Aidan Baigrie

18.03.2011

3rd African Peering and Interconnection Forum (AfPIF)

AFPIF

August 2012

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

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AFPIF TODAY

AFPIF

“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

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AGENDA

AFPIF

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”

INTRODUCTION

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Opportunities for bandwidth providers are endless…

AFRICA

Source: ‘Broadband penetration’ WBIS 2008

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…

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SETTING THE SCENE

AFPIF

How demand is looking…

Demand growth is not tapering off

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

• 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)G

loba

l vie

wAf

rica

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$)

What’s driving demand…

SETTING THE SCENE

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Possible demand in 2100… (UN)

SETTING THE SCENE

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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?

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

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SETTING THE SCENE

AFPIF

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

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SETTING THE SCENE

AFPIF

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

Demand

Pric

e

Africa’s PERCEIVED demand curve

Demand

Pric

e

Africa’s ACTUAL demand curve

2009

Price: o 3000 usd/Mbo 25c / MB

Speed: o 2-7 mbps capable BTSo 0.384 - 1 mbps adsl

?

Price: o 100 USD/Mbo R 1c / MB

Speed: o 70 mbps capable BTSo 10 mbps adsl

2012

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A VISION OF THE AFRICAN INTERNET

AFPIF

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

… and a well-oiled regulatory environment

Reliable and pervasive Infrastructure IP enablement

and peering

Building local content

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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

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

A VISION OF THE AFRICAN INTERNET

AFPIF

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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

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

A VISION OF THE AFRICAN INTERNET

AFPIF

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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

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

A VISION OF THE AFRICAN INTERNET

AFPIF

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SOME CHALLENGES

AFPIF

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

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SOME CHALLENGES

AFPIF

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)

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SOME CHALLENGES

AFPIF

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

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SOME CHALLENGES

AFPIF

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]

Internet2a

1a

1b

2b

5 6

Local cloud

43

1 a. Mobile Phone2a. Wireless/ Tower Fibre NW1b. Home2b. Last Mile/Backhaul-------------------------3. ISP (Services+Cloud) 4. Longhaul5. Submarine capacity6. Internet breakout

Broadband Components

SOME CHALLENGES

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

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

KEY STEPS

AFPIF

SEACOM’s role

Working as a Network of cables

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

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

KEY STEPS

AFPIF

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

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

KEY STEPS

AFPIF

SEACOM’s role

1

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

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

KEY STEPS

AFPIF

SEACOM’s role

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SOME CHALLENGES

AFPIF

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…

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SOME CHALLENGES

AFPIF

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

18.03.2011 25

SOME CHALLENGES

AFPIF

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

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SOME CHALLENGES

AFPIF

We see some hurdles to overcome though…

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

Challenges to overcome

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SUMMARY

AFPIF

• 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

Thank you.

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Building the African Internet

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BACKUP

THEN CAME CLOUD

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Cloud computing for enterprises started to boom…

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

2010 2011 2012 2013 2014 2015$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

$43,438 $69,433

$113,530

$175,958

$277,189

$440,380

Enterprise Cloud Spending Growth to Take Off(USDm)

Re

ven

ue

In U

SD

($

M)

THEN CAME CLOUD

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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

The cloud did a u-turn…

CLOUD EVOLUTION

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

• IaaS, SaaS, Paas…… (Azure, EC2…)

AFPIF

• How does this fare for Submarine players?o Bad right?o Not necessarily….60hrs/min

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

AFPIF

INFRASTRUCTURE PLIGHT

Yet history tells us….

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• Submarine cables > Commoditization

o Sunk costso Low variable cost of saleo Price elasticity responds to price

– so drop it…

• Over-the-top players reap the fruits

o All the big brands…

AFPIF

p

vHigh demand elasticity

INFRASTRUCTURE PLIGHT

INFRASTRUCTURE PLIGHT

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• Some models that worko Stay…o Vertical integration (product layering)o Horizontal integration (value chain consumption)o The Pamoja model (share the apple pie)

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• 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 everAFPIF

SOME TAKEAWAYS

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Random facts on YouTube.

…

AFPIF

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

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Submarine (90%) Backhaul (9%) Last mile (1%)

Submarine (50%) Backhaul (30%) Last mile (20%)

Broa

dban

d va

lue

SEACOMSAT 3 (Telkom)SAFE (Telkom)WACS (Telkom)

EASSyAce?SAex?

…

TelkomNeotel

BBIDFANLD

…

Telkom…

Com

petiti

on

(Fix

ed li

ne)

H

M

L

Price $

Price/unit multiplier 1x 6x 36x

Fibre

Distance

INTRODUCTION

AFPIF