Transcript Achieving affordable bandwidth

Open vs closed approaches
to international fibre
Russell Southwood
CEO, Balancing Act
http://www.balancingact-africa.com
[email protected]
Closed consortium: Monopoly
and investment barriers
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Monopoly structure: Liberalising at the national level but
leaving monopoly at international level?
Consortium the historic approach but new structure
needed for the period of liberalisation
Lack of access for potential investors - the case of
Nigerian SNO Globacom. Investors change over time?
Creation of artificial barriers to investment: One per
country, international gateway licence
Public funding and accountability - SAT3 included
significant element of public funding but public interest
not expressed
Transparency, pricing and
access
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Although a monopoly, no transparency on contracts or
pricing (Telkom SA & SAT3 contract)
Unfair competitive advantage privileges to a selfselecting set of investors
Short-term payback? Short-term profit taking at the
expense of developing the market
Creates price and access “gatekeepers” through which
landlocked countries have to pass (Lesotho & Namibia)
Results in the inefficient staying inefficient (20% of
SAT3 consortium members in Africa not upgrading
capacity). Wasting the asset given
Starting assumptions for a
new approach?
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Fibre is a time-limited asset. Lasts 25 years. Every
day some part of it is not used, it is a wasting asset
It makes commercial sense for the fibre to be as wellused as possible from day one
Lowest possible prices assuming payback over
longest possible period but including…
Need to manage, maintain and repair the cable over
its life
Not an NGO activity but run as a commercial entity
Layered Network Model
Wholesale
Retail
Layer
Open Access / Reseller Model
Services - Voice, Internet
Network / Transmission
Physical Infrastructure
From “Open Access Models”, infoDev, 2005
What is an Open Access
approach?
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A focus how to create the best deal for the
consumer, whether the individual or the
corporate user
A way of thinking about how to achieve this not
a prescription to be followed in only one way
Approach adopted will differ depending on
circumstances in time and in relation to
particular national conditions
Principles for intervention:
open access response?
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A technology-neutral framework that encourages
innovative, low-cost delivery to users
Maximum competition at all layers in the IP network
Transparency to ensure fair trading within and between
layers
Everyone can connect to everyone (no dominant market
position)
Devolved local solutions rather than centralised ones.
So what might this mean for
EASSy?
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Only one fibre so there’s no competition at
physical and transport layers. Therefore….
Need to create a transparent level playing field in
terms of investment, access and price
Lowest achievable international price allowing all
players to compete (and profit) nationally in the
services and transport layers (cf JV oil pipelines)
Open access: practical
impact on EASSy?
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No effective barriers on investment. Multiple investors
in each country. Low $ minimum entry point ($1m?)
Sell max capacity ahead
Lowest possible pricing. Public funding element to
allow payback over 10-20 years.
Same price for all. Agreed wholesale and retail
Transparent pricing. No hidden advantages for some
Needs to cover repairs and maintenance and
repayment of loans. Need to re-adjust pricing up or
down.
Parallel open access agreements to cover inland
regional transit for landlocked countries
Imagine a future…
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When bandwidth costs Africa more like US$500-1000
per mbps pm
Every university student has access to the knowledge,
ideas and research on the Internet
Calling your son in Europe costs US$2-3 cents a
minute rather than US$1 a minute
SMEs flourish and Africa competes in call centre
market
Government offices are all connected and have lowcost VoIP calling. Free calls for citizen
enquiries….etc…etc…etc…
Imagine a different future….