gwi - african ict infrastructure - ic and backbone - excerpts - apr-09

8/9/2019 GWI - African ICT Infrastructure - IC and Backbone - Excerpts - Apr-09

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GWI, Inc., 2009

2009:ICT infrastructure in Africaat a crossroad

March 2009


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GWI, Inc., 2009 Page 2

Table of Content

Executive summaryMarket overview

International connectivity Submarine cable systems

Satellite

Regional infrastructure Regional fiber backbones

Regional IXPs

Country infrastructure Country fiber backbones

Country IXPs

Access networks Mobile Voice (GSM, 3G)

Mobile Data (GPRS, EDGE,UMTS900)

Fixed Wireless Access

(CDMA2000) Broadband Wireless Access

(WiMAX)

Infrastructure UtilizationProjects

Conclusion


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Executive Summary


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Executive Summary (1/3)

Investments in ICT infrastructure in Africa have significantly increased in recent years.

Private sector investments in particular have been stimulated through the establishmentof independent regulators in many African countries and by the opening to competition ofmost African telecommunication markets.

The bulk of the past decade ICT investments went to mobile networks ($40B over thepast decade). Mobile subscribers went from 16 million at the turn of the century to over300 million today.

If voice service progress is very encouraging, the situation is quite different with dataservices, which are most needed for government, business and consumer applications.

The broadband infrastructure is grossly inadequate and actually inexistent in many partsof the continent. Where available, Internet access is much slower, of poorer quality andseveral times more expensive than in the rest of the developing world. Broadbandpenetration is still under the 1% mark on the continent, and a DSL subscription costs anaverage $360 per month in sub-Saharan Africa to be compared with $40 in the USA and$30 in the EU.

This situation is however soon to change dramatically.

This presentation objective is to highlight the reasons why Africa is on the verge ofseeing the long-awaited development of data services in general and broadband accessin particular. : source World Bank, 2008


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Broadband services have a lengthy enablement chain: International Connectivity (IC) to

the Global Internet, regional and country backbone networks, interexchange points (IXP),access networks, ICT platforms and applications.

Not only all elements are required, but they must be made available in the right order.

The fact that little Internet content is hosted on the continent itself worsened the lack ofIC. The rare existing links (e.g. SAT3/SAFE and VSAT) provided connectivity to theGlobal Internet at astronomical cost. IC has been the main bottleneck of the broadband

service enablement chain, and it is going to rapidly vanish. By mid 2010, at the time of the 2010 FIFA World Cup in South Africa, at least 3 new

submarine cable systems will be ready for service, multiplying sub-Saharan IC capacityat least by a factor 25. The East coast will enjoy landing stations for the first time ever.

EASSy cable system will operate in an open access mode, enabling the provision ofmuch more affordable connectivity, likely at a tenth of current costs. Moreover excess IC

capacity will trigger competition for traffic among all players leading to more competitivepricing on non-open cable systems.

Submarine cable forthcoming readiness for service is already speeding up thedeployment of the main terrestrial fiber backbone networks that backhaul traffic tolanding stations. For instance, most of the Eastern and Southern regional backbone willbe ready in sync with the East coast submarine cable systems.

: Glo1, TEAMS and SEACOM (2009); EASSy (2010)


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The regional backbone infrastructure will propagate IC capacity along thousand ofkilometers of terrestrial links. The continent fiber backbone is expected to expand froman estimated 12,000 Kms of existing links to over 60,000 Kms in the three years tocome.

At access points along the new continental backbone, carriers and specifically mobileoperators will switch traffic from expensive and limited VSAT connections to the new IC.That in turn will free VSAT bandwidth, which is still in high demand outside the proximityof backbone networks.

Where the continental backbone offers access points, ICT development local programswill be enabled. Private investors will create access networks, and the development oflocally-pertinent ICT content, applications and services will be made possible.

The speed at which ICT develops will still depend on local policy and regulatoryenvironment, including infrastructure sharing, demand aggregation among institutions

and demand generation initiatives.

But once the main broadband service inhibitor, i.e. International Connectivity, has beenbypassed, GWI expects the pace of ICT development in Africa to be steadilyaccelerating.


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The broadband servicesenablement chain

Submarine cables & landingstations

Satellite-link backbone

Interconnect Exchanges

Regional fiber backbones

Country national backbones

Middle mile networks

GSM / 3G networks

Fixed-wireless networks

WIMAX, FTTP

Internet by Satellite

E-government platform

Content, directories, portals

Security, payment, e-commerce


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International Connectivity projects:

Submarine cable systems


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International Connectivity:status and trends

In Africa, most Internet traffic passes in and out of the continent sincelittle Internet content is hosted within the continent itself, making theavailability of sufficient international connectivity an integral element ofthe delivery of broadband connectivity.

Total investment in undersea cable systems in Africa (1987-2007):$934M, vs. total global investment same period: $46B (i.e. Africancables represent only 2% of the worldwide cable system).

As of today, Mtunzini, South Africa to Djibouti remains the longest un-served coastline in the world (7,000 Kms).

Africa is expected to catch up in terms of submarine cable systems,with an estimated $6.4B of planned and projected projects in the yearsto come.


