Hurricane Africa 250Not quite as low as the $0.27/megabit price in Riga. Hurricane Electric, a major Internet backbone, is coming to Africa. Although they aren't announcing prices, I predict they will offer much less expensive backhaul/transit. Most of the continent suffers from brutally high, cartel-like prices for wholesale connections. If HE prices as I expect they will, that could easily reduce consumer Internet prices by 15% to 35%. In turn, that will allow tens of millions more to connect.  

In 2012 at the WCIT, a dozen Africans told me the high cost of transit/backhaul was by far the most important international obstacle to bringing the Internet to more Africans. A friend of mine was quoted $70/megabit for a Gig-E in Lagos last year. The cost in most European or American cities would be between $0.50 and perhaps $4.00. The current high price of backhaul raises the cost of a robust broadband connection probably $10-20 over what it could be.  Even a second-rate service with a low cap is probably $5 more expensive than necessary.  

There is a real cost involved carrying data 6,000 miles undersea but that explains only a small part of the 50-1 difference in the price between London and most of Africa. Most coastal countries are now served by more than one undersea cable.

South Africa has five and Kenya three, Take a look at Steve Song's remarkable map. The Africans have been chomping at the bit to reduce the impact of the cartel, but the U.S. has been blocking that at the ITU.

Hurricane offers a $2,700/month price for a 10 gigabit pipe in several dozen cities in Europe and North America, including Riga, Latvia and Rochester, Minnesota. That's on a five year contract. Three years would be somewhat higher. The Africa price will be higher but I believe will create a new market level. The cable middleman must be paid. A Gig-E can serve a thousand robust connections and easily five thousand with low caps. 10 gigs is enough for ten thousand good connections.   

HE keeps prices down by doing little advertising and less pr and run lean in all ways. They;ve been around since 1994, were early to IPv6 and other technical advances, and service many world-class clients.  

The ISP needs to carry the data from the Hurricane POP to their local networks. Fortunately, land-based fiber nets are growing rapidly. With 700M mobile subs in Africa, the market is booming. Afterfibre has a map worth looking at. 

Africa will have more than 315M broadband users, the population of the United States, within the next 18 months. Ericsson expects a total of 500M new broadband users in Africa between 2015 & 2020. 

A bit further - All cost figures here other than actual price quotes are my somewhat informed estimates based on scattered details of actual ISP internal costs I've accumulated over the years. They aren't precise. Cost accounting in a high fixed cost/low marginal cost industry is highly subjective. That's especially true here because the decision how to allocate backhaul costs between voice and data varies. Also, expect a lag between the wholesale and retail price changes.

In developed countries with typically robust regional fiber, a large carrier's network cost from the peering point to the local exchange was similar to transit costs. Both seem to typically equate to 3-5 hops worth of switches/routers. So if I double transit costs, which have a competitive market, I get a usable estimate of the marginal cost of the bandwidth delivered to the local exchange. If transit costs $0.27/megabit in the local market, I believe the marginal cost of bandwidth will be well under $1. That's confirmed off the record numerous times by the carriers but very rarely discussed in public. (Because bandwidth is such a small part of broadband costs, any policy discussion that focuses on how much bandwidth a consumer takes is unsound.)

However, as I testified to the U.S. Broadband Commission, rural areas and small companies often have much higher costs. ISPs and telcos under ~ 20,000 customers cannot efficiently buy backhaul in many locations. (That's when I developed some rules of thumb between transit costs and the delivered cost of broadband,) I suspect the effect is even more extreme in African rural areas or where customers are relatively few. I'd welcome any data people might have. 

Newsletter

Often interesting

Events

Mobile World Congress, Barcelona, Feb 27-March 2 100,000 mob Barcelona. Fares from New York are triple the usual price and hotels even higher - if you can find one less than a hour from the city. Everybody who is anybody goes so everybody who is anybody goes. Beyond the pomp and hot air are a slew of top technical people. Seek them out and make sure yo make appointments in advance with the people you want to see. Hint: You can still get rooms at the hostels in town. Next year, book way in advance to get one of the hotel rooms GSMA have negotiated with the city.

Digital Hollywood Media Summit, New York March 7-8. Victor Harwood always had an enormous number of top people in an almost overcrowded schedule. Senior folks from advertising, all media, marketing and more. VR and AR are heavily represented, from the talent to the salesmen. The price is about half what most shows charge and there are discounts for those with limited resources, including students.  A great way to learn what the most advanced in these fields are doing.

Brooklyn 5G Summit April 19-21st The most sophisticated people in wireless will be there, from the CTOs of NTT and Nokia to the most respected academics on the planet. Incredible S/N. If you can't come to Brooklyn, you must watch the stream. It takes two or three years for most people to catch up to what's learned here.

G.fast Summit, Paris May 9-11 Trevor Linney of BT is deploying 10M lines. John Cioffi promises something astonishing. Everyone in the industry will be there except Broadcom, being their usual antisocial self. On the 9th, Hubert Mariotte of the standards committee has a deep technical tutorial and I have a session for everyone else.

TNO Ultrabroadband Den Haag June 12-15 Always a strong group.

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