O3b Networks CEO clears up claims made by Sea Launch

Two days ago, this site featured a write-up of a Spaceflight Now article that made several claims about O3b Networks. I received an email from O3b Networks CEO, Greg Wyler, where he clarified aspects of the original article.

Since any negativity, even in this remote and barren part of the blogosphere, could possibly have an impact on the fate of O3b Networks, I have decided to delete my previous post. O3b’s efforts are critical to improving the connectivity situation for the Pacific Islands and if this blog played some role in hindering their efforts, then I could not have that hanging on my conscience as I have a great deal of respect for what Greg and his crew are trying to accomplish.

You will not find those assertions repeated on this site, but if you are interested to know, you can follow the link to the Spaceflight Now article.

The response from Greg Wyler, via email:

O3b Networks secured an alternative launch vehicle well before the bankruptcy filing due to Sea Launches inability to meet its contractual obligations. The statements attributed to Sea Launch are not accurate so we cannot comment on why they said them.

Again from Greg, on the alleged downsizing of the O3b satellite fleet:

The O3b Networks system has a scalable fleet based on demand, and customer contracts have exceeded projections every quarter. For instance at the end of Q2 we posted approximately 571m of backlog which is significantly above plan and demonstrates the absolute need for low cost, low latency backhaul.

For now, it appears the launch is on track and will allow O3b to launch service as scheduled, by late 2010. With demand for O3b’s services greater than anticipated, the launch of the 2nd set of 8 satellites also looks like it will become reality. With a constellation of 16 satellites, O3b Networks will provide low-cost, low-latency backhaul service for developing countries that right now have no access to such service.

Untangling the SPIN about submarine cable projects

Landing a submarine cable is no small task (Source: SPIN presentation)

An Up-to-date primer on the state of submarine cable projects in the Pacific Region is titled Trans-Pacific Capacity: Possible New Price War? It includes a section that heavily references the South Pacific:

The latest construction wave began in 2006 and has been centered on the Asian and Pacific Regions. The current round of activity started with the Gondwana, Australia to New Caledonia system,Telstra’s Australia to Hawaii system and six new trans-Pacific cables. These new cables are the Trans Pacific Express, Asia American Gateway, FLAG’s Eagle, Next Generation Network, and the Unity cable projects (Source: TMC).

Out of these six projects, only one faces significant delay:

O3b Networks set to make waves in Pacific

On Wednesday, I had the chance to  speak with representatives of O3b Networks via conference call. I talked to Nara Sihavong who is their Regional Director of Sales, Asia-Pacific. Also on the call were John Dick,  from Regional Sales and Mike Serrano, Director of Marketing. Together, they updated me on what has been going on at O3b since the launch of operations in Sept. ‘08.  They also briefed me  on the company’s plans in the Pacific.

ITU Ministerial Forum in Tonga, Feb 17-20: "Connecting the Unconnected"

O3b launched operations in September of 2008 with Google, HSBC, and Liberty Global as primary investors.  Initial focus of the company’s sales and marketing efforts has been on African countries.  However, O3b’s overarching mission is to provide improved connectivity for emerging economies, the “other 3 billion”. They have been quick out of the gate, signing agreements with several  operators & ISPs, including the Microcom, the largest ISP in the Democratic Republic of Congo.

Coconut Wireless has covered O3b Networks here, here, and here.   O3b’s presence at PTC ‘09 in Honolulu was the kick-off of its efforts in the Pacific.  It was at PTC ‘09 where they revealed details of their plans to offer improved connectivity to the Pacfic Islands.

The recent ITU meeting in Tonga was part of this effort and the O3b team met with Ministerial level delegates to pave the way for further talks in Pacific Island nations. Nara then spent a week in Fiji, where he held meetings and discussions with the telecom operators.

He reports an enthusiastic response from the operators and adds that he sees the business development units within these companies moving with an urgency that reveals their understanding of what increased competition means for market dynamics.

