Connecting Africa to the Rest of the World
Internet access rates in sub-Saharan African are the highest in the world; however, potential demand is huge. The International Telecommunication Union (ITU) and the World Bank hold that the cost of a broadband connection is, on average, about USD 110 for 110 kilobits per second. In Europe and Central Asia, the same type of connection costs USD 20 while in Latin America and the Caribbean, it is USD 7. The Middle East and North African countries pay less than USD 30.
But potential demand is huge, according to the 2010 African Economic Outlook (AEO), a joint African Development Bank-OECD report, launched on 24 May in Abidjan at the Annual Meetings of the African Development Bank Group (AfDB).
A study covering 16 sub-Saharan countries conducted in 2006-2007 showed that in South Africa, Cameroon, Kenya, Nigeria and Senegal, more than 10% of respondents used the internet. The development potential is real given that Internet awareness is still very low. In Burkina Faso, Ethiopia, Mozambique, Uganda and Tanzania, fewer than 10% of respondents were aware of the internet. The rate increased to 30 percent in Benin, Botswana, Côte d'Ivoire, Ghana and Namibia. The telecommunications sector is investing in international bandwidth to meet this potential demand and has now reached an annual growth rate of 96% of the band - compared to the global average which, according to a 2008 Tele-geography survey, stands at 51%.
The low internet penetration rate and high connection cost are mainly due to the lack of high capacity international networks and operators can therefore charge a rate higher than the marginal cost of service. Today, only one submarine fibre optic cable connects Africa’s west coast - SAT-3. The service quality is world-class and access is limited to members of the consortium that built the link in 2002.
Since mid-2007, operators have been able to acquire capacity at a monthly rate of up to USD 25,000 per megabit/second (Mbps). Cable operators anticipate increased competition and have reduced rates within the range of USD 2,000 -10,000 per Mbps per month. In terms of traffic volume, South Africa’s wholesale rates are the lowest – in contrast to Cameroon and Gabon, which pay high rates. In most cases, countries – with the exception of Benin and Ghana - can not afford a link to SAT-3 to the extent that the infrastructure is underutilized.
In the main, connectivity in Africa is provided by ground stations by satellite and satellite dishes of the Very Small Aperture Terminal (VSAT) type. This is expensive, even if the rates - which stand between USD 3,000 and USD 5,000 Mbps per month - are often lower than SAT-3 rates. In addition, the applications are slow compared to other technologies: a web page query can take up to 16 seconds.
Intelsat, the world leader in commercial satellites services, covers the entire continent. Thuraya, whose shareholders include Middle Eastern and North African operators and investors, covers North Africa and central Africa.
Initiatives are underway in West, East and Southern Africa to develop international networks. But for the moment, eastern and Southern and East Africa must content themselves with satellites, and have access to only 0.07% of international bandwidth capacity. East Africa Submarine Cable ( EASSy) is designed to link 21 countries along 10,000 kilometers from Sudan to South Africa by 2008. Rates are expected to increase from USD 500 to USD 1,500 per Mbps per month, due to an open access model enabling all service providers to pay same rates for connection, whether or not they are investors in the project. But this USD 263 million project is behind schedule due, in particular, to disagreements, over the consortium’s management.
On the west coast, Ghana, Nigeria and Senegal offer the strongest potential demand for international connection. No fewer than seven groups of investors have expressed the wish to bring new international capacity to the region, but only a few will succeed. Globacom, the second oldest operator in Nigeria, was expected to install 9,500 kilometers of fibre optic cable in Lagos in 2009, and will connect the city to Accra (Ghana) and Dakar (Senegal).
The GL01 project, estimated at USD 150 million, is not without risk given that the operator’s current traffic level in Benin, Ghana and Nigeria does not justify such an investment. Nigeria is hosting another project - One MaIN – carried out by Mainstreet Technologies to link Portugal to Lagos and Accra in May 2010. Wholesale prices are expected to stand at USD 200 per Mbps a month. This cable would then be extended to South Africa at a cost of USD 865 million. The West African Cable System (WACS) is supported by South Africa’s biggest operators - MTN, Neotel, Telkom and Vodacom - which manage traffic along the west coast. The docking stations will only be in Accra and Lagos.
The proposed submarine cable between the African coast and Europe - known as ACE (Africa Coast to Europe) – and supported by France Telecom and 14 African operators, is expected to link France to Gabon in 2011. This cable will be built by a consortium managed by France Telecom. The proposed high-speed satellite internet project called ‘Another Three Billion’ or O3B, should be operational by 2010 for close to USD 700 per Mbps a month. Downloading a web page could therefore take four seconds.
NEPAD’s Uhurunet project designed to install a fibre optic submarine cable around Africa has not received much attention. Finally, Thalès Alenia Space is building the first pan-African satellite (Rascom). Initially planned to be launched in the 1990s, it will only be operational after 2010. The submarine cable project for the west coast of Africa, WAFS (West African Festoon System) will link Nigeria to Namibia. It is expected to adopt the same governance structure as SAT-3 and should also be managed by Telkom SA. WAFS is not expected to offer an open access model.