Day 2 of 10: What are the existing Business Models for Optical Fiber Provision?
I want to thank all those who contributed (in writing and in silence) during yesterdays 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 cables 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 Africas socio-economic renaissance hangs on the availability of cheap bandwidth or communication costs. As such, the OFC presents a historic opportunity that should not be left to prevail under short-term, commercial arrangements either within the Private or Consortium models. Open Access Models proposes radical changes at all levels (Political, Legal, Regulatory, Economical, etc) in order to provision international OFC with an alleged bias towards socio-economic development. In particular, they claim that the OFC should be co-owned by both Government and Private sector but should NOT be operated for profit; that is, it should be run at Cost by a body agreed upon. Further, access or connection to the cable should be Open to current and future stakeholders wishing to connect to it AT COST not profit. The fundamental point is that money should NOT be made out of the cable, money and lots of it, should be made out of services (BPO, eCommerce, etc) that would arise from the presence of the cable. Open Access model, foresees a Low-Cost, High Volume Business Model for the Cable. Its biggest limitation is the fact that it remains a fairly academic topic that is yet to be tested particularly in an environment whose political, regulatory and legal structures are not entirely matured. It chances of successful implementations are deemed low. Furthermore, even if it was to succeed, the sceptics are wondering:- of what use is cheap international bandwidth without African (local) Content and an equally developed domestic digital network? Might this not be just another avenue of opening up the emerging African e-markets to be exploited by the developed economies? 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 above Models 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. References/Acknowledgements http://www.fibreforafrica.net/ http://www.africafocus.org/docs06/apc0612.php http://www.fibreforafrica.net/ http://www.diplofoundation.org/poolbin.asp?IDPool=127 ____________________________________________________________________________________ Need a quick answer? Get one in minutes from people who know. Ask your question on www.Answers.yahoo.com
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.
--- John Walubengo <jwalu@yahoo.com> wrote:
I want to thank all those who contributed (in writing and in silence) during yesterdays 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 cables 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 Africas socio-economic renaissance hangs on the availability of cheap bandwidth or communication costs. As such, the OFC presents a historic opportunity that should not be left to prevail under short-term, commercial arrangements either within the Private or Consortium models. Open Access Models proposes radical changes at all levels (Political, Legal, Regulatory, Economical, etc) in order to provision international OFC with an alleged bias towards socio-economic development.
In particular, they claim that the OFC should be co-owned by both Government and Private sector but should NOT be operated for profit; that is, it should be run at Cost by a body agreed upon. Further, access or connection to the cable should be Open to current and future stakeholders wishing to connect to it AT COST not profit. The fundamental point is that money should NOT be made out of the cable, money and lots of it, should be made out of services (BPO, eCommerce, etc) that would arise from the presence of the cable. Open Access model, foresees a Low-Cost, High Volume Business Model for the Cable. Its biggest limitation is the fact that it remains a fairly academic topic that is yet to be tested particularly in an environment whose political, regulatory and legal structures are not entirely matured. It chances of successful implementations are deemed low. Furthermore, even if it was to succeed, the sceptics are wondering:- of what use is cheap international bandwidth without African (local) Content and an equally developed domestic digital network? Might this not be just another avenue of opening up the emerging African e-markets to be exploited by the developed economies?
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 above Models 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.
References/Acknowledgements http://www.fibreforafrica.net/ http://www.africafocus.org/docs06/apc0612.php http://www.fibreforafrica.net/ http://www.diplofoundation.org/poolbin.asp?IDPool=127
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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 ----- From: "John Walubengo" <jwalu@yahoo.com> To: <kai.wulff@kdn.co.ke> 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.
--- John Walubengo <jwalu@yahoo.com> wrote:
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 renaissance hangs on the availability of cheap bandwidth or communication costs. As such, the OFC presents a historic opportunity that should not be left to prevail under short-term, commercial arrangements either within the Private or Consortium models. Open Access Models proposes radical changes at all levels (Political, Legal, Regulatory, Economical, etc) in order to provision international OFC with an alleged bias towards socio-economic development.
In particular, they claim that the OFC should be co-owned by both Government and Private sector but should NOT be operated for profit; that is, it should be run at Cost by a body agreed upon. Further, access or connection to the cable should be Open to current and future stakeholders wishing to connect to it - AT COST not profit. The fundamental point is that money should NOT be made out of the cable, money and lots of it, should be made out of services (BPO, eCommerce, etc) that would arise from the presence of the cable. Open Access model, foresees a Low-Cost, High Volume Business Model for the Cable. Its biggest limitation is the fact that it remains a fairly academic topic that is yet to be tested - particularly in an environment whose political, regulatory and legal structures are not entirely matured. It chances of successful implementations are deemed low. Furthermore, even if it was to succeed, the sceptics are wondering:- of what use is cheap international bandwidth without African (local) Content and an equally developed domestic digital network? Might this not be just another avenue of 'opening up' the emerging African e-markets to be exploited by the developed economies?
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 above Models 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.
References/Acknowledgements http://www.fibreforafrica.net/ http://www.africafocus.org/docs06/apc0612.php http://www.fibreforafrica.net/ http://www.diplofoundation.org/poolbin.asp?IDPool=127
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Need a quick answer? Get one in minutes from people who know. Ask your question on www.Answers.yahoo.com
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Thanx Kai, for your views...as key National data operator in the country, your thoughts are quite appreciated. We would like to hear also from ISPs, Academia and Consumers regarding the models for provisioning international optical fiber...Mucheru, Victor, Eric, Alex and others. Plse do not sit on your ideas... walu. --- "Kai U. Wulff" <kai.wulff@kdn.co.ke> wrote:
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 ----- From: "John Walubengo" <jwalu@yahoo.com> To: <kai.wulff@kdn.co.ke> 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.
--- John Walubengo <jwalu@yahoo.com> wrote:
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
=== message truncated === ____________________________________________________________________________________ We won't tell. Get more on shows you hate to love (and love to hate): Yahoo! TV's Guilty Pleasures list. http://tv.yahoo.com/collections/265
Much of my take is recorded in history @ http://blogs.law.harvard.edu/ eric/tag/eassy/ nb: ignore or replace EASSy where necessary and the principles are same @ international, regional, national and even rural level. Eric here On 24 Jan 2007, at 18:18, John Walubengo wrote:
Thanx Kai, for your views...as key National data operator in the country, your thoughts are quite appreciated. We would like to hear also from ISPs, Academia and Consumers regarding the models for provisioning international optical fiber...Mucheru, Victor, Eric, Alex and others. Plse do not sit on your ideas...
walu.
--- "Kai U. Wulff" <kai.wulff@kdn.co.ke> wrote:
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 ----- From: "John Walubengo" <jwalu@yahoo.com> To: <kai.wulff@kdn.co.ke> 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.
--- John Walubengo <jwalu@yahoo.com> wrote:
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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______________________________________________________________________ ______________ We won't tell. Get more on shows you hate to love (and love to hate): Yahoo! TV's Guilty Pleasures list. http://tv.yahoo.com/collections/265
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Eric M.K Osiakwan Executive Secretary AfrISPA (www.afrispa.org) Tel: + 233.21.258800 ext 2031 Fax: + 233.21.258811 Cell: + 233.244.386792 Handle: eosiakwan Snail Mail: Pmb 208, Accra-North Office: BusyInternet - 42 Ring Road Central, Accra-North Blog: http://blogs.law.harvard.edu/eric/ Slang: "Tomorrow Now"
participants (3)
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Eric Osiakwan -
John Walubengo -
Kai U. Wulff