Nara Sihavong

O3b also met with the members of the Communication Ministry and outlined to them the kind of support  and guarantees government would have to come forward with in order to get services underway in Fiji.  For ministers in the region, O3b offers a new pathway to building up ICT sectors which can become generators of employment and income.

As a provider of backhaul service, O3b would not provide direct service to customers in the region.  Instead, they are looking for agreements with ILECs, CLECs, mobile providers and  ISPs.  For remote areas not currently served, O3b would be interested in talking to entrepreneurs interesting in building ISPs.

When agreements are in place, O3b will work with existing operators in Fiji, like FINTEL, Vodafone, TFL, and Digicel.  O3b is also in similar discussion with operators in other Pacific countries.  Any provider who signs on with O3b  gains superior quality connectivity to the international infrastructure, something that is only possible now through two very expensive options, the Southern Cross Cable Network or GEO satellite service providers.

With O3b, at the national level, governments do not have to wait for undersea cables.  A look at the following map of the region will show how O3b is mapping all the islands for service:

Proposed coverage for Pacific Islands (Please click image to view in Hi-res)

They can leap frog that process that can take years, take a look at what O3b can do and create a congruent domestic and international network to inter-connect all their remote islands:

How O3b works: A diagram of QuickStart and QuickVar Solutions

O3b would provide the backhaul service and the telecoms would deploy wireless (WiMAX or LTE) or cable networks to reach customers.  Signing service agreements with O3b would mean realizing huge cost savings, which hopefully is the incentive that the incumbent telecom operators need to ensure wider propagation of  services at much lower costs.

View Slideshow with company info:

PowerPoint available for download here (approx. 3 MB)

3.5m fixed terminal for Tier 1 service

The savings are significant.  Telecoms in the Pacific currently pay in the range of $3,000-$6,000/mbps, where O3b can provide superior service at a fraction of that cost: $600/mbps for QuickStart.

O3b is a Medium Earth Orbit (MEO) operator meaning much smaller satellite dishes are required.  This is because the satellites will orbit about 8,000 km above earth, as opposed to the 36,000 km of existing Geostationary (GEO) platforms. This is an important distinction because it means significantly lower costs for ground equipment. The shorter distance that the signal has to travel to reach a satellite in MEO orbit is what allows for low-latency connections. As MEO technology becomes more widespread and cheaper, even greater savings could be realized. Learn more about what MEO and GEO mean.

A large part of our conversation revolved around the regulatory picture in the S. Pacific.  With the ADB and World Bank pushing for liberalization of telecommunications in the region, there is for the first time considerable pressure to change the status quo, which has protected monopolies and the high prices and poor service they offer.

According to Nara,  O3b’s technology offering necessitates a re-examination of plans for coping with future infrastructure needs. This moment presents an opportunity for telecom operators, regulatory bodies, and those at the ministerial level to look at their long-term planning and reformulate their outlook for the next 5 and 10 years.

O3b Service can help ISPs and mobile providers address their needs

There are early signs of misunderstandings that can take place.  As the people who have to ensure successful implementation of liberalization efforts, regulatory bodies have a key role to play.  In Papua new Guinea,  regulators require fees for licensing satellite operators to provide service. This is a deviation from normal practice and could be a hindrance to O3b’s entrance into the PNG market.

The challenge is on for all stakeholders in the Pacific to be creative in getting the most out of this technology.  In my early posts on Ensuring Universal Access (Part I, Part II), I outlined how next generation wireless deployments should allow for ‘piggybacking’ for schools and emergency services.  For this to be realized, this is something that regulators need to demand of operators.

John remarked that the game-changing technology is an example of how innovation is being used to overcome a real problem.  Low-cost satellite offers the potential to deploy ubiquitous Internet coverage, dramatically altering the landscape of what is possible for the economies of these countries.  This is something not true of submarine cable projects, which can languish on the drawing board for years without any real progress.

