Google announced this week that it was involved in a radical new plan to bring internet access to the majority of the developing world.
The internet giant has signed up with Liberty Global and HSBC in a bid to launch 16 satellites, which will bring high-speed internet access to Africa and parts of Asia, Latin America, Australia and the Middle East.
The project aims to use low earth orbit satellites instead of fibre cables for the core network, which will link to cellphone towers throughout the developing countries.
This is great news for the telecoms and broadband industry in South Africa, where new players are looking to get into the market to provide some much-needed competition.
The project, which has been dubbed the 03b Network, named after the “other three billion” people for whom fast fibre internet access networks are not commercially viable, is set to come online by the end of 2010.
The 16 satellites will be able to cover all points between 45° north of the equator and 45° south of the equator.
A recent World Bank report titled Broadband for Africa: Policy for promoting the development of backbone networks says the average retail price for basic broadband in sub-Saharan Africa in 2006 was US$366 a month, while in India it was US$44, in Europe US$40 and in the United States US$12.
The report says the major reason for this is the lack of high-quality backbone infrastructure that would allow for affordable mass-market broadband access.
Anriette Esterhuysen, executive director of the Association for Progressive Communications (APC), says the announcement is great news for value-added network services (Vans) in South Africa.
In a recent high court ruling Vans operators were given permission to build their own networks, which will allow them to compete against established mobile, broadband and fixed-line players.
Once the O3b network is online they will be able to link their local wireless networks to the O3b network and purchase bandwidth for their customers.
“As the regulatory framework makes the market more competitive, it’s great that there are further technology options available, which will make the sector more dynamic,” says Esterhuysen.
“It’s great that there is an alternative, which is faster and cheaper than conventional satellite access,” says Esterhuysen. “If they pull it off, it will make the infrastructure market more competitive.”
She says the announced monthly price of $500 a megabit that telecoms operators would fork out is competitive, adding that the last time APC did price comparisons on the SAT-3 undersea cable, which provides most of Africa’s bandwidth, the cheapest country was selling a megabit at $1 000.
Google Alternative Access Team product manager Larry Alder has been reported saying the project could reduce the cost of bandwidth in some markets by as much as 95%.
“O3b’s model empowers local entrepreneurs and companies to deliver internet and mobile services to those in currently under-served or remote locations at speeds necessary to power rich web-based applications,” says Alder.
“We believe in O3b’s model and its goal of expanding the reach of the internet to users who have limited and expensive connection options as it complements our mission of organising the world’s information and making it universally accessible and useful.”
But Esterhuysen says this should not be seen as a replacement to fibre networks, which are laid in the ground, as there is still a great need to invest in these networks.
The ambitious O3b network project is the brainchild of American technology entrepreneur Greg Wyler.
“Access to the internet backbone is still severely limited in emerging markets,” says Wyler. “Only when emerging markets achieve affordable and ubiquitous access to the rest of the world will we observe locally generated content, widespread e-learning, telemedicine and many more enablers to social and economic growth which reflect the true value of the internet.
“O3b Networks will bring multi-gigabit internet speeds directly to the emerging markets, whether landlocked in Africa or isolated by water in the Pacific Islands,” says Wyler.
Liberty Global, Google and HSBC have invested $20-million in the project and expect to raise 70% of the rest of the finances for the $750-million project on the debt market.
Further equity financing of $150-million to $180-million is needed for the project and could come from the three investors or from additional backers that are brought on board.
The O3b network was set to place its first order for 16 low earth orbit satellites with French company Thales Alenia Space this week.