As this issue of Africa Telecoms is focusing on satellite and fibre in Africa, do you feel that these communications technologies will work together concurrently in the future or will one or the other dominate within an African context?
We are already seeing the migration of international connectivity from satellite onto submarine fibre, with many carriers having announced plans to terminate satellite circuits at the end of existing contracts. As the availability of diversely-routed international submarine connectivity continues to expand, we would expect to see this trend continuing into the foreseeable future. Satellite will still have a part to play in extremely remote areas, but we expect to see fibre dominate in the future as we have seen in the rest of the world.
What do you see as the key differentiators between satellite and fibre connectivity?
Mainly, delay: for international connections satellites introduce long delays because of the often long communication path between the two locations. Fibre-optics tend to be deployed to minimise route distance, and submarine cables typically follow the most direct coastal route between major coastal locations, resulting in much lower delays. Secondly, scalability: fibre-optic systems are extremely scalable - once installed, fibre-optic connectivity is relatively cheap to upgrade. Capacity upgrades continue to be possible, even on old submarine systems. Once deployed, satellites cannot be physically upgraded. Lastly, cost: satellite costs are not distance dependent, making them particularly suited to delivering service between remote locations and where demand is low. The build cost of fibre is directly related to distance, so it is most costeffective when demand is high or growing fast and for meeting long-term, rather than low-demand, short-term requirements. Both are susceptible to service interruption, although weather features are much more common than earthquakes! In both cases, an alternative route is required for back-up.
Could you give us a synopsis of the rather complex ownership structure put in place for the construction of the EASSy cable and how WIOCC fits into this as an special purpose vehicle (SPV)? Was the creation of the SPV a regulatory requirement and/or why was it instituted?
Following extensive dialogue amongst all of the stakeholders, a mutual understanding was reached by governments concerned, telecom operators and a number of Development Finance Institutions (DFIs) in June 2006 around a hybrid project structure involving both direct consortium members and an SPV that met the Governments’ developmental objectives of ensuring low-cost open access to international connectivity, while providing for financing flexibility and maintaining the commercial appeal of the EASSy Project. The SPV was established to create a vehicle to leverage debt financing from the DFIs and to reduce the upfront equity requirements of certain operators who wished to avail themselves of financing. Thus, in this “hybrid” structure, the larger telecom companies invested directly in their own right, while a number of smaller ones invested through an SPV, named WIOCC.
How active, as a shareholder, has WIOCC been in the construction phase of the EASSy cable?
WIOCC has been extremely active, particularly in its chairmanship of the EASSy Technical Working Group and co-chairing of the Procurement Group. This involves directing the progress of engineering, provisioning, installation, bringing into service and the continued operation of EASSy. Specifically, WIOCC has driven negotiations on construction in Somalia, marine contracts, testing, landing station construction, Data Communications Network management and Operations & Maintenance budgets. WIOCC also chairs the Investment & Assignment sub-committee and co-chairs the Operations & Maintenance sub-committee.
The relationship between WIOCC and EASSy is quite an interesting one, particularly as WIOCC is still reselling capacity in the EASSy cable. Does this offer any benefits to WIOCC clients? Considering this, why would an operator work with WIOCC as opposed to directly with EASSy?
There are two key reasons for an operator to work directly with WIOCC: Firstly, as an SPV, WIOCC is able to offer connectivity into all nine landing countries (and onward to a further 11 countries), whereas other EASSy shareholders are only able to serve their own markets. For an operator this means simplification - they can buy connectivity into many locations through a single relationship (with WIOCC), and avoid having to maintain relationships with a number of different organisations. Additionally, WIOCC is the largest shareholder in EASSy, owning nearly a third of the capacity on the system. Whilst many other shareholder have invested for their own use (and this will take preference), WIOCC's capacity allocation is more than sufficient to service shareholders and other operators wanting EASSy capacity.
When is the cable expected to go live?
We are completing the construction phase right now. This will be followed by two months of comprehensive end-to-end testing of the system. The System Ready for Service Date is 30th June 2010.
