Wholesale change

Wholesale international traffic carrier Six Telecoms hopes to take advantage of the boost in capacity to Africa as a number of submarine cables come online

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By  George Bevir Published  April 5, 2009

Africa's connectivity with the Middle East and the rest of the world is set to increase with a number of submarine cables going live this year. Wholesale international traffic carrier Six Telecoms hopes to take advantage of the boost in capacity.

The continent of Africa has experienced some of the fastest internet subscription growth rates in the world, second only to the huge growth witnessed in the neighbouring Middle East. Figures from the ITU show that over the past eight years, the number of internet users in Africa has risen by 1100%. And the number of broadband subscriptions is set to quadruple to 12.7 million by 2012, according to a survey conducted last year by research firm AfricaNext.

If the growth is to continue and Africa's internet penetration rate of 5.6% is to continue moving towards the worldwide average of 23%, then the lack of connectivity between African countries and the rest of the world needs to be addressed.

It has been estimated that 75% of Africa's internal internet traffic is routed through the US and Europe, and when neighbouring countries want to exchange information the data sometimes has to be routed through countries as far away as France or Canada. Such a convoluted means of sending data and voice traffic not only increases the risk of failure, it also adds a significant amount of cost to the process, which is inevitably passed on to the consumer.

Fibre backbone developments, such as Telkom, MTN and Neotel's US$197 million, 5,000km fibre-optic cable across South Africa should help to address cross-Africa connectivity. Such an initiative will help to increase data transfer rates between African nations, but it will not address Africa's limited connectivity to the rest of the world.

One stark illustration of the bottle necks that limit international capacity was referred to in a document produced by the US Office of the Director of National Intelligence. It claimed that the 900 million people in Africa have to make do with the same level of international internet connectivity as the 480,000 residents of Luxembourg.

The benefits to emerging economies of a robust ICT infrastructure have been widely acknowledged by aid agencies, and as a result fibre optic submarine projects that promise greater connectivity have been given substantial backing by aid banks, with submarine cables receiving particular attention. Indeed, analysts estimate that annual spending on the global undersea network market will average $2 billion in four years.

Underserved East Africa

Many international fibre optic cables that link North and West Africa to neighbouring regions are already in place, leaving East Africa in particular as the most underserved part of the continent. This was meant to change four years ago, when the East African Submarine Cable System (EASSY) cable linking countries along the east coast of Africa to the Middle East via the Red Sea was due to go live. But work on the cable only began in March last year, and it now has an anticipated completion date of 2010.

The Du-backed EIG cable, which will connect Fujairah in the UAE to Djibouti in the Horn of Africa and India, is expected to complete by the second quarter of 2010. For other countries along the east coast, connectivity should be improved this year, with two cables due to be ‘lit' in 2009. The East Africa Marine System (Teams) consortium of the Government of Kenya and the UAE's Etisalat is working on a 4,900km cable that it says will have an ultimate capacity of 640Gbps/sec. that will link the port city of Mombassa in Kenya to Fujairah.

And rival submarine cable outfit Seacom is planning to launch its own cable at around the same time, with an anticipated launch date of June 2009. When it is fully functional, Seacom's fibre optic cable will link Southern and East Africa, Europe and South Asia. All of this increased connectivity will not only enhance performance for consumers, it will also present an opportunity for companies that route international voice and data traffic that will be carried on the cables to users in the countries along the coast and internally to landlocked countries.

International opportunity

Tanzanian company Six Telecoms, which describes itself as a "carrier's carrier", is one such company. It claims to handle 60% of Tanzania's out-bound international traffic. At present, all of Six Telecom's international traffic is routed via satellite, and this is something that CEO Rashid Shamte is not very happy about.

"We're 100% dependant on satellite, which is a pain," he says. "It's extremely expensive, which is why we are really excited about Seacom. The largest challenge for us, especially in Eastern Africa, has been access. We're working on an infrastructure project interlinking eight countries around East Africa with fibre projects and extensive microwave projects, because over the past 30 years, before we came in, just to call Kenya (from Tanzania), you had to backhaul it through Europe," he says.

With Tanzania's position on the east coast of Africa, Shamte describes the country as "a natural hub", and he says it is ideally located to act as an access point for other African countries that need to connect to the Middle East and beyond. Demand for extra capacity has grown since the telecoms regimes in the region were liberalised, and it was after the process occurred in Tanzania's telecoms sector and incumbent operator Tanzania Telecommunication Company's (TTCL) monopoly was ended that Six Telecom was established in 2004, with Shamte as one of the founders and a 15% shareholder in the business.

"Once the incumbent's monopoly was over, we were the first company to get the licence," Shamte says. "So we set up an international gateway. We currently run traffic for all of the mobile operators in Tanzania, and the role shifted from the incumbent to us," he says.

The company has infrastructure in Dar es Salaam that acts as a transit and connectivity hub for local and regional partner operators, and it owns and operates hubs in London and New York that facilitate traffic aggregation from the company's international carrier interconnections. Both these locations also have dedicated fibre connectivity to Intelsat earth station for connectivity via satellite to Tanzania.

"We're present in Tanzania, we're present in Kenya, Uganda, Malawi, we're working on our presence in Zambia. They haven't opened up that market yet, so it's quite difficult," Shamte says. "Our presence in those countries is very basic. We do have interconnection agreements which we've honed into alliances, so we pretty much have equipment which helps us do our voice and our data across the border."

Shamte wants more partners in the Middle East to enable a greater flow of traffic between the two regions and into Asia, but the cost of satellite troubles him. "We're paying far enough for our voice business, which at least the margins are good and the revenue's good, and the business model justifies the satellite cost. But as far as bandwidth is concerned, that's going to be handled by the Seacom situation," he says.

Middle East partners

One of Six Telecoms' partners in the Middle East is the UAE's second operator, Du. Executive vice president for Du's international and wholesale division, Andrew Grenville, says that the operators' priorities for international connectivity are decided by its customer base, and although Africa is not a region that demands the greatest level of connectivity, it is considered a growth area. As well as connecting via point of presence (PoP) in London, last year Du announced that it would invest $50 million in the EIG cable, increasing the operator's ability to reach into Africa and India and offer more bandwidth and IP services.

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