undertake additional project monitoring visits both through its own staff and through independent consultants recruited directly by the European Commission for independent monitoring reviews”.

So far such monitoring review by the EU apparently hasn’t happened nor has SHG drawn “on specialised legal expertise in order to ensure that the legal framework for providing high speed internet access to the population of Saint Helena” is in place, as the EDF programme anticipated.

Instead of drawing specialized legal expertise SHG has hired a health care policy expert for its new policy and is currently looking for a “Telecommunications Technical Consultant” who among some technical duties shall “support SHG with the negotiation process and definition of appropriate licence terms and conditions”.

Given the inclarities and issues of the exsiting license terms and conditions the definition of such should perhaps be left to a specialized legal expert rather than a technical consultant.

It is also hard to understand why SHG now rushes to award a new 10-year license amidst the Covid-19 pandemic when no alternative bidder can access the island. Since the EDF programming document explicitly allows its targets and indicators to be changed in duly justified circumstances, the milestones due in 2021 (delivery of 10-17 Mbps to 70% of users) could probably be delayed so that we could hold the tender process at a later stage when international travel becomes possible again and competing bidders can come to the island.

A delay would also allow the tender process to be supervised from overseas by an independent third party with the necessary expertise and experience.

Meanwhile it remains to be seen if the intense demands made in the EOI to alternative bidders will also be made to Sure.

High-speed broadband would be huge for education. Not only could we make better use of online materials, but with affordable broadband teachers could develop their practice from home.
I'm an IT engineer and I would love to return to my island to start an IT business, but because of the slow, expensive and unreliable internet connection this is simply impossible.
I had to leave St Helena to study. Being 5000 miles away from my family and friends is hard. Not being able to skype with them due to the slow and expensive internet on St Helena is even harder.
Socioeconomic status is now heavily reliant on broadband penetration. With the ever-growing importance of the internet, St Helena with its limited access is in danger of being left behind.