As East Africa awaits the expanded high-speed Internet connectivity that new submarine cables will bring the region, another endeavor is aiming higher – targeting all of the continent’s population from the skies.
O3b Networks Ltd. plans to deploy 16 satellites around the world to give Africans and others living in developing countries access to the Internet. “O3b” refers to the “other three billion,” nearly half of the world’s population who do not live in the developed world and who have limited access to modern communications.
“In today's global economy, Internet access and communications are a fundamental requirement for economic growth,” O3b founder Greg Wyler told allAfrica.com. “The importance of a communications infrastructure transcends the individual at the computer.”
Wyler decided to start O3b after trying to boost Internet connectivity in Rwanda by spreading fiber through Terracom Communications. “Africa is big, very big,” Wyler said. “We realized that trenching hundreds of thousands of kilometers of fiber was not the answer.”
He said the low-orbiting satellites would reduce costs for Internet service providers, making them five or six times cheaper than current high-quality satellites. This would bring costs in line with those of fiber.
Peter Lange, Africa senior analyst for BuddeComm, the largest global telecommunications research site on the Web, said O3b has a good business case to fill the gaps of fiber connectivity in Africa. “And those are some pretty big gaps,” he said.
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Despite the increase in submarine fiber cables around the continent over the next two years, many countries will continue to lack national fiber backbone networks to take the bandwidth from the coast to the interior, said Lange.
“Only the coastal cities, where the landing stations are, will initially benefit from the fiber. But there will be enough major cities and rural areas left in Africa that will not have fiber near them during the 10-year life span of the MEO satellites that O3b wants to use.”
“In areas where there is fiber, I think O3b will be a niche player only,” he said. “It will be hard to compete with the greater capacity and life span of fiber.”
O3b Networks has financial and operational support from Google Inc., Liberty Global, Inc. and HSBC Principal Investments. The initial investment from those three companies, Wyler said, was more than 40 million Euros (US $50 million), representing about one-third of total equity requirements.
The total cost of the first phase of the project is expected to be approximately 350 million Euros ($438 million), much of which will be serviced with debt.
Wyler said the endeavor has so far escaped being affected by the global financial crisis because it serves emerging markets, most of which operate conservatively when it comes to debt structures. In addition, he said, “Our markets also have the lowest Internet penetration and the fastest growth.”
