in the country, your thoughts are quite appreciated. We
fiber...Mucheru, Victor, Eric, Alex and others. Plse do
not sit on your ideas...
walu.
I would say the models depend on the market and
regulation!
There are good and bad examples for each model. For Kenya
I prefer the model
KDN has opted for: We guarantee with our weight that
sufficient market
demand is in existance, an international operator
(without interest in our
market) is therefore attracted to bring a cable to our
doorstep at his risk.
This way this operator has to keep prices down since he
wants to make is
least attractive for another system to come! The second
system then will be
required for redundancy and to keep price pressure and
ideally should come
2-3 years after the first. The model for the second
system can now be
different and based on the users and usage of the first
system (because now
commercial banks are easier to convince). We herefore
support Teams and the
Flag initiative (and EASSY as a system going south).
As initiator for Flag to come, KDN will NOT levy any fee
for accessing the
system! This side of the system will be open access and
the only system that
has non-discriminatory (ugaguzi) access to all FLAG
landing points arount
the globe, so no extra onward capacity purchase must be
done!
For domestic fiber in a deregulated market there is only
one model:
Commercial whereby the Government as a user (actually the
largest user in a
market) has influence over the cost/price model as a
consumer.
You see, OFC cost money to deploy and over a certain
running period the O&M
is higher than the Capex! So no matter how it is
structured, the economy of
a country needs to pay for it one way or the other. This
payment is easy if
the system stimulates private businesses (including the
business of the
owner of the cable).
Good example is India! Private operators have cabled
EVERY village and
BECAUSE of this, the cost for calls are the lowest in the
world!
Rgds
Kai
----- Original Message -----
Sent: Wednesday, January 24, 2007 3:15 PM
Subject: Re: [Kictanet] Day 2 of 10: What are the
existing Business
Modelsfor Optical Fiber Provision?
Aih! this Day 2 is too quiet. I have copied the the last
paragraph hoping it will kickstart this thread...
The Question.
So back to the question:- What are the existing Models
for provisioning OFC? Plse voice your support, objection,
correction or comments on any of the Models below giving
reasons why. In addition, feel free to suggest other
existing models out there or still under construction.
We have only 2days on this theme so let the views start
flowing...
walu.
I want to thank all those who contributed (in writing
and
in silence) during yesterday's 1st day of discussions.
Becky will be giving us the summaries in due course.
Indeed
it was a warm-up to what I believe is going to be a lot
more of a complex issue and hence the following long
and
necessary background information on the Business Models
for
Provisioning submarine Optical Fiber Cables (OFCs -
plse
not the abbreviation, we shall use it frequently).
I stand to be corrected but from what I gather, there
seems
to be two distinct Business Models for providing OFC,
namely, Purely Commercial and Partly Commercial. A
third
approach, which is yet to be tried (implemented) but is
highly acclaimed in Donor and Academic communities, is
known as the Open Access approach.
Now, in a Purley Commercial Setup, Private Data
Communications Companies, usually the top level IBPs -
Internet Backbone Providers such as Cable&Wireless, BT,
France Telecom, MCI, would establish a business need to
build an OFC b/w continents in order to exchange
traffic
between their (ISP) customers that exists on both ends
of
the OFC. Please note that IBPs are not ideally selling
bandwidth directly to the regular you and me, but
rather
to
the ISPs - Internet Service Providers who will
eventually
resale this Internet Access (bandwidth) to you and me.
Option I: Purely commercial Model
Basically, the IBPs use their own money to put up
(down?)
the cable and they independently decide who connects to
the
cable's landing (exchange) points and at what rate per
month. These private companies are run on a purely
commercial basis with the aim of maximising profit at
the
shortest times possible. Indeed ISPs would not mind the
potentially high-prices arising from these model as
long
as
you and me can meet this cost when it is eventually
slapped
on us. This is the prevailing model for OFCs between
America/Europe as well as America/Asia-Pacific - but
with
the advantage that the OFCs in these two realms are
abundant to point of having driven the costs extremely
down.
Option II: Partly Commercial Model.
This is what has occurred with the OFC running from
Portugal, across the Western Coast of Africa through to
S.Africa. The so called SAT3 Cable has been
provisioned
through a (currently) contentious model that has given
the
term 'Consortium' a suspicious connotation. At its
simplest level, a group of mainly government owned
(Public)
Telco companies across the affected coast-line get
together
to form a consortium with a view to seek funds and
build
the OFC. Thereafter, they retain the privilege of
independently deciding who connects to the cable and at
what rate per month. From the SAT3 experience, the OFCs
monthly rates charged are nowhere near the ones enjoyed
currently being enjoyed in the developed economies for
various reasons.
Their high costs of OFC bandwidth has attracted
pressure
from Civil Society, Academia and other groups who argue
that since (largely) Public Funds were used to build
the
cable, the Consortium Profit-motive should be moderated
(regulated?) to strike a balance with the Public
interest
(read - very cheap rates). The Consortium has ofcourse
resisted this thinking arguing that their bandwidth
charges
are dictated by market forces - specifically, Africa
has
over the years generated little internet traffic
volumes
that would have made it possible for them to
drastically
drop down the charges. Circumstances have therefore
forced
them into a High-cost, Low Volume business model.
Furthermore, their Bandwidth charges are incidentally
5-10
times lower than Satellite Bandwidth costs and that
should
be appreciated.
Option III: Open Access Model.
And so, in comes the proponents of Open Access Model.
In
the simplest terms, they argue that Africa's
socio-economic
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