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3rd African Peering and Interconnection Forum ( AfPIF ). August 2012. The Role Submarine Cables can play in the Interconnection of Africa's Internet. Aidan Baigrie. 18.03.2011. AfPIF. AfPIF today.

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3rd african peering and interconnection forum afpif

3rd African Peering and Interconnection Forum (AfPIF)

August 2012

The Role Submarine Cables can play in the Interconnection of Africa's Internet

Aidan Baigrie

18.03.2011

AfPIF


3rd african peering and interconnection forum afpif

AfPIF today

“Imagine a world in which every single person on the planet is given free access to the sum of all human knowledge. That's what we're doing.”

Jimmy Wales, founder of Wikipedia

AfPIF

18.03.2011

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3rd african peering and interconnection forum afpif

Agenda

  • The role of submarine players in an African Internet

  • Setting the tone

  • A vision of the African Internet

  • Filling the void

  • Summary

“Broadband is to the 21st Century what railways were to the 19th Century”

AfPIF

18.03.2011

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3rd african peering and interconnection forum afpif

INTRODUCTION

Opportunities for bandwidth providers are endless…

Where was Africa (2009)?

  • Africa: the least penetrated continent in the world

  • Most of Africa had no internet or was solely dependent on costly and high latency satellite, until recently…

AFRICA

Source: ‘Broadband penetration’ WBIS 2008

AfPIF

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3rd african peering and interconnection forum afpif

SETTING THE SCENE

How demand is looking…

  • Demand growth is not tapering off

  • Cisco predicts that mobile devices will surpass the population by the end of the year (US ‘11)

  • Smartphones largest consumer of mobile data (6EX/m in ’16)

Global view

  • Africa mobile data traffic 104% CAGR (2011-2016) = 36x = the highest of any continent on the planet (Low base?)

  • Internet penetration here has grown 60% in 2 years (‘12)

  • By 2013, more smartphones than normal phones sold says MTN (<50$)

Africa view

Of 10m internet users in SA, some 8m are mobile/ wireless driven

AfPIF

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3rd african peering and interconnection forum afpif

SETTING THE SCENE

What’s driving demand…

  • Possible demand in 2100… (UN)

AfPIF

18.03.2011

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3rd african peering and interconnection forum afpif

Setting the scene

The way in which traditional brick and mortar industries rules business is changing…

Demand in one day

  • 172 million unique people visited Facebook

  • 400 million queries on Google

  • 864 000 hours of video uploaded to Youtube

  • 294 billion emails were sent

  • The first 3 bullets represent a few of the most valuable tech companies on earth – ask yourself…what are their assets?

AfPIF

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3rd african peering and interconnection forum afpif

Setting the scene

This growth has come through one key concept…the understanding that affordability unlocks demand

AfPIF

18.03.2011

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3rd african peering and interconnection forum afpif

SETTING THE SCENE

Affordable pricing works better, sufficient ROI and ongoing maintenance revenues are key though

Africa’s ACTUAL demand curve

Africa’s PERCEIVED demand curve

Price

Demand

2009

2012

Price

  • Price:

    • 100 USD/Mb

    • R 1c/ MB

  • Speed:

    • 70 mbps capable BTS

    • 10 mbps adsl

  • Price:

    • 3000 usd/Mb

    • 25c / MB

  • Speed:

    • 2-7 mbps capable BTS

    • 0.384 - 1 mbps adsl

  • ?

Demand

AfPIF

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3rd african peering and interconnection forum afpif

A VISION OF THE AFRICAN INTERNET

Whilst building an African Internet is driven by organic and often random growth, there are some key ingredients

Reliable and pervasive Infrastructure

IP enablement and peering

Building local content

… and a well-oiled regulatory environment

AfPIF

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3rd african peering and interconnection forum afpif

A vision of the African internet

We see devotion to the following elements as key to driving an African Internet

  • Key ingredients of an African Internet

  • Fostering intra African connectivity through reliable and affordable Subsea, Regional, National, Metro and Access connectivity

  • Fibre to enterprises and mobile to the masses

AfPIF

18.03.2011

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3rd african peering and interconnection forum afpif

A vision of the African internet

We see devotion to the following elements as key to driving an African Internet

  • Key ingredients of an African Internet

  • Fostering intra African connectivity through reliable and affordable Subsea, Regional, National, Metro and Access connectivity

  • Fibre to enterprises and mobile to the masses

  • Local carrier neutral datacenters, and easily accessible open-access exchanges and meet-me points

  • Peering and sharing of local content to reduce costs, encourage uptake and drive up usage

AfPIF

18.03.2011

12


3rd african peering and interconnection forum afpif

A vision of the African internet

We see devotion to the following elements as key to driving an African Internet

  • Key ingredients of an African Internet

  • Fostering intra African connectivity through reliable and affordable Subsea, Regional, National, Metro and Access connectivity

  • Fibre to enterprises and mobile to the masses

  • Local carrier neutral datacenters, and easily accessible open-access exchanges and meet-me points

