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Africa: Bandwidth Reports
AfricaFocus Bulletin
Dec 7, 2006 (061207)
(Reposted from sources cited below)
Editor's Note
"Bandwidth is the life-blood of the world's knowledge economy,
but it is scarcest where it is most needed ... For those
[African institutions] that can afford it, their costs are
usually thousands of times higher than for their counterparts in
the developed world, and even Africa's most well-endowed centres
of excellence have less bandwidth than a home broadband user in
North America or Europe, and it must be shared amongst hundreds
or even thousands of users. A variety of factors are
responsible for this situation, but the biggest cause is the
high cost of international connections to the global
telecommunication backbones." - Mike Jensen
This AfricaFocus Bulletin contains excerpts from recent reports
by Mike Jensen for the Association of Progressive
Communications, and by Russell Southwood of Balancing Act, both
focusing on issues of additional bandwidth.
Another AfricaFocus Bulletin sent out today contains a variety
of reports from Balancing Act's News Update on the IT and
telecommunications sectors in Africa.
++++++++++++++++++++++end editor's note+++++++++++++++++++++++
Open Access: Lowering the Costs of International Bandwidth in
Africa
Association for Progressive Communications (APC)
APC Issue Papers
Mike Jensen
October 2006
[Excerpts only. Full text, with footnotes and maps, available at
http://rights.apc.org/documents/open_access_EN.pdf
- This paper ... which was finalised in late June 2006, contains
annexes available online:
http://rights.apc.org/documents/fibre_bandwidth_annexes_EN.pdf
- A South African, Mike Jensen sent his first email more than
twenty years ago. He is an independent consultant with
experience in more than 30 countries in Africa assisting in the
establishment of information and communications systems over the
last 15 years.
- APC is an international network of civil society organisations
founded in 1990 dedicated to empowering and supporting people
working for peace, human rights, development and protection of
the environment, through the strategic use of information and
communication technology (ICTs). We work to build a world in
which all people have easy, equal and affordable access to the
creative potential of ICTs to improve their lives and create
more democratic and egalitarian societies.]
Bandwidth is the life-blood of the world's knowledge economy,
but it is scarcest where it is most needed - in the developing
nations of Africa which require low-cost communications to
accelerate their socioeconomic development. Few schools,
libraries, universities and research centres on the continent
have any internet access. For those that can afford it, their
costs are usually thousands of times higher than for their
counterparts in the developed world, and even Africa's most
well-endowed centres of excellence have less bandwidth than a
home broadband user in North America or Europe, and it must be
shared amongst hundreds or even thousands of users.
A variety of factors are responsible for this situation, but the
biggest cause is the high cost of international connections to
the global telecommunication backbones. This is mainly the
result of the lack of international optic fibre infrastructure,
which is necessary to deliver sufficient volumes of low-cost
bandwidth, and the consequent dependency on much more expensive
satellite bandwidth. Less than twenty of the 54 African
countries have international optic fibre cable connections, and
these are currently controlled by inefficient state-owned
operators which charge monopoly prices while neglecting to build
the national backbones needed to carry local and international
traffic. As a result, circuits from Africa to the US or Europe
usually cost more than US$5000 a month1 , while cross-Atlantic
links between North America and Europe can now be obtained for
US$2.5/Mbps/month and for US$16 30/ Mpbs/month on international
routes in Asia.
The only large-scale international fibre link in Africa
(SAT-3/WASC/SAFE) connects eight countries on the west coast of
the continent to Europe and the Far East. Operating as a cartel
of monopoly stateowned telecommunication providers, prices have
barely come down since it began operating in 2002. New fibre
projects have been proposed which could break this monopoly and
add many more African countries to the global grid, but most of
these projects are also being developed by state-owned telecom
operators. As a result they are following the same high-priced
SAT-3 business model. Unless interventions are made to reduce
the cost of these existing international fibre links and to
ensure that new fibre infrastructure is quickly built, the
continent will be prevented from tapping its latent potential
and will fall further behind the rest of the world.