For many Pacific countries who have been contemplating spending many millions to get undersea fiber connections , the dream of high-speed connectivity is a step closer to reality.  With O3b, they can pursue fiber-like connectivity at a fraction of the cost, allowing them to invest in other projects critical to social and economic development.

Getting from here, to where we need to be...

Creating a policy toolkit for S. Pacific Regulators

For several weeks now, I have been parsing through websites and academic papers trying to understand the available literature on telecommunication policy.   An earlier post on O3b referenced the International Telecommunication Union meeting in Tonga.

One of the outcomes from this meeting was a direction for ‘officials to work toward establishing a shared regulator resource centre at the earliest possible date.’

From its founding, this has been exactly the goal for this blog, to be a resource for everyone in the region to better understand how ICT  and telecommunications liberalization impacts the lives of those living in the Pacific.

In true Pacific fashion, island nations have shown up late for the telecommunications liberalization party.  This is regrettable, but it presents us with the opportunity to study how liberalization has fared in other countries in the world.  In the literature on development, this is referred to as the benefit of being a latecomer.

Of course, it’s only a benefit if we learn the right lessons, make the appropriate comparisons, and take the necessary steps to avoid pitfalls faced by other nations who attempted to bring about change to their telecommunications sector.

Read about telecommunications policy and failures of liberalization in South Africa, as well as challenges faced by small economies, particularly relevant for the small island states of the Pacific.

There is an overwhelming amount of information that is available on this topic from online sources.

Click above image to view table of contents for ITU's ICT Regulation Toolkit

The plan is to have this become the first in a series of posts that will examine issues of telecommunications policy pertaining to liberalization and regulation.

To get a better understanding, it’s helpful  for us to develop a  road map to better put into perspective the many issues of concern.  For our needs, the framework of analysis is offered in Section 2.4 of the ICT Regulation Toolkit, which outlines responsibilities of a good regulatory body:

• implementating the authorization framework that provides opportunities for new companies and investors to establish ICT businesses. Simple authorization procedures tend to maximize new entry (see Module 3);
• regulating competition (including tariffs) involving the effective enforcement of fair and equitable competitive market principles, restraining the power of dominant suppliers and leveling the playing field for new entrants (see Module 2);
• interconnecting networks and facilities. Normally transparent rules are established for interconnecting all types of traditional and new communications networks and associated cost-based payments (see Module 2)
• implementing universal service/access mechanisms to ensure the widespread (and affordable) diffusion of ICT (see Module 4);
• managing the radio spectrum effectively to facilitate new entrants and new technologies, which is particularly relevant to new broadband wireless opportunities such as Wi-Fi and WiMAX (see Module 5); and
• minimizing the burden and costs of regulation and contract enforcement (see Module 7)

Future posts on policy will be oriented around these modules.  You can also expect more emphasis on academic articles that focus on small economies, since that is where the most apt comparisons to Pacific nations can be made.

O3b announces pricing structure for Pacific Islands

Start-up satellite broadband provider O3b Networks expects to unveil an initial pricing plan for Pacific islands next week.  Greg Wyler, CEO, plans to announce a megabit-per-second pricing structure for Pacific Island countries at a meeting of the International Telecommunication Union from Feb 17-20, in Tonga:

Mr Wyler said the company’s preliminary assessment is that an island would pay around US$600 per megabit per second of throughput, plus an initial activation fee for the ground equipment of about US$350,000, for orders placed by May 2009. (Source: Pacnews)

I had the good fortune to see Greg Wyler, CEO of O3b, speak at PTC ‘09.  He described O3b’s plan for the Pacific Islands and it sounded pretty awesome as anyone addressing the needs of the Pacific Islands, is instantly my hero.

Greg Wyler at PTC '09 in Honolulu

O3b arrives on the scene just as other satellite companies like Intelsat are raising prices in the Pacific claiming the only alternative is stopping service to the islands.

