Tenet signs deal with Seacom

Tenet has signed an indefeasible capacity purchase agreement with Seacom, which has started construction on an undersea cable that will land in KwaZulu-Natal.

Tenet runs a national research and education network on behalf of 40 research and educational institutions in SA and surrounding areas. It is responsible for securing connectivity and associated services for the institutions it serves, and which control it. These institutions include all 23 of SA`s universities and most of the research councils.

The deal with Seacom, says Tenet CEO Duncan Martin, "provides for us to acquire the use of 10Gbps wavelength from Seacom`s Mtunzini landing station, in KwaZulu-Natal (the same beach on which the SAFE cable comes ashore, but not the same facility), to London. The agreement gives Tenet the right of use for the life of the cable (expected to be 20 years) and allows Tenet to make the bandwidth available to education and research institutions in SA and in neighbouring countries on a cost-recovery basis."

Tenet has purchased this right for a one-off purchase price and annual maintenance payments, which are fixed at a small percentage of the purchase price, in dollar terms, he says.

States Martin: "Seacom has offered us the option of paying the purchase price in six equal annual payments (the interest over the period is built into the payments). Each of the six payments amounts to almost the same as the Tenet institutions are now collectively paying each year for one-fifth of a Gbps capacity on the SAT-3 cable.

"Consequently, the institutions will be paying the same as they are now, but will get 50 times the bandwidth, and, at the end of the six years, will have finished paying for the bandwidth for the following 14 years."

Tenet raised the funding to pay for the deal from the institutions it represents. Says Martin: "We explained this no-brainer deal to the institutions and invited them to make a commitment to the fixed annual payments. Enough of them responded that it was over-subscribed, we had more funding committed than we will need to cover the payments."

The first payment is due in 2009, when the capacity on the Seacom system becomes available, and the last will be in 2014. Expected turn-on date is 1 July 2009.

"Seacom is granting Tenet access to its Mtunzini landing station," says Tenet CTO Andrew Alston. "Unlike the SAT-3 and SAFE landing stations, which are closed, Seacom`s is open access which means customers can put their own connecting equipment in the landing station."

Tenet will connect from Mtunzini to the 100-odd sites it serves via a network being deployed by the Meraka Institute, under contract to the Department of Science and Technology. The South African National Research Network (Sanren) will be deployed over the next 18 months.

"Tenet is working very closely with Sanren," says Martin, "and Sanren will connect the 100 institutional front doors all over the country to the Seacom landing station."

Says Seacom spokesman Stephen Laufer: "Clearly, Tenet is a client that will benefit from the fact that there is much greater bandwidth available, at much lower prices. The deal is good for academia in SA and good for education. Seacom is obviously, for that reason, very pleased to be partnering Tenet in this way."

Laufer says the value of the deal is "confidential information between commercial partners". According to a statement released by Seacom earlier this week, construction on the cable and undersea repeaters will start next week.

According to the same statement: "Seacom has already invested more than $10 million in the marine survey and engineering of the cable. This advance work has allowed Seacom to maintain its ready for service date of June 2009. The $650 million cable covers more than 15 000km," the company says.