SHOW ME THE MONEY
Now to the fun stuff. It comes as no surprise that successful completion of either of these two projects requires a healthy dose of financing. At the present, O3b Network requires US$650 million with US$60 million already secured through it’s financing partners. It should be noted that O3b, at least of publication of this article, is entirely privately funded. Remember Greg Wyler, he’s a serial entrepreneur with first-hand knowledge on the realities of trying to lay networks in Africa. He previously had an ill-received partnership with Rwanda’s “development-at-all-cost president, Paul Kagame. The US$20 million investment fizzled in a cloud of finger-pointing after 4 years. I can only assume that Mr. Wyler’s new venture was born out of experience, and he has learned from that failure, and like a perennial top athlete, is bouncing back with a new twist to the game plan.
EASSy, while cheaper by comparison, will require in excess of US$248, and I say ‘in excess’ because, as an African, I know that things magically tend to cost more than the amount put on paper. EASSy is being funded by the World Bank, various international development banks, contributions from the members of the consortium, and up until last year, NEPAD.
We all know that where there’s money in Africa, invariably big government, corruption, bickering, and back-stabbing are never too far behind. NEPAD threw a spanner in the works last year by deciding to drop out of the EASSy pact because of strategic in-fighting as to how best deploy the network. And just to further muddle the direction of the project, NEPAD became a direct competitor with plans to lay it’s own cable, with the blessing of various governments and telecoms that sided with NEPADS deployment direction. This creates an interesting tit for tat, because governments (read: South Africa, et al) can now disallow EASSy from landing the cable on it’s shores in order to protect NEPAD’s initiative and once again maintain a monopoly on bandwidth. And with NEPAD’s departure, the future of EASSy is now clouded. So much for competition is good for business.
< End Part 1 >
{ 10 comments }
We are working with companies now to bring awareness to the issues of low-technology in Africa. Regarding the issue of adaptation, we made this 3-minute doc “West African Giggle” that tries to discuss the technology in an indirect fashion.
http://www.westafricangiggle.com
http://www.digitalcribs.net/DisplayVideo.aspx?id=971429327
Hi TMS Ruge,
Check out this post about transparency in laying submarine cable: http://manypossibilities.net/2008/05/transparent-undersea-cables/
IT points to a blog, discussion forum, and photo/video gallery and crucially, to a progress chart:
http://pipeinternational.com/index.php?option=com_content&view=article&id=22&Itemid=66
Would be very cool for the E.Africa projects to do as well. One can always hope
Hi guys, thanks a lot for your insightful comments. There’s enough material in here to warrant a follow-up article. I’ve extended inquiries for comment to some of the entities discussed. I’ll see if they have anything to say by the time the article is published on Monday. I’ll dig a little deeper into the issue and find out what’s at stake in this space over the next 18 months.
Also, every time I am in Uganda, there isn’t a BHH. I hope you guys have a great time. Is there one in December? I will be in UG for the month.
Cheers
@McTim, definitely will see you at BHH!
@BSK It seems we are in violent agreement on these issues
AS for “some ISPs” capping service @ 200 MB per month, is this a certain yello company? In any case it can be seen in a couple of different ways.
A) This is an innovative product for “lite users” who want access, but don’t want to pay a lot for an “all you can eat” style connectivity. Pay as you go model enables consumers to control costs, .
B) This is an insidious “nose of the camel under the tent” attack on Net Neutrality by a telco meant to milk consumers by charging them per Byte .
In any case, clueful consumers/power users like us can see that this product isn’t useful for them. The question then is how to educate the folks who don’t have the same clue level. Hope to meet you at BHH on Thursday!!
@McTim, broadband to me, as least by Ugandan standards, is over 1 mbps, to the *internet backbone* not just to the ISP.
Don’t get me wrong, I do understand the costs of getting relatively fast internet connectivity in Uganda. I once did the figures and they were not pleasant. So maybe my use of the word “nonsense” was misleading.
I just find it very annoying for someone (read ISP) to come up with new versions of “broadband” every other month, and then some ISPs assign download limits of 200MB per month. I use that on an average day. For work.
Back to the main article, I’m not too sure if it’s good or bad in the long term, but the political wrangling in Africa alone has set us back so far it’s unbelievable. It’s a good thing there are foreign governments and corporations that see the potential we cannot see in our selves.
Thanks for your enlightenment though, McTim. I’m no ISP guru, but this information is very promising.
Thank you for shedding light on the undersea vs space race.
My observation is that LEO-Sat is a yet to be tried technology while undersea fiber is well tested technology. So I am inclined to keep my eyes on the several under sea fiber projects – at least for all major population centers of East Africa, even though hinterland cable laying has had its challenges (like people digging it up in some areas).
In the article, only EASSy and TEAMS are mentioned but I thought SeaCom was the first to commence.
IK
Hi TMS,
Sorry, I only read the first page when replying to this article. You clearly have a good grasp of the situation. My question is this: Where are the boats? In other words, what is the exact status of the projects? Are there ships at sea, laying cable? if so how much has gone off the drums into the sea? There is literally no information about this online (yet). Would love to see some from TEAMS or FLAG or anybody really.
@BSK What is Broadband for you, and why can’t you get it?
Whatever the answer to the first part of the question, the answer to the 2nd part is that it costs to much to get it via satellite.
For example, say you want 1 Megabit per second from your ISP. They buy that 1 Mb/sec at a cost ranging from ~2000 USD (for a large telco making a multi-Megabit purchase to 9000 USD(for a small ISP buying just the single Megabit per second. Now, they could sell that to you at cost plus x percent, or they could sell the same 1 Mb/sec multiple times to numerous customers in order to bring down costs and hopefully increase profits at the same time.
The bottom line is that they are selling a very scarce commodity, and the reason it is scarce is because of the cost of carrying the bits to and fro using scarce spectrum via Geo-synchronous satellites (which are multibillion dollar investments). LEOs (Low-Earth Orbit) OTOH, are much smaller investments, provide lower latency and use freely available spectrum. Fibre is expensive to lay, but provides several orders of magnitude more bandwidth.
@TMS Both fiber and satellites will be useful in the future, while there is an element of first to market/first mover advantage, it’s not a clear cut race to see which comes first. There are places that will never be served by fibre, which is where 03b connectivity will be useful, and there are circumstances where fibre will have market advantages.
For telcos, their object has traditionally been to maintain scarcity which keeps prices (and margins) high, ISPs globally OTOH operate in a very low margin commodity business. Currently margins for ISPs are higher in East Africa than they are globally. Both the o3b and fibre projects will bring their costs down, and hopefully these cost savings will be passed on to the consumers. Both will be disruptive and highly beneficial if/when built. I eagerly await both types of connectivity.
NB: EASSy may still be around as an idea and mulitstakeholder protocol, but the project to lay submarine cable to East Africa is now called smt like the NEPAD African regional broadband initiative, and due to political wrangling, the Kenyans are building their own called TEAMS and others are planning and building their own submarine links as well. So it’s not just a race between fibre and o3b, but a race amongst the various fibre projects as well.
Being directly involved with the Internet industry in Uganda, (Node Six does hosting and web applications), I’ve been holding my breath for a very long time, waiting for true broadband, not the nonsense the telecoms and ISPs keep throwing in our faces.
And it’s a breath of fresh air to see some serious contenders coming up.
Very Interesting and insightful article. Can’t wait for part two.
Comments on this entry are closed.
{ 3 trackbacks }