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OTHER 3 BILLION (O3B)


Overview

  • Reference: P-Z1-GB0-014
  • Approval date: 06/10/2010
  • Start date: 29/11/2010
  • Appraisal Date: 13/12/1901
  • Status: OngoingOnGo
  • Implementing Agency: O3B AFRICA LIMITED
  • Location:

Description

In an initial phase, O3b intends to design, construct, launch and operate a constellation of 8 MEO satellites (the Project), covering the geographic region comprised within the 45° North and the 45° South latitudes, which coincides with emerging markets, namely Africa, Asia and Latin America. Later, O3b intends to scale up its operations with subsequent satellite launches covering the same geographic region. The system is designed so that a third of its total capacity will serve the African continent.

Each satellite will provide 12 transponders, each connected to a steerable antenna. Each transponder can, in an example configuration, beam more than 600 Mbps of both uplink and downlink connectivity. Part of the transponders will be directed to teleports to provide connectivity to the world Internet. The system total capacity is therefore of 80 transponders, a third of which will be serving Africa.

O3b clients will be telecom operators in emerging markets including fixed line operators, mobile operators and Internet Service Providers. O3b will offer primarily two types of services: long-haul trunking services, which allow telecom operators to connect to the global Internet exchanges and cellular back-haul, which allow mobile operators to connect their remote cellular towers to their main switching centers.


Objectives

Through its innovative approach, O3b will achieve a significant cost advantage compared to satellite competitors . Its core value proposition therefore lies in the affordability of high bandwidth links. O3b is currently proposing prices which are 50% to 80% lower than the GEO prices.


Rationale

The proposed O3b system is innovative compared to traditional geostationary satellite systems (GEO) used by the telecom industry. F irst, its steerable spot beams allow it to concentrate the transmitted signal to specific geographic areas of a diameter of less than 450km and therefore to deliver high bandwidth connectivity at costs well below that of alternative technologies. Next, O3b's equatorial orbit makes it a truly scalable system and allows for further cost reductions with additional satellite launches. Finally, with an altitude of 8,063 kilometers from the earth, some 4 times closer to the geostationary satellites, the system offers a considerable reduction in transit times and therefore results in an improvement in the quality of service. This innovation is particularly suited for the needs of emerging market, and especially Africa, where lack of terrestrial infrastructure is a well known fact.


Benefits

The Project will mainly benefit telecom operators and users in emerging markets. First, it will provide the trunking capacity needed by Internet Service Providers present in landlocked areas to access the international gateways. Second, it will provide the backhauling capacity needed by mobile operators to extend their coverage in rural areas. The project will therefore contribute to reduce prices of Internet and mobile communications. It will also contribute to bringing connectivity to previously uncovered areas. The amount of such benefits will depend on the effective price reduction that O3b will offer to its clients and the level of competition in the retail market. This will be further assessed during appraisal.

Gender and Social Effects There is growing evidence that ICT plays a critical role in social development and, in particular, in addressing the Millennium Development Goals. Direct applications are widespread in sectors such as health, education, and agriculture.

Private Sector Development It is recognized that the use of mobile phones in Africa has widened markets, created better information flow, lowered transaction costs, substituted for costly physical transportation, and improved revenue yields. People in remote areas, where other forms of communication (such as postal systems, roads and fixed line phones) are often poor, may be prepared to spend relatively large amounts of their revenue on telecommunications because it helps them save money in other areas.

The are currently around 160 transponders over Africa providing cellular back-haul services and an additional 50 providing Internet trunking services. The Project will therefore contribute to about a two fold increase in the African satellite transponder market for telecom services (excluding TV).

The project will generate VAT and corporate income tax revenues for African governments. The project will also allow governments to save on foreign exchange, as telecom operators will be buying satellite capacity, paid in dollars, at lower prices. The level of these indirect tax revenues will be estimated during appraisal.

The Project will be contributing to regional integration through increased Internet connectivity. It will also increase business con nectivity and therefore the competitiveness of the African businesses. Finally, it will produce net foreign exchange savings.


Key contacts

DERBY Nanette Esi - PISD2


Costs

Finance source Amount
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