Balancing Act (London)

Africa: O3B Starts Operations in Africa and Launches Second Constellation Which Will Cover More Countries

analysis

London — It was nine years ago that O3B started as an idea but it seems like an eternity. But with the launch of its second constellation of 4 Medium Earth Orbit (MEO) satellites, it will now begin to swing into operation with services targeted at a range of countries, largely where fibre is absent. Russell Southwood spoke to Daniel Schapiro about current operations and what's planned.

Greg Wyler came up with the idea of launching O3B to connect the 3 billion unconnected globally and saw MEO satellite constellations as a way of making satellite capacity as cheap as fibre.

This was the headline pitch for investors at that point. At this stage, satellite prices were rock solid and no-one in the industry was talking about re-inventing the business.

I well remember Google founder Larry Page questioning me with his machine gun delivery about connectivity problems on the continent at TED Africa in Arusha in 2008. But I claim no credit for Google investing in it as Greg Wyler could, as the saying goes, sell ice to the eskimos.

Long story, short. A project as big as this needed institutional investors and someone who knew how to manage and sell satellite capacity. Enter SES who bought into the company.

The full list of investors now includes: HSBC, Liberty Global, Allen and Company, Northbridge Venture Partners, Soroof International, Development Bank of Southern Africa, Sofina and Satya Capital (Mo Ibrahim's investment vehicle).

The challenge was that Greg Wyler was like a mediaeval stonemason selling a cathedral. It was all about how high the towers were going to be and the wonderful sightlines were when you looked up. The big pitch ignored a number of annoying details at the foundation level.

Launching satellites is a slow business and in the seven years since the company launched, increasing areas of Africa now have access to fibre and more are coming on stream.

The service is designed for those needing wholesale bandwidth and requires relatively costly equipment to receive the bandwidth on the ground. So it's been a tough sell to operators. They have been disposing of most of their satellite capacity as contracts expired and have proved reluctant to head back to satellite whatever the price.

So O3B has had to clarify the message and focus carefully on those countries in Africa where fibre is not currently available for a large number of people and where that might remain the case for the foreseeable future.

For as Daniel Schapiro told me:"The initial plan was not to start service with the first constellation of four satellites. But after the second launch was delayed, there was customer pressure to start so we opened 10 sites globally. Two of these sites were in Africa: DRC and South Sudan."

The launch of the second constellation was completed successfully this week and they will cover the whole continent:"The full service will be operational by mid August and we have actual customers in Liberia, Somalia, South Sudan and number of other African countries." Each 8-satellite constellation delivers 84 Gbps and over 1.2 Gbps per beam.

The service is targeted at operators (ISPs and mobile companies), directly or indirectly through resellers and O3B is also talking to NGOs and Governments. The minimum supply level is 100 mbps but most customers are taking more than that amount:"Some contracts are for a whole beam."

The ground station costs vary but are in the order of high tens of thousands of dollars:"We can do cellular backhaul for remote environments for either 3G or 4G because MEO satellites have low latency unlike geo-stationery satellites."

Prices vary enormously depending on what's happening in a particular country market. However, they are tending to track fibre prices. In places where fibre is highly competitive like Ghana and Kenya, where fibre prices are US$100 or below, O3B's prices are "about that" but in places where fibre is more is more expensive they will more or less match those prices.

The operation that is already under way is Ragasat in DRC, owned by the ISP Raga:"Ragasat is a carrier of carriers. We don't sell directly to Ragasat but to ASS who own the beam. Ragasat is distributing more than a full beam to mobile operators and ISPs in Kinshasa. They will take a significant chunk of the market."

Another customer who will come on stream shortly is Gulfsat in Madagascar. It runs a triple play operation under the Blueline brand:"It's taking a significant amount of bandwidth and will replace one of its fibres with O3B capacity.

It will make their network more resilient in event of outages. When the fibre goes down, it goes down for significant periods of time. With O3B, the inevitable outages that happen will be much, much shorter."

The service will be fully operational in mid August and will be interesting to see how many customers it gets now that there is an actual fully operational service.

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