  • Peering and sharing of local content to reduce costs, encourage uptake and drive up usage

  • Intelligent IP based networks

  • Cloud and mobile integration into basic m-services, hosting of content locally to provide true mature market experiences

  • And of course….a well oiled regulatory environment

AfPIF

18.03.2011

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3rd african peering and interconnection forum afpif

Some challenges

We see some hurdles to overcome though…

  • Challenges to overcome (1/2)

  • Reliability of subsea and terrestrial fibre is not optimal yet, there needs to be further development on resilient routes and mesh metro networks

  • Fibre into Enterprises is unaffordable without critical mass (chicken and egg)

  • Many Data centers still embrace crippling pricing and as such don’t facilitate regional exchanges

AfPIF

18.03.2011

14


3rd african peering and interconnection forum afpif

Some challenges

We see some hurdles to overcome though…

  • Challenges to overcome (1/2)

  • Reliability of subsea and terrestrial fibre is not optimal yet, there needs to be further development on resilient routes and mesh metro networks

  • Fibre into Enterprises is unaffordable without critical mass (chicken and egg)

  • Many Data centers still embrace crippling pricing and as such don’t facilitate regional exchanges

  • National transit is multiples more expensive than international transit in many African countries, e.g. customers pay more to access information in their own country than the rest of the world(don’t browse locally please)

AfPIF

18.03.2011

15


3rd african peering and interconnection forum afpif

Some challenges

We see some hurdles to overcome though…

  • Challenges to overcome (1/2)

  • Reliability of subsea and terrestrial fibre is not optimal yet, there needs to be further development on resilient routes and mesh metro networks

  • Fibre into Enterprises is unaffordable without critical mass (chicken and egg)

  • Many Data centers still embrace crippling pricing and as such don’t facilitate regional exchanges

  • National transit is multiples more expensive than international transit in many African countries, e.g. customers pay more to access information in their own country than the rest of the world

  • Whilst National IP networks exist, there is still a need for affordable pan-African regional IP networks

AfPIF

18.03.2011

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3rd african peering and interconnection forum afpif

Some challenges

We see some hurdles to overcome though…

  • Challenges to overcome (2/2)

  • Cloud providers are finding it costly to place equipment in country and finding it difficult to navigate the regulatory and sovereign complexity of delivering a service in Africa

  • National Policy can work against sharing resources and regional hubs

  • International carriers struggle without single SLAs and predictable, reliable services [Zoom-In]

AfPIF

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3rd african peering and interconnection forum afpif

Some challenges

The journey of a byte goes hrough many hands before it arrives here

Broadband Components

1 a. Mobile Phone

2a. Wireless/ Tower Fibre NW

1b. Home

2b. Last Mile/Backhaul

-------------------------

3. ISP (Services+Cloud)

4. Longhaul

5. Submarine capacity

6. Internet breakout

Internet

Local cloud

6

3

4

5

2a

2b

1a

1b

AfPIF

18.03.2011

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3rd african peering and interconnection forum afpif

Key steps

What do we believe is our responsibility in achieving an African Internet?

  • SEACOM’s role

AfPIF

18.03.2011

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3rd african peering and interconnection forum afpif

Key steps

What do we believe is our responsibility in achieving an African Internet?

  • SEACOM’s role

  • Working as a Network of cables

  • Providing full IP services over the network with inherent resilience through East/West breakout

AfPIF

18.03.2011

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3rd african peering and interconnection forum afpif

Key steps

What do we believe is our responsibility in achieving an African Internet?

  • SEACOM’s role

  • Working as a Network of cables

  • Providing full IP services over the network with inherent resilience through East/West breakout

  • Creating partnerships with terrestrial and last mile providers ot provide integrated services (single SLAs)

  • Partnership models between fibre players to utilize existing fibre and to ensure affordability of FTTx models for ISPs

1

AfPIF

18.03.2011

21


3rd african peering and interconnection forum afpif

Key steps

What do we believe is our responsibility in achieving an African Internet?

  • SEACOM’s role

  • Working as a Network of cables

  • Providing full IP services over the network with inherent resilience through East/West breakout

  • Creating partnerships with terrestrial and last mile providers ot provide integrated services (single SLAs)

  • Partnership models between fibre players to utilize existing fibre and to ensure affordability of FTTx models for ISPs

  • Providing capability for Exchange points in selected PoPs, bringing multiple subsea and terrestrial cables together with customers

  • Building a cloud services platform through Pamoja, that changes the way global content players think about Africa – fostering the creation of local services and the aggregation of international services…locally

AfPIF

18.03.2011

22


3rd african peering and interconnection forum afpif

Some challenges

We see some hurdles to overcome though…

  • Challenges to overcome

  • Reliability of subsea and terrestrial fibre is not optimal yet, there needs to be further development on resilient routes and mesh metro networks… not to mention high quality builds…