This problem is not unique to Africa. Other developing regions
suffer from the same problem, but it is at its most extreme in
sub-Saharan Africa, which has the lowest teledensity in the
world and the highest unmet demand for telecommunication
services. Fortunately, African governments and the international
community have recently become more aware that action is needed
to improve access to communications and to encourage the
adoption of alternative business models that can significantly
lower the cost of international links. These have centred on
what are known as open access models, which are cost-based and
owned by the public sector (similar to roads and rail lines),
rather than being operated by a club of companies aiming to
maximise profits.
Most African country telecommunication markets are slowly moving
to a more competitive environment which will ultimately address
pricing and national imbalances in demand and supply. However
the international sector in developing countries is different
from developed nations because the majority of countries have
markets that are too small to justify the cost of deploying many
competing international fibre cables. With each cable able to
carry data at terabit speeds, only one international connection
to a global hub is needed, although a second physically separate
link is also required for backup (redundant connection)
purposes. However achieving competitive pricing between just two
suppliers is infeasible. Thus, in order to ensure cost-based
pricing, a different model of deployment is needed, where the
cable and landing points are operated on a non-profit basis,
extending the models used by internet service providers for
operating national or regional Internet Exchange Points (Ixs).
This follows a number of recent studies which have identified
public-private partnerships and open access models as a more
appropriate solution for fibre deployment These also build on
precedents set by the oil and gas industries when building
pipelines, in which the basic approach is to establish a Special
Purpose Vehicle (SPV) to operate the facilities. The main
objective of the SPV is not to make a profit, but to facilitate
profits made elsewhere by the participating companies. The aim
is not to exclude incumbent telecom operators from the process,
but to allow the participation of others that might bring
additional funding or other advantages to the table such as
rights of way to build fibre along power or rail routes
The most viable structure for this approach is likely to be a
two-part system in which national cable landing points are
managed by national associations of bandwidth providers, while
the cable itself is owned by a mix of operators and private or
public investors. Given that the most appropriate place for the
cable landing point is likely to be at the facilities of the
national operator, these would most likely be owned by the
state, but operated by a management company appointed by the
national association of bandwidth providers.
With the cable itself, different models can be adopted. In one
scenario any entity would be free to invest, either as an
operator, in which case the investment would be tied to
guaranteed amounts of bandwidth, or as a non-user shareholder
who might invest funds or provide a right of way (e.g. a gas
pipeline operator wishing to minimise the cost of operating
their pipeline network). Alternatively, ownership of the cable
can be defined on a national basis with shares held by the same
special purpose companies that operate the landing points.
In either case, sufficient investment is likely to come from the
much broader base of operators that would be able to access the
bandwidth at cost, and little additional financing would likely
be required However some of the smaller, more remote or less
developed countries might require special assistance, and given
the general interest by the international community in ensuring
more universal access, along with the positive impact on demand
for national backbones that would result from affordable
international connectivity, donors could provide a demand
guarantee that would meet any revenue shortfalls in the early
years. This may be a risk for donors if the demand was not met
over the life of the cable. However, assuming the long-term
business case is sound, they might look to recoup the funding
when traffic increased at a later point. Donors could also be
invited to meet the cost of additional add-drop units on fibre
projects to ensure small and remote communities along the way
can be reached. The choice of these locations would be a matter
for negotiation between the donors and national governments.
Given the interest of governments in supporting the development
of their nations such as through improved access to health and
education, along with the broader social improvement and
enhanced public services which can be provided through better
connectivity, there is a growing interest amongst a wide range
of stakeholders in ensuring that open access models are adopted.
The initial focus is likely to be on supporting the adoption of
open access models for the upcoming East African fibre project
(EASSy, see below) which could then be replicated in West and
Central Africa. At the same time SAT-3 and other existing
international fibre cables may be declared essential facilities
serving the public good with regulated pricing. Specific
activities are likely to be:
- Increased backing for policy makers and regulatory agencies in
Africa to implement policy changes and regulations that allow
open access to international fibre
- Support to local associations of bandwidth providers to
establish shared international fibre gateways
- Increased backing for international fibre projects which aim
to provide equal access to all bandwidth providers.
