Google and HSBC back Ob3 satellite Internet project

'Other 3 billion' project is expected to cost $650mn and has now raised $65mn in equity.

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By  Kate Holton and Niclas Mika Published  September 9, 2008

Internet firm Google and Europe's biggest bank HSBC have thrown their weight behind a plan to provide cheap, high-speed Web access via satellite to millions in Africa and other emerging markets.

Google has joined forces with the bank and cable operator Liberty Global to back a group called O3b Networks, which stands for the "other 3 billion" people who do not have access.

It will provide high-speed backhaul for telecoms operators and Internet providers, which can then sell services to businesses and consumers.

South African Finance Minister Trevor Manuel welcomed the project when speaking at a conference in Germany.

"The information gap is very real and clearly whatever we can do to close it must be encouraged," Manuel told a news conference in Berlin on the UN-backed Millennium development goals.

"Any initiative that can leapfrog over traditional means of getting information to people must be encouraged. Information is power and it supports democracy and it supports decision-making."

O3b networks said in a statement the satellites would be constructed by Thales Alenia Space and should be operational by the end of 2010.

The company's founder, Greg Wyler, told newswire Reuters that coverage would reach from Spain to South Africa, include most of South America, large parts of Asia and all South Pacific Islands.

The project intends to offer fibre performance over satellite to parts of the world where it is not commercially viable or practical to deploy a fibre network.

Because its satellites orbit earth at lower altitudes than those used to beam TV signals to homes, they work better for Internet access where latency - the amount of time it takes for bits of information to travel from source to destination - is an issue, Wyler said.

The project is expected to cost $650 million until the launch, he said. Initial equity of $65 million has been raised, but the final mix of debt and equity has not been set.

In some parts of the world, the company will compete with fibre-optic cables currently under construction - for instance, over a dozen cables have been announced connecting Africa to Europe, the Middle East and Asia.

"There's some fibre in place on the coast of Africa, there are pieces of fibre around, and this is meant to compliment those pieces," Wyler said.

"We have the ability to offer pricing that is lower than what is being offered today. We have the ability to bring that to everywhere."

The group is also hoping that Internet access will prove as popular as mobile phone services have in recent years.

"The global bet is: will the GDP and the growth and demand in all of the emerging markets grow?" he said. "If the answer is yes, maybe not in some countries but certainly in others, then it's a good bet."

Richard Hurst, a telecoms analyst at global advisory firm IDC, said that, on paper, the project should be a good initiative.

But he warned that the potentially limited capacity for satellite spectrum in Africa means there would still be a need for some fibre optic cables to help boost capacity. (Reuters)

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