AfPIF

18.03.2011

23


3rd african peering and interconnection forum afpif

Some challenges

We see some hurdles to overcome though…

  • Challenges to overcome

  • Reliability of subsea and terrestrial fibre is not optimal yet, there needs to be further development on resilient routes and mesh metro networks

  • Fibre into Enterprises is unaffordable without critical mass (chicken and egg)

  • Many Data centers still embrace crippling pricing and as such don’t facilitate regional exchanges

AfPIF

18.03.2011

24


3rd african peering and interconnection forum afpif

Some challenges

We see some hurdles to overcome though…

  • Challenges to overcome

  • Reliability of subsea and terrestrial fibre is not optimal yet, there needs to be further development on resilient routes and mesh metro networks

  • Fibre into Enterprises is unaffordable without critical mass (chicken and egg)

  • Many Data centers still embrace crippling pricing and as such don’t facilitate regional exchanges

  • National transit is multiples more expensive than international transit in many African countries, e.g. customers pay more to access information in their own country than the rest of the world

AfPIF

18.03.2011

25


3rd african peering and interconnection forum afpif

Some challenges

We see some hurdles to overcome though…

  • Challenges to overcome

  • Reliability of subsea and terrestrial fibre is not optimal yet, there needs to be further development on resilient routes and mesh metro networks

  • Fibre into Enterprises is unaffordable without critical mass (chicken and egg)

  • Many Data centers still embrace crippling pricing and as such don’t facilitate regional exchanges

  • National transit is multiples more expensive than international transit in many African countries, e.g. customers pay more to access information in their own country than the rest of the world

  • Whilst National IP networks exist, there is still a need for affordable pan-African regional IP networks

AfPIF

18.03.2011

26


3rd african peering and interconnection forum afpif

summary

  • We believe that to strive for an African Internet, one needs a clear vision and clear plan of actions to get there

  • Affordable pricing, and a grasp of how large the potential really is

  • We understand the African Internet and see ourselves as not a cable, but a Pan-African Network

  • …let’s continue pushing - there is still a lot to be done

AfPIF

18.03.2011

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Thank you

Thank you.

Building the African Internet

18.03.2011


3rd african peering and interconnection forum afpif

BACKUP

18.03.2011


3rd african peering and interconnection forum afpif

TheN CAME CLOUD

Cloud computing for enterprises started to boom…

Source: AMI-Partners (www.ami-partners.com) 2012

AfPIF

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3rd african peering and interconnection forum afpif

THEN CAME CLOUD

This added stress to original Cloud models…already straining under video and music services… (think Apple TV and iTunes Match)

enterprises have more stringent requirements on cloud services than consumers...cracks appeared…

“Gmail can be slow, but not when it’s your enterprise solution….”

AfPIF

18.03.2011

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3rd african peering and interconnection forum afpif

CLOUD EVOLUTION

The cloud did a u-turn…

  • The cloud is decentralizing (making click and scream…click and stream)

  • IaaS, SaaS, Paas…… (Azure, EC2…)

  • How does this fare for Submarine players?

    • Bad right?

    • Not necessarily….60hrs/min

AfPIF

18.03.2011

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3rd african peering and interconnection forum afpif

Infrastructure plight

So again, the challenges are there but demand is still strong….

Yet history tells us….

AfPIF

18.03.2011

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3rd african peering and interconnection forum afpif

Infrastructure plight

  • Submarine cables > Commoditization

    • Sunk costs

    • Low variable cost of sale

    • Price elasticity responds to price

    • – so drop it…

  • Over-the-top players reap the fruits

    • All the big brands…

p

High demand elasticity

v

AfPIF

18.03.2011

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3rd african peering and interconnection forum afpif

Infrastructure plight

  • Some models that work

    • Stay…

    • Vertical integration (product layering)

    • Horizontal integration (value chain consumption)

    • The Pamoja model (share the apple pie)

AfPIF

18.03.2011

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3rd african peering and interconnection forum afpif

SOME TAKEAWAYS

  • Demand BIG (driven by mobile)

  • The gap is closing fast and the bullwhip may be there…

  • Demand not going away in Africa

  • But there are challenges for Broadband infrastructure players

  • Cloud isn’t one of them – contrarily as we grow more dependent on cloud services, the threads that link the cloud are more critical than ever

AfPIF

18.03.2011

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3rd african peering and interconnection forum afpif

Random facts on YouTube.

AfPIF

18.03.2011

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3rd african peering and interconnection forum afpif

INTRODUCTION

London to CT shows how disproportionate costing is & the important role of competition in Fibre Procurement

Backhaul (9%)

Distance

Submarine (90%)

Last mile (1%)

Fibre

Broadband value

Price $

Submarine (50%)

Backhaul (30%)

Last mile (20%)

6x

36x

Price/unit multiplier

1x

H

SEACOM

SAT 3 (Telkom)

SAFE (Telkom)

WACS (Telkom)

EASSy

Ace?

SAex?

M

Telkom

Neotel

BBI

DFA

NLD

Competition (Fixed line)

L

Telkom

AfPIF

18.03.2011

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