Africa’s Bandwidth Puzzle

September 8th, 2009 by · 1 Comment

africa_underseas_cablesThere’s a thoughtful article over on regarding what Africa can and cannot do with all the undersea bandwidth that has come ashore already or is coming soon.  This summer SEACOM finally went online along the east coast, and WACS is due along the west coast in the next couple of years, which will add to the other 5 cables to provide an aggregate capacity of over 10Tbps to the continent.  That’s not much compared to what feeds Europe and North America, but for Africa it’s huge.  However, few telecommunications companies on the continent are at a stage where they can actually use it, and even those who are generally still serve populations with high rates of poverty and illiteracy.   So will all that bandwidth just sit idle?

The way I see it, Africa’s communications systems have had a chicken and egg problem for decades.  They have had little access to inexpensive bandwidth, which has made it all but impossible to develop local demand.  And the lack of local demand means that nobody has been willing to build cables to provide more bandwidth.  Now out of the blue someone has provided a whole shipment of chickens, and they’re worried that they can’t sell the eggs.  Stop worrying.  The catch-22 has been lifted, and that’s good enough for the moment.

It may not be easy and it certainly won’t be geographically homogeneous, but the more creative companies in the region will find a way to take advantage of the new bandwidth.  I am reminded of Beijing where everyone from the corporate executive to the migrant worker who recycles the trash has a cell phone now – a nice one too.  It is a transformation that has taken only a decade.  Of course Africa is a very different place at a very different stage of development.

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Categories: Internet Traffic · Undersea cables

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  • Brian Scully says:

    Rob, An interesting article you write. I just recently became aware of the following investment opportunity in Africa. The opportunity is in Sierra Leone (West Africa). Below is portions of their executive summary to potential investors.

    A group of entreprenuers have obtained exclusive rights to five major telecommunications licenses from the African government. These licenses include the Landing Rights to deploy and operate the first and only undersea fiber optic cable transmission facility in Sierra Leone, and to provide voice and broadband data gateway services; thereby enabling international connectivity from Sierra Leone to the rest of the world. With a five-year exclusivity period guaranteed by the government, it literally means that the initial deployment costs can pay for itself within 5 years. There will be no competition in this marketplace as this company will be the only one granted with these rights.

    The strategic focus is to deploy the first subsea fiber optic network backbone in Sierra Leone by building a cable branch in Freetown with connectivity to one of the four undersea fiber optic trunks (ACE, WACS, MainOne, GLO-1) currently being deployed along the western coast of Africa. These cable transport facilities will offer a high speed, reliable and cost effective telecommunications system. Such an infrastructure would support a variety of telecommunication services, allowing additional product offerings to Sierra Leone in the areas of voice, data and video.

    Once this branch is deployed, a majority of the country will be connected to their system via Microwave radio carrying GSM, CDMA and WiMAX traffic. This will provide almost everyone with the opportunity to have a gateway to the world of information and communication.

    Future company plans include offering differentiated high-speed broadband fixed scalable services, such as Internet, combined data, voice, and video service capabilities.

    This will facilitate continued business growth as well as improve the quality of life in the public and private sectors.

    Product focus will be on offering broadband Internet access, data and voice gateway services by targeting existing Mobile operators, Internet Service Providers, businesses and the government.

    Revenue Potential
    _ International voice calls from Sierra Leone in 2008 generated total revenue of between US$ 48-50 million. Goal to secure a majority stake and eventually take over the revenue stream for most calls generated and terminating into Sierra Leone through its Fixed Wireless System.
    _ Wholesale Bandwidth. Based on current market prices in the region of US$ 7,500 to US$ 12,000 Mbps per month, wholesale bandwidth will be marketed to ISP’s and Mobile Operators, with an initial target uptake of 150 Mbps within 3 years, generating US$ 17.5 million annually on average and US$ 52.7 million in 3 years.
    _ ISP and Broadband Connection. Based on present prices, entry level Broadband will be offered for US $50 per month to domestic subscribers with an initial target uptake of 60,000 users within 3 years, generating an income of US$ 3 million per month and US$ 36 million annually.
    _ Commercial Broadband services will be marketed at $200-$500 per month with a target uptake of 2,000 users within 3 years, generating an income of between US$ 400,000 and US $1,000,000 per month or between US $4.8 million and US $12 million annually.
    _ Data Storage and other Commercial services should achieve an income of US$ 450,000 per month within 3 years, generating an income of US$ 5 million annually.

    Investors can expect an ROI of 40-50% in the first five years. This capital will be deployed under two major product segments of Project – CLEAR (i.e. Cable Link to Electronically Accessible Resources), namely:

    _ Undersea Fiber optic cable communication transport facility with international connectivity via a high-speed and reliable fiber optic cable link, providing voice and data gateway services for international traffic termination.
    _ WiMAX and similar wireless network technology to provide Internet Access, Cable TV, and other Value-Added services.

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