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.
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.