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

"I'm hopeful we can grow the connectivity in and out of Africa, and it's a place that is fast emerging in terms of mobile penetration and internet penetration so it's only going to go one way, and that's up," says Grenville.

Shamte describes the current situation of connecting clients in the Middle East as "a total nightmare, a total headache", with landing stations in Europe needed before traffic is routed back to the Middle East by fibre. "You see how many cost centres there are?" he asks. "Seacom will be one company to deal with, and significantly cheaper, with less point of failures. It will open up a complete new revenue stream, it's optimising my opex, and it's providing me with the ability to expand my services."

Seacom connection

Seacom's US$700 million cable landed at Mombassa in Kenya last month, with an additional express fibre pair from Kenya to France into a PoP in Marseilles and another express fibre pair is from Tanzania to India into the PoP in Mumbai, with an overall proposed capacity of 1.2Tbps.

Such high capacity will enable bandwidth hungry use of peer-to-peer networks, as well as IPTV services. It will also allow high definition TV pictures to be fed in and out of Africa, just in time for two major football tournaments that are due to take place in South Africa, the Confederations Cup in 2009 and the World Cup in 2010. Both are sure to test the capacity of the new cables.

Seacom president Brian Herlihy says that the cable is on course to meet the launch date of June this year, with testing due to be completed ahead of the launch date. So far, 10% of the capacity of Seacom has been allocated to various operators and telcos, but Herlihy is confident that it will prove to be popular with telecoms companies in the region. "If you build it, they will come" Herlihy says, acknowledging the cliché.

Grenville agrees that when submarine cable is laid, operators will inevitably gravitate towards it. "Most operators will use submarine capacity where it exists," he says. "It is usually more cost-effective, and it is invariably faster. As and when the cables (in Africa) come up, people will definitely reduce their reliance on satellite, because it's expensive and it's slower. History has shown that wherever more cable goes in the world, it starts to bring the access point down. And we would welcome that, because then there is more choice and we can pass those benefits on to customers.

"If models elsewhere in the world hold true then we will see a reduction in pricing to consumers, in whatever shape or form that takes place, because our underlying costs will be lower," he adds.

Shamte thinks that benefits of increased broadband access for Africa will be enormous. "The more capacity there is, the more people will innovate in the business place," Shamte says. "The Gulf is such a huge trading transit point for us, between Africa and Asia and China, it's quite important now for us to find partners here who have real cross border reach," Shamte says.

At present, Six Telecoms routes some of its traffic through Du, and it is also in talks with STC about establishing voice and data connections with the Saudi operator. Shamte lists "reach" and "the ability to execute" as his two main priorities in looking for partners in the Middle East to do business with. "All the markets into East Africa are liberalised. If we have the right partner here (Middle East) they can be the pick-me-up point. And we can be the drop-off point," he says.

Seacom is expected to have a significant effect on the price per megabyte of data compared to satellite, reducing the cost by as much as 15 times which, Shamte says, will open up a whole range of new opportunities which would otherwise be prohibited by the cost of satellite.

Herlihy says that the cost will be 95% less than West Africa's submarine cable Sat-3, and he is confident that the savings will be passed on to consumers. Universities have been targeted by Seacom as potential beneficiaries of the extra capacity, and they will be offered connectivity at cost.

"You also have banks, large multinationals, property developers, China coming in, Japan as well. Africa is open to huge data business, and huge IP transfer businesses, clearing businesses, all of which will diversify our business,".

Herlihy points out that while Africa has never been considered an information based economy, with enough bandwidth, that could change. Outsourcing in particular is a trend that Africa could stand to benefit from, with masses of available and cost effective manpower, ripe for working in service sectors such as call centres.

International connectivity to call centres came under the spotlight at the end of last year when several high profile instances of severed submarine cables showed the degree to which the world relies on a handful of submerged cables. Fishing boats and seismic activity were blamed for the cuts that reduced internet connectivity between Europe and the Middle East. While it is impossible to completely guard against cables being cut, Herlihy says that considerable work has been done to ensure that the cables will not pass through potentially troublesome areas.

While Herlihy is keen to highlight the proposed constancy of Seacom's connection, Shamte thinks stability will help to attract more businesses to East Africa.

"Africa is an emerging market, based on our mineral resources and Africa is the only place where you can have a safe financial investment at the moment," Shamte says.

The long way round

Du's executive vice president international and wholesale, Andrew Grenville, says that commercially it is important to strike a balance between connecting directly and using a point of presence (PoP).

"The London PoP, which we recently opened, is useful for reaching into Africa as a lot of African operators use London as a natural hub for their telecom services, so by having a PoP there we have very ready access to some of the players that it wouldn't make economic sense for us to reach on a bilateral basis.

"We go where our customers dictate we go, so if we have a lot of traffic requirements to South Africa, then we will do direct relationships with the South African operator...however, if you take a smaller African nation where it really doesn't make a lot of economic sense for that operator or us to put capacity to each other and connect, it may be far more cost effective if they have got a pipe going to London to cross connect there," he adds.

"The incremental cost is lower, and we can get the benefits of the relationship. Directs are very important, and we have hundreds and hundreds of direct relationships, but where they are not economically feasible we either do it through partners who can reach operators that we don't have contact with, or maybe the London PoP which enables more of those," Grenville says.

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