There is the risk that the entrenched interests of the incumbent
operators and their state-owners will be able to resist efforts
to change national telecom policy, and that the EASSy project
goes ahead as currently planned. Nonetheless, support from a
broad range of stakeholders is expected to substantially improve
the chances of an alternative strategy being adopted, which
could have a major impact on the way international fibre
projects in developing countries are being planned in the
future.
In summary:
Most of Africa is as yet unconnected to the global fibre
backbones.
Optic fibre is the only way to supply sufficient international
low-cost bandwidth.
As elsewhere, the limited fibre that has been laid in Africa is
not competitively priced, and uses business models developed by
cartels of monopoly telecommunication operators.
A cable planned for the East coast of Africa (EASSy) which will
have a major impact on bandwidth availability in the region, was
being developed as a club of mostly state monopoly operators
with high prices and low volumes in mind.
The strategy for the deployment of an open access model for
EASSy is in the process of being legislated by policy makers in
the region.
The adoption of a low-cost open access model for EASSy would
likely have a major impact on the way new fibre projects are
planned in other regions in Africa.
1.The Nature of the Problem
Communication costs in Africa are currently thousands of times
higher than in Europe or North America. This particularly
affects those with the most limited resources: students,
researchers, doctors, scientists, and other public servants, as
well as the general public, who are unable to take full
advantage of the unprecedented access to knowledge the internet
provides. Cheaper bandwidth for African institutions,
particularly governments, schools, universities, libraries and
hospitals would provide widespread access to the wealth of
information available online, facilitate African contributions
to the global economy and increase the likelihood of successful
solutions to African development problems. So in a nutshell, the
constraints on development in Africa caused by the high cost of
communications are not being addressed due to inappropriate
business models used for deploying international fibre
infrastructure.
The developed world is benefiting from the surplus of optical
fibre cable laid during the dot-com bubble which has coincided
with technology advances that have made speeds of over 1000
Gigabits per second routine on these fibre links. While those in
the North reap the benefits of these developments, much of the
South, and Africa in particular, has not seen significant
deployment of international fibre. ...
There is only one intercontinental fibre link to sub-Saharan
Africa (SAT-3) which provides connections to Europe and the Far
East for eight countries along the west coast of the continent
,,, Except for some onward links from South Africa to its
neighbours, and from Sudan to Egypt and from Senegal to Mali,
the remaining 33 African countries are unconnected to the global
optical backbones, and depend on the much more limited and
high-cost bandwidth from satellite links. Even the few countries
that have access to international fibre through SAT-3 are not
seeing the benefits because it is operated as a consortium where
connections are charged at monopoly prices8 by the state-owned
operators which still predominate in most of Africa, and in many
other developing regions.
As a result, institutions in these countries pay thousands of
dollars a month for internet connections which a home broadband
user in North America would pay US$20 a month for. Aside from
the general dampening effect this has had on uptake,
unaffordable bandwidth has actually excluded African scientists
from gaining access to the services of global research networks
which now expect their member countries to have at least 1Gbps
on international connections in order to access the advanced
services and petabit data sets they now provide.
In a chicken-and-egg situation, the constraints on demand
resulting from the high tariffs charged by the monopoly
operators have contributed to the slow pace of fibre deployment
and the severe lack of investment in needed infrastructure. Many
of these state-run telecom operators, often mismanaged,
inefficient and suffering from much reduced profits caused by
the collapse of international settlement rates, do not have the
resources to invest the millions of dollars needed to deploy
national and international fibre, and neither do their host
governments. Understandably, few private investors or donors are
interested in financing these moribund organisations that rest
on artificially-closed markets. At the same time, continued
state-operator control over international gateways and national
backbones has meant there are very few opportunities for
investment in privately-operated telecommunication
infrastructure.