Any news from O3b is good news for the Pacific islands.  Here’s some details on the satellites and the scheduled 2010 launch:

… based in the British tax haven Jersey Channel Islands, has contracted with manufacturer Thales Alenia Space of France and Italy to build an initial eight 700-kilogram O3b satellites to be launched together in late 2010 aboard a Sea Launch Co. rocket.

Launching satellites is no small task and there have been several quite prominent failures at what O3b is attempting to accomplish.  With the way technology is becoming so widespread in the world, the timing could be right for O3b.

We can only hold our breath in anticipation of the launch of the satellites in the latter half of 2010. On behalf of everyone who recognizes that O3b’s success means real competition for internet services in Fiji, we wish them well!

The Promise of O3b Networks

I’ve written previously about O3b Networks, a satellite start-up that promises to deliver IP backhaul services to the developing world.  I had a good fortune to speak with their CEO, Director of Asia-Pacific Sales, and Head of Ground Networks at the recent PTC conference in Honolulu.

Satellite technology, in a new configuration, promises to release the 3rd world from the shackles placed on them by domestic telecom monopolies.

They have just announced the signing of a new contract with Quark Communications in Guyana. An excerpt from their press release:

“With less than 1% penetration of broadband Internet usage in Guyana, we feel we have a moral obligation to provide all Guyanese Internet access for educational, commercial, and medical purposes,” said Brian Yong, CEO and Founder of Quark Communications. “The problem has traditionally been that it is very expensive to connect into the global communications infrastructure. With O3b, we now have access to ‘fibre like’ connectivity at an affordable price.”

Though emphasis of this blog is on Fiji and the Pacific Islands, it helps to bear in mind that a wide range of countries in the Global South face essentially the same issues when it comes to access to international telecommunications.  O3b’s presence helps ISPs in these countries to get access to high-speed backhaul facilities for a fraction of the price.  Where the only alternative is to lay expensive fiber-optic cable to establish international access, O3b offers hope.  Fiber projects come with price tags starting at $300 million, an impossibility for small nations dealing when looking at their spending priorities.

O3b is not tackling this problem with unproven technology.  They are relying on existing satellite technology (see graphic below) deployed in a very different constellation to achieve a coverage area for majority world/developing countries in entirety.  Some technical specifications:

Courtesy of O3b Networks

Additional online resources for O3b:

A Link to a short clip where you can hear a National Public Radio program feature on O3b in Africa

Diagram of O3b satellite constellation, a key difference from providers of the past (Video provided by O3b):

You can find press releases, media coverage,  and the most current company information on the O3b Networks website.

New Satellite Venture could be lifeline for Internet in the Pacific

     

The recent round of deregulation brings promise (Digicel launches in two weeks), but the internet is still an area of uncertainty because the monopoly license on the sole internet gateway (Southern Cross Cable) has not been challenged.  And more importantly, FINTEL seems to have been able to hold off efforts to deregulate in this area because it is on the hook to the network owner C&W, soon to be acquired by AT&T. 

FINTEL is well aware that to challenge their dominant status, govt. would have to pry control of the gateway from them–at an estimated price tag of $300 million, that is out of reach of Fiji Govt. finances.

Additionally, investing in a competing new cable running to say American Samoa, Hawaii, or New Caledonia would come at a price of about $100 million, which is also out of reach.

 

Annnouncement this week of Google’s investment in a new satellite business venture that seeks to provide broadband internet access at low and reduced rates to Africa, Latin American, and Asian countries offers a great deal of promise to Pacific Island countries. 

While the O3B website does not list the Pacific as an area where they will operate, we can only cross our fingers that when they launch their satellites in 2010, the Pacific will be part of the coverage.  The concept of satellite-based 3G wireless internet backhaul to get ISPs up and running in developing countries is extremely exciting and offers hope to the 3 billion people who still do not have internet access.

See also my previous post on how regulators can enforce ‘functional separation’, which would have to be done in Fiji to pry loose Fintel’s grip on internet backhaul in Fiji.

Next post: How mobile usage might affect the move toward expanding internet infrastructure in Fiji.