The seed for the establishment of TENET was planted back in 1998. It started with a meeting of all university vice-chancellors, called by the president of the Foundation for Research Development (today known as the National Research Foundation), Dr Khotso Makhele. Dr Makhele requested this meeting because, since the early 1990s, the FRD had been providing Internet bandwidth to South African universities through it’s so-called UNINET project which they planned to terminate.
Before an audience of the university vice-chancellors Dr Makhele walked to an empty wall in the conference room, grabbed hold of an imaginary switch, and said, as he pretended to pull down the switch, “Not today, not tomorrow, but soon we will switch UNINET off.” It was a dramatic trigger for the universities to take over the provisioning of their own Internet access.
The group of vice-chancellors asked the recently retired vice-chancellor of the University of Cape Town (UCT), Dr Stuart Saunders to take overall responsibility for this project. Dr Saunders was also closely involved with the Andrew W Mellon Foundation, which had invested in the computerisation of university libraries and was concerned about the high costs of bandwidth.
In response to these two triggers Saunders established a task team to investigate options. Leading the task team was Dr Duncan Martin, who was Director of Information Technology at UCT at the time. The task team decided to form a non-profit company with its first directors appointed by the South African universities and technikons (technical colleges, which have since either merged with universities or been renamed as universities of technology). The newly formed board then appointed Dr Saunders as chair and Dr Martin as the first employee and CEO of the Tertiary Education Network of South Africa (TENET). TENET was incorporated on the 22nd August 2000.
Subsequently TENET’s name was changed to Tertiary Education and Research Network of South Africa in recognition of the equal roles teaching & learning and research played in higher education; and the membership criteria were revised to allow all statutory higher educational institutions and research councils to become members, along with associated support institutions such as the National Library of South Africa.
Early triumphs
The first two tasks were to get all South African universities to sign up to get their Internet through TENET, and to negotiate better rates with Telkom, the South African state-owned telecommunications operator, which, at that stage, had a monopoly on the market.
Tough negotiations ensued and eventually Telkom agreed on a rate that was significantly lower than the one that it had been charging UNINET — conditional upon the number of universities that signed up with TENET — the more universities on board, the lower the unit price.
The first TENET agreement with Telkom was called the Higher Education Inter-networking Solution with Telkom (HEIST). This was a four-year agreement which ensured Internet access to universities at favourable costs and also with Telkom providing a technical help desk to universities and monitoring services 24-hours a day. In January 2005, the HEIST Agreement was superseded by the Second Generation Inter-networking Solution (GEN2 Agreement) with Telkom, which held for three years.
Thanks to the many consultative workshops that the Task Team had arranged during the negotiations, every institution that had used UNINET’s services elected to transition to TENET. The service cut-over from UNINET to TENET occurred on 1 March 2001.
Beginning of deregulation and SEACOM cable
As the GEN2 agreement with Telkom was set to expire, the process of the deregulation of the South African telecommunications industry was slowly beginning and new players were emerging on the scene. So when it came time to negotiate the Generation Three (GEN3) agreement with Telkom, TENET made the decision to invite proposals from all new industry roleplayers. As this process was ongoing, Dr Martin received an unexpected phone call.
“It was from a man named Brian Herlihy,” he remembers. “He said to me: ‘You are the CEO of TENET, right? Well, I’m the CEO of SEACOM and here is what we will do for TENET’.”
Herlihy was representing a private company, SEACOM, who were planning to lay a submarine cable down the east coast of Africa. The cable would run from Sicily, across the Mediterranean, cross the Egyptian desert, plunge into the Indian Ocean, land in various countries on the east coast of Africa before terminating at a landing at Mtunzini, some 140 km north of Durban on the KwaZulu-Natal coast. At the time, SEACOM had not yet commissioned the manufacture of the cable nor had received permission from the South African government to land the cable.
“According to the deal Herlihy offered, TENET would buy an indefeasible right of use of a 10 gigabit per second circuit, for the life of the cable, between Johannesburg and Sicily, for a capital sum of USD 23 million.” says Dr Martin. Three changes were made to the offer during the next few weeks: Sicily became London; Johannesburg became Mtunzini; and the price dropped to USD 20 million.
“The unit price was staggeringly low compared to what we had been paying Telkom.”
He later found out that SEACOM was charging commercial clients some four times as much as it asked of TENET.
“I told Herlihy I was very interested, and then set about figuring out how I was going to lay my hands on $20 million,” said Dr Martin.
He first went to speak to a university finance director — a conversation that proved very disheartening. “I walked away from that meeting a disillusioned but wiser man,” he said. “The finance director’s response was: ‘you want how much money for the Internet? Do you know what students do with the Internet? They email their girlfriends and look at porn!’”
Things were different when Dr Martin put the opportunity to the IT Directors of the universities and research councils. He had worked out that if most of the user institutions would agree not to reduce their expenditure on Internet bandwidth for a period of six years, and if SEACOM would permit the purchase price to be paid off over six years, then the deal was viable. SEACOM did agree to the six-year payment period (with a hefty rate of interest on outstanding balances). And some 26 institutions agreed formally not to reduce their Internet spend in dollar terms.
Finally, to eliminate the unpredictable effects of the exchange rate, Dr Martin approached the Development Bank of Southern Africa (DBSA) for a Rand loan, to be repaid over six years, so that SEACOM could be paid off immediately, and the institutions’ commitments could be redenominated in Rand. The DBSA advanced a loan of some R153 million; SEACOM was paid in full, and over the following seven years, the DBSA loan was paid off.
TENET contracted with a company called Dark Fibre Africa to purchase dark fibre capacity from the SEACOM landing station in Mtunzini through to a campus of the Durban University of Technology, from where a national backbone was built by the South African National Research Network (SANReN). This was completed in 2010, and the new SEACOM capacity was brought into use.
TENET becomes a fully licensed network and network services provider
While the negotiations around the SEACOM cable, and work on installation of the cable took place, the South African telecommunications market deregulated even further. The Telecommunications Act of 1996 was replaced by the Electronic Communications Act of 2005. According to this act all entities that held a specific license under the previous act (Value-Added Network Services licence) would automatically receive licenses to operate networks and network services. This was however, under pressure from Telkom and other big players in the industry, blocked by the Minister of Communications who tried to establish a policy in which, at most, 20 organisations would get licenses under this act. Fortunately a company called Altech Autopage Cellular took this to court and in August 2008 won the court battle. TENET automatically became a fully licensed network and network services provider.
“I remember I flew up to Joburg to personally take possession of the license document,” said Dr Martin, “and whistled my way out of the ICASA [Independent Communications Authority of South Africa] building.”
This was the beginning of a new era for TENET in which the organisation transitioned from what was effectively a “bandwidth stokvel” into a professional entity, managing and operating its own network.