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Submarine cable projects inAfrica, 2008-2010

Recent decision bySouth Africangovernment tonationalize cablelanding rights

(September 2008)could impact someprojects: Benefit for INFRACO

Disadvantage forEASSy, SEACOM, andFLAG NGN. Extensionof Main One to SouthAfrica could be revisited.


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Submarine cable systems:the East Coast: the missing link

Projects on the EastCoast of Africa:

East African SubmarineCable System (EASSy)

Seacom

East African MarineSystem (TEAMS)

FLAG Next GenerationNetwork (NGN)

Source: World Bank Group , 2008


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East African Submarine Cable(EASSy)

Driven by a consortium ofregional operators

Cost$265 million

Ready for Service in 2010 (ontime for the FIFA World Cup?)

Financing from DevelopmentFinancial Institutions (DFIs)including World Bank/IFC, EIB,AfDB, AFD, KfW

Supply contract signed withAlcatel-Lucent.

Source and additional info at: www.eassy.org , 2008


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Seacom

Consortium of investors(Herakles, IPS, Convergencepartners, etc.); ownership SA:50%, Kenya: 25%, USA: 25%.

13,700 Kms, capacity:1.28 Tbps

Cost: $650M; financed byNedbank & Investec.

Supplier: Tyco

Ready for Service confirmed forJune 2009; in close competition

with TEAMs to be the 1st EastAfrican coast undersea cable inoperation.

Progress map athttp://www.seacom.mu/intro.html

Source and additional info at: www.seacom.mu , 2008
http://www.seacom.mu/intro.htmlhttp://www.seacom.mu/intro.html


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TEAMS

Point-to-point system connecting Mombasa,

Kenya and Fujairah, UAE (capacity: 120Gbps, upgradable to 1.2 Tbps). UAE, a hubfor many submarine cables, will ensureonward connectivity with the rest of theworld.

Proposed by Communications Commission

of Kenya (CCK) in 2006 Ready for Service: Summer 2009. TEAMS

will be first ready for service a year ahead ofEASSy (Source: IDG News Services).

Currently, 20 per cent of the project is owned

by the Government of Kenya, 15% byEtisalat of the United Arab Emirates, and therest by private investors.

Supply contract awarded to Alcatel-Lucentin October, 2007: $82 million.

TEAMS: 4,500 Kms from Fujairah, UAETo Mombasa, Kenya with no landingStations in between.


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FLAG NGN System-2 and -3from Reliance

In December 2006, FlagTelecom (Reliance Group ofIndia) announced System-2, asubmarine cable between Indiaand Kenya, with possible

extension to South Africa andReunion, then to Mozambique,Tanzania, Madagascar, Mayotteand Mauritius.

Ready for Service by 2010.

System-3 is the Mediterraneanpart of FLAG and has landingstations in Libya & Egypt.


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Too much cable capacity in themid-term?

Undersea cable systems are not all about capacity. In particular the location

and operating model of the landing stations are critical. That being said, the total cable capacity for Africa is going to jump by a factor

10 within 2 years, and by another factor 5 soon after if all proposed systemsmaterialize.

Source: Terabit Consulting, 2008


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Submarine cable projects:Critical Success Factors

Diversity of interconnects with other global cable networks.

Number of landing stations and back-haul terrestrial linksinterconnecting at landing stations that will feed the proposed cablescapacity.

Open access model at the landing station in order to avoid thecreation of a bottleneck at the country level that would restrain thetraffic.

Solidity of the financing plan and involved players as the projects arein tens or hundreds of M$ and sunk costs are high.

Long-term vision of the business plan: the ramping-up of trafficvolumes takes time (except where only competition is satellite) and thegenerated revenues will stem accordingly.


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Submarine cable projects:Summary

At least 5 major submarine cable systems will open forservice in the 18 months to come (by mid 2010).

They will provide Africa with over 10 times the currentinternational bandwidth.

They will push broadband connectivity possible bottlenecksdown the chain to terrestrial backbone networks.

They will also free VSAT capacity, especially from mobileoperators switching international traffic to cable. The VSATcapacity still in high demand will redeploy in smallermarkets throughout the continent.


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Backbone Networks


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Fiber backbones in Africa


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Regional backbone networks:business drivers

Possibility to interconnect with at least one submarine landing station(with an open access policy) for international connectivity.

Interconnect with a satellite ground station for redundancy (even indegraded mode) or interconnecting with two different submarine cables(even through another regional backbone operator), which will providean immense negotiation power with cable operators, in addition to routeredundancy.

Harmonization of policies and regulatory frameworks at the sub-regionallevel. In particular liberalization and completion of regulatory reforms inall countries involved by the project and open access policies at allmajor interconnect points are essential to make the project attractive toprivate investors.

Need for a steering organization (e.g. NEPAD, SADC) to secure thefunding of studies, define priorities and facilitate the development ofprojects aligned with the defined priorities.


