•Bandwidth may fall from $2,400 to $10 per MG
• Nigeria records 5,400% increase in Internet use
Ben Uzor Jr
More Nigerian homes will have access to cheaper internet services by 2012 as the country’s bandwidth market is expected to witness explosive price wars occasioned by heightened competition in the submarine cable market, analysts have predicted. It is expected that the price of bandwidth will fall from $ 2, 400 to $10 per megabyte as the number of submarine cables increase.
This is coming after a decade of slow, expensive and exasperating access to the information superhighway owing to the dearth of broadband infrastructure. According to them, Nigeria recorded a 5,400 percent increase in internet users from 2000 to 2009, indicating triple digit annual growth rates. Furthermore, it is indicative of the enormous potential in the growth of the internet market representing huge business prospects waiting to be harnessed, if only the necessary regulatory push and implementation of internet-based initiatives are made.
Besides, Nigeria will have five undersea cable systems connecting her to Europe and America in 2012 and they would boost data capacity to over 12 terabits per second. For years, and until the last few weeks, the only cable system serving Nigeria’s internet and data needs was the SAT-3/WASC or South Atlantic 3/West Africa Submarine Cable, which is a communication cable linking Portugal and Spain to South Africa, with connections to several West African countries along the route.
In the last few weeks, the Main One Cable System has launched, promising an astounding 4.92 terabits per second of bandwidth after upgrade. More recently, the Glo-One cable has also gone. Equally, the West African Cable System (WACS) - an initiative operated by nine countries (including Nigeria’s MTN Group), which comes with a high capacity submarine cable system linking Europe, West Africa and South Africa, will provide over 3.8 terabits per second of bandwidth.
Informed sources told BusinessDay that the WACS intends to adopt an aggressive entry strategy that would see prices of bandwidth fall as low as $10 per megabyte in Nigeria. According to the source, the reason why WACS would be able to sell at this ground-breaking rate is because the initiative is not for profit making, as most of the capacity is for members of the consortium.
Although WACS’ proposition has not yet come to fruition, Main One and Glo-One are already bringing down existing pricing model by reducing communications cost by 50 percent. Before Main One Cable commenced commercial operations, telecoms operators and Internet Service Providers (ISPs) bought 1 megabyte of bandwidth capacity for as much as $2,400, according to BusinessDay investigations. In the United States, the same megabyte per second costs $3.33 and in Japan $0.27 while in Kenya it is $600.
Moreover, Main One Cable seems not to be perturbed by growing competition in the undersea cable market. Funke Opeke , chief executive officer, Main One Cable Company had told BusinessDay recently that its open access strategy which dictates that the cable will not be in direct competition with telecommunications operators but rather provide high value wholesale bandwidth at affordable costs would definitely be the distinguishing factor as competition thickens in the cable sub-sector.
“We are open access which makes a lot of our operators’ customers feel comfortable. We provide services to all operators; we are not a retail operator, we only do business on a wholesale basis. So, we are not competing with them, its shared infrastructure. Our objective is to deliver superior value to them at a reduced cost in an open pricing scheme. You get a higher discount if you buy more volume or if you subscribe for a longer period. So, no operator is treated unfairly.”
Some industry analysts share Opeke’s opinion, arguing that WACS and ACE cables are consortium cables designed primarily to serve their members whilst Glo One cable is self-feeding for Globacom. In both cases, their idea of pricing will be very different from Main One as an independent cable. Globacom’s group chief operating officer (GCOO), Mohammed Jameel, thinks that the telecoms company’s regional reach and unique pricing model will also be a huge advantage for Glo-One cable amid competition.
“With telecoms licences in Nigeria, Ghana, Benin Republic, Cote d’Ivoire and Gambia, we are able to give circuits to customer locations and offer seamless services in several countries without engaging third parties”, Jameel explained. The GCOO further added that even where Globacom did not have operating licence, the company would be able to reach any global destination because of its strategic partnership with all major carriers.
Jameel disclosed that the primary beneficiaries of the Glo-One facility would be telecom carriers, GSM and Code Division Multiple Access (CDMA) operators and Internet Service Providers (ISPs) who will extend the benefits to remote enterprises, retailers and individuals.
Also, there are other underwater initiatives in the offering. The ACE submarine cable system covering Nigeria and other countries will stretch 17,000 kilometres (10,500 miles) from Penmarch, France, to Cape Town, South Africa, connecting 23 countries. The network will have built-in 40 gigabit per second capability and it is slated to be operational in the first-half of 2012.
Only a few days ago, BusinessDay learnt that Alcatel-Lucent was selected by eFive Telecoms, a South African telecoms firm, to build a new submarine cable network linking the west coast of Africa to South America. The system, according to sources, will be composed of two trunks - the first one connecting South Africa to Angola and Nigeria and the second trunk linking Angola to Brazil.
Meanwhile, growth in the telecommunications sector has remained on the upswing as latest statistics from the Nigerian Communications Commission (NCC) reveal that active connections peaked at over 80.6 million lines as at July this year with the GSM mobile sector accounting for the traditional market dominance with over 72.7 million lines. Furthermore, the mobile CDMA segment dropped 7.7 million lines whilst the fixed wired/wireless segment accounted for 1.1 million lines within the period.
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