[For detailed sections on SAT-3 and EASSEY omitted, see full
text on the APC website]
Balancing Act's News Update 318 (13th August 2006)
Top Story: Africa's Transition to Fibre Likely to Be Slower than
Expected, Says New Report
With the proposed EASSy fibre cable coming on stream in 2008 and
the steady roll-out of national backbone and cross-border links,
it might be expected that the proportion of African traffic
carried by fibre would increase very quickly. This appears
unlikely to happen within the next three to five years,
according to a new report from Balancing Act out this week.
Currently around 80% of all of Africa's voice and data traffic
is carried by satellite but this figure is likely to fall as the
continent increases fibre links at all levels. The balance of
traffic is almost all carried by the continent's only current
international fibre link, SAT3.
Based on use of its international traffic database, it estimates
that on the basis of the progress of current plans and with
favourable pricing adjustments on the SAT3 fibre, just over 30%
of the total market in three years time will be carried by
fibre, according to the African Satellite Markets report.
Why is this transition likely to be so slow given that fibre is
cheaper than satellite for high-volume traffic? There are a
number of factors:
- The slow speed of competitive national backbone roll-out: It
has taken Nigeria five years to get to a point where Nitel is
supplying sufficient national backbone connections to SAT3 that
there is now a rising flow of traffic on to the SAT3 cable. By
contrast, South Africa's Telkom completed this work prior to the
cable opening and now carries the majority of its traffic over
the fibre link.
- The lack of inter-country links: Although both SAT3 and the
proposed EASSy cable connect coastal cities there are relatively
few cross-border links in place. Kenya has two sets of links
being built to Nairobi by KDN and Telkom Kenya and a link is
being built from Kenya to Rwanda. But other parts of the
"land-side" infrastructure are at a much earlier stage. For
example, Zamtel has just announced its intention to build its
connection to EASSy (see Telecom News). And in one case
Zimbabwe the transition has gone backwards: Telkom SA financed
a fibre link to the country but TelOne failed to meet the
payments so is now sending its traffic via satellite.
- The impact of high SAT3 prices on landlocked and "no landing
station" countries: SAT3 consortium member Namibia Telecom is a
"no landing station country" and sends 60% of its voice traffic
via satellite, most of the balance being calls to South Africa.
Why? Because the costs of transiting via South Africa make it
more expensive than sending via satellite. Based on a pricing
survey, the report looks in detail at these market distortions
that have arisen from the position held by the monopoly market
supplier.
- The lowering of prices on the proposed EASSy cable: Although
final prices have not yet been announced, it is believed that
they will fall in the US$500-1000 range (the lower price
probably being available after a five year period). This will
give users in the largest Sub-Saharan African market, South
Africa, a much cheaper alternative and will drive down what
Telkom SA can charge. Over 3-5 years, this will have the effect
of unlocking some of the market distortion problems identified
in the previous point in the southern African region. However,
it will leave similar problems in West Africa largely
unaffected.
Sub-Saharan Africa has seen a fourfold increase in the level of
international Internet bandwidth supplied by satellite over the
last four years, from 500 Mbps in 2002 to 1.86 Gbps in 2006.
There are now 71 satellites with full or partial coverage of
Africa and seven more are planned.
Two major satellite operator acquisitions were completed during
2006:
- On 3 July 2006, Intelsat announced that it had completed the
acquisition of PanAmSat. Intelsat now therefore operates 25 out
of the 54 satellites over Africa.
- On 30 March 2006, SES Global completed the acquisition of New
Skies Satellites. SES Global now therefore operates 6 out of 54
satellites over Africa.
There have also been moves toward consolidation in the reseller
market as Israel's Gilat Satcom has purchased another Israeli
reseller IP Planet. Both companies have a significant presence
in the African market. Another large reseller with a significant
presence has also been the subject of an unsuccessful bid and a
large African corporate connectivity supplier is up for sale.
For further details of what's in African Satellite Markets, go
to: http://www.balancingact-africa.com/satmarks.html To order
the report, go to: http://www.balancingact-africa.com/profiles/order/order_form.php
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues,
with a particular focus on U.S. and international policies.
AfricaFocus Bulletin is edited by William Minter.
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