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Regional backbones:Eastern & Southern Africa

Internet

Users per

100

PCs per

100

Broadband

Subscribers

per 1000

Djibouti 1.45 2.75 0.00

Eritrea 1.82 0.57 0.00

Ethiopia 0.21 0.29 0.00

Kenya 3.24 0.88 0.00

Malawi 0.41 0.19 0.03

Somalia 1.09 0.61 0.00

Sudan 7.98 9.26 0.06

Tanzania 0.87 0.73 0.00

Uganda 1.77 1.06 0.00Eastern Africa 2.15 1.87 0.01

Internet

Users per

100

PCs per

100

Broadband

Subscriber

s per 1000

Angola 0.53 0.58 0.00

Botswana 3.39 4.86 0.00

Comoros 2.50 0.63 0.01

Lesotho 2.39 0.00 0.03

Madagascar 0.54 0.49 0.00

Mauritius 24.00 16.00 41.32Mozambique 0.70 1.43 0.00

Namibia 3.69 10.84 0.00

Seychelles 26.25 20.00 7.13

South Africa 10.75 8.36 3.48

Swaziland 3.50 3.50 0.00

Zambia 1.98 0.97 0.02

Zimbabwe 8.40 7.14 1.06

Southern Africa 5.38 4.44 4.08

Despite the undersea cable still-missing link (EASSy), the Eastern andSouthern African regional backbonehas made better progress, thanks tothe Kigali protocol and severalinitiatives such as SRII and COMTEL.

Until EASSy (or an alternative projectsuch as TEAMS or SEACOM) isoperational, the regional backbone isdependent on South Africa landingstations for international connectivity.

Eastern and Southern Africa (E&SA) includes the following 25 countries:

Angola, Botswana, Burundi, Comoros, DRC, Djibouti, Eritrea, Ethiopia,

Kenya, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia,

Rwanda, Seychelles, Somalia, South Africa, Sudan, Swaziland, Tanzania,

Uganda, Zambia, and Zimbabwe.


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Regional backbones:Eastern & Southern Africa

The Eastern & Southern Africaregional backbone as proposed byNEPAD in 2004 links together thecapitals and main cities with theEASSy cable landing stations.

It brings together several regional

initiatives (COMTEL, SRII, EASSy)into a cohesive infrastructuredevelopment plan.

The policy & regulatory frameworkneeded to encourage private sectorinvestment in the backbone is knownas the Kigali Protocol and wassigned in 2006 by 12 countries.

The terrestrial backbone (in red onthe map) represents around 30,000kilometers of fiber.

Status as of March 2008, source: NEPAD


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Regional backbones:EABS, the Northern Loop

This regional backbone is theterrestrial backhaul to EASSy. Itcan also rely on TEAMS orSeaCom as alternativeinternational cable options.

Links capitals of Kenya, Uganda,Rwanda, Burundi and Tanzania.

Essential to the Uganda countrybackbone (access to EASSy).

The Kenyan link is operational,

the Uganda-Rwanda-Burundi linkis under construction while theTanzanian link is still underconsideration.


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The Central Africa Backbone(CAB)

A joint World Bank-AfDB program

aims at providing broadbandconnections in Central Africa byusing optical fiber alreadydeployed along the Chad-Cameroon pipeline. Internationalconnectivity is provided throughsubmarine cable landing station inCameroon.

Phase 1 of the Central AfricanBackbone (CAB) Project isexpected to focus on Chad,Cameroon and CAR and involvesapproximately US$30m financing.

Phase 2 of CAB Project isexpected to include other CentralAfrican Countries as well asNigeria and could mobilize up toUS$130m additional financing. Source: IFC, 2008


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Regional fiber backbones:Critical Success Factors

Interconnection capabilities:

At undersea cable landing stations, preferably in open access mode

At major regional and national IXPs.

Strategic infrastructure sharing with other carriers is very often a way toimprove the network profitability (more traffic, less competitive threat): exampledark fiber leasing.

The volume of aggregated traffic the backbone will collect and transport iscritical to the business plan.

It depends on many factors, and is typically evaluated in terms of respectivecontribution of each access point and aggregated traffic on each backbone segment(link between two access or interconnect points). Typical factors are: size of servedmetro areas, capital cities (government usage), connections with collect and access

networks, etc. Competition shall be assessed point-to-point (typically multi-segment; model similar toairline companies).

Commitments from mobile operators (roaming and international connectivity,especially for landlocked country GSM operators) and from government for publictraffic are often critical to profitability.


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Conclusion


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Evaluating ICT opportunities in achanging environment

The upcoming readiness for service of several majorsubmarine cable systems is going to significantlyaccelerate the pace of ICT development in sub-SaharanAfrica.

Many opportunities are shaping up for government andpublic institutions to facilitate and contribute to the ICTdevelopment and for private investors to make profits inbuilding networks and providing ICT services.

These opportunities must be evaluated in the forthcomingcompetitive ICT landscape and not in the supply-drivenmodel the African ICT sector has been used to in the past.


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GWI, Inc.

A Strategic and Management Consulting Firm

10 years of experience in the African

telecommunication markets

A portfolio of prestigious clients:

World Bank, African Development Bank,government institutions, tier-1 operators, etc.

[email protected]
mailto:[email protected]:[email protected]

gwi - african ict infrastructure - ic and backbone - excerpts - apr-09

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