With the Seacom cable having landed and a number of other cables being planned, does this change any of the initial business objectives set out by WIOCC?And will WIOCC be looking to invest in additional capacity on any of the other cables?
The short answer to the first question is “no”. There was never any doubt that East Africa would become a competitive market for submarine connectivity; the only question was when and how long would it take. WIOCC is backed by some of the key carriers in the region, and we believe that we offer customers a clear and compelling business proposition compared with competing systems. EASSy is being constructed with a high degree of resilience built in, but we are also considering options to further improve the physical diversity of our routing. Clearly, other cables along the east and west coasts present us with a variety of options that we are exploring.
With the EASSY cable having landed in Kenya, is WIOCC able to currently offer capacity to clients in East Africa? If so, how much capacity has already been sold? What percentage of WIOCC capacity has been taken up by your shareholders and how much is available to the open market?
As you would expect, WIOCC is working closely with its shareholders to quantify their needs, as well as meeting with other prospective customers to further discuss their requirements. WIOCC shareholders have all signed up to significant amounts of capacity, but as WIOCC has the largest shareholding in the EASSy system there is plenty of capacity to satisfy the demand from the open market.
WIOCC seems to have a number of key differentiators to its competitors. Could you please talk us through how you feel these aspects will benefit WIOCC customers as we move into the future?
There are a number of ways in which customers will benefit:
a) WIOCC will be the first to offer direct connectivity to Europe from East Africa. Unlike our competitors (who route via the Middle East or India), EASSy will connect directly between East Africa and the key internet exchanges in Europe and the US. This will offer WIOCC customers the opportunity to differentiate their services by offering the fastest possible route to many of the most popular sites on the Internet.
b) WIOCC customers will be able to take advantage of high-speed international connectivity from a wider variety of locations. Our 12 shareholders' extensive terrestrial, fibreoptic networks are being interconnected to create the most comprehensive access network in the region.
c) WIOCC offers customers truly affordable international connectivity, with a very different pricing model to our competitors. Our flexible contract terms enable carriers to start small and increase their connectivity in line with demand. This provides a level playing field for small, medium and large service providers to compete head-to-head, encouraging them to develop cost-effective, highperformance business solutions and services for the end user. We offer contracts as short as one month, and for as little as 2Mbps of capacity.
d) WIOCC will deliver very high levels of resilience and reliability. The way in which EASSy has been designed minimises outages. The cable itself is based on a 'collapsed ring' structure, meaning that we can route traffic the opposite way around the ring in the case of a cable break. Whilst this may increase delays a little, it means that a single break in the cable will not result in a complete loss of service. Interconnection of our shareholders' terrestrial networks will also offer alternative routes between many of the landing stations should there be a more extensive break in the cable. Finally, WIOCC is negotiating interconnection agreements with a variety of international cable operators, which will enable us to take advantage of a variety of international routing options. The key benefit to our customers is reduced risk of complete service outage, without having to purchase capacity on multiple cable or satellite systems.
Are there any plans in the future for the EASSy cable to be extended to continue up the West coast of Africa? If not do you feel there would be merit in evaluating the viability of a continuous fibre ring around Africa?
We have no plans to physically extend the EASSy cable up the West coast. However, there are clear benefits to our shareholders and customers in being able to extend their reach to other parts of Africa; and in having access to a diverse route for resilience. We are therefore exploring options for meeting these requirements with a variety of organisations.
With WIOCC’s Onward Connectivity seemingly having direct backhaul access to Europe, Asia, North America and notably in the Eastern and Southern regions of Africa, are there plans to link into the Central African Backbone (CAB) project once completed? Then, are there any plans to extend this connectivity through to Western and Northern Africa?
WIOCC has already announced that it will offer connectivity between 20 countries in Africa, including landlocked countries such as Uganda, Rwanda, Burundi, Zambia, Zimbabwe and Botswana. One of the countries to which we will connect is Sudan, which is eligible to participate in the CAB project. Whilst there are no formal plans in place right now to interconnect with CAB, we are exploring many avenues to broaden coverage including connectivity to other regions of Africa.