Africa is readying for a second wave of higher speed Internet use, writes Russell Southwood of Balancing Act in this expert guide to what "bandwidth" is, how it is being spread and what it can do for developing countries. This article is extracted from Global Information Society Watch 2009.
Put simply, bandwidth is what carries voice and data from one place to another. It is the petrol of the new, global economy and it must be affordable for any developing country to remain competitive in a changing world.
Arguably the use of bandwidth will increasingly substitute for tasks previously done by saying "send a driver" in many developing nations. In July 2008, the South Korean government, which almost completely depends on imports for its oil, ordered that all government vehicles be used only every other day to cut fuel costs. So there is an imperative to address the cost of things such as information collection and delivery, meeting people and gathering opinions, which were previously reliant on conventional means of transport.
Cheap and accessible bandwidth encourages information, ideas and money to flow quickly within a country and between countries. Despite the best efforts of backward-looking governments, it allows a country's citizens to know what is happening in the world and what the world thinks about what is happening in their country.
The world's tyrants may still be able to dominate their citizens, but they are that bit more vulnerable when faced with a freer flow of information about their deeds. Recent crises in places as diverse as Burma, Tibet and Zimbabwe attest to the power of information to influence those in power, even if it does not necessarily change who is in power.
There is a connection between the social and the economic. If it costs your country U.S. $7,000 to $10,000 per megabit per second (mbps) per month – one of the units used to price bandwidth – to communicate with the rest of the world, you are likely to do less of it than another country where the same bandwidth sells for below $1,000 per mbps per month. Those developing countries that have access to cheap bandwidth have some chance of staying ahead in the "dog-eat-dog" world of the new global economy. They can respond to new needs in the global economy and not simply rely on the changeable fortunes of selling agricultural produce, minerals and tourism.
Used strategically, bandwidth can create new "think work" industries such as business process outsourcing (BPO) and call centres. For example, a single company in Ghana (ACS) employs 1,200 people doing data processing. The Indian Ocean island of Mauritius employs more than 4,000 people in a combination of BPO and call centres. More than 10,000 people in the South African city of Cape Town work in these sectors.
If communications costs are not lowered, then the cost of financing trade and ultimately the prices of the goods themselves will be higher than necessary for everyone. Many African countries rely on goods traded between themselves and nearby neighbours. The goods traded are not simply luxury goods, but also essential foodstuffs that make up the daily diet of all citizens. Cheap and accessible bandwidth encourages regional trade integration that helps reduce air miles: the product grown to meet local demand is not one that needs to be imported or exported half way round the world.
But perhaps the most crucial impact that cheap bandwidth – taken together with competition – may have is on the cost of transferring money. There is considerable movement of people both between neighbouring countries and internationally.
Take the example of West Africa. According to a report by the Organisation for Economic Co-operation and Development (OECD) and the Sahel and West Africa Club, there are three waves of population movement in and from West Africa. Since the early 1960s, 80 million people have moved to the cities from rural areas. Populations also move from one country to another, representing 90 percent of inter-regional migration. Finally, West Africans represent three percent of migrants from non-OECD countries living in Europe.
Each of these people needs to be able to communicate with their family. The son who has gone overseas rings his mother back in West Africa. That same mother rings her grandmother in the village. Financial remittances flow all the way down this chain of communication and, according to the International Fund for Agricultural Development, in 2006 these were worth $10 billion to West African countries. These remittances exceed the amount of money spent by international donors.
But the cost of sending that money is around 12 percent of the total, whereas elsewhere in the world, such as Latin America, it has fallen to six percent. Cheaper communications and competition can bring cheaper transaction costs, and more of this money will arrive in developing countries.
The first wave of the communications revolution in Africa was the spread of mobile phones, which are now within reach of 60 to 70 percent of the continent's population. By contrast, the Internet is only accessed by 12 to 15 percent of the population. Until recently, the experience of the Internet in Africa has been like having to eat a three-course meal by sucking it through a straw: time-consuming, unreliable and expensive.
While new mobile interfaces will increasingly allow mobile Internet access, the second wave of the communications revolution will be the spread of relatively cheap Internet use. For developing countries, particularly in Africa, the Internet has been the poor cousin of much more widely distributed technologies such as mobile phones and radio. However, despite the limitations of speed and cost, a surprisingly large number of people use it.
Based on national survey samples from a range of 12 African countries of different income levels, a study by the University of the Witwatersrand in Johannesburg shows that between two and 15 percent of the population use the Internet (except in the two poorest countries) and between one and eight percent use it on a daily basis (except for the four poorest countries). On this basis, there might easily be tens, or even hundreds of thousands of broadband subscribers, depending on the size of country. Literacy plays a part, but probably not as bigger part as price.
There is a clear link between the price of international bandwidth and the retail price of voice and Internet services to the consumer. However, this link is not just a result of the price of international bandwidth, but also a reflection of both its cost and availability within a country. Cheaper international bandwidth means that there should be cheaper national bandwidth. Indeed, without this occurring, anomalies are found whereby it costs more to communicate between neighbouring countries or two cities within a country than it does to link the capital and a European or North American destination.
Except for widely distributed rural populations where satellite is more appropriate, the cheapest bandwidth can be delivered using fibre.
International bandwidth prices in Africa have come down for a number of reasons. There has been an extended discussion about how to ensure open and competitive access to new international fibre-optic cables currently being built. As part of this process, national Internet service provider associations have lobbied the telecoms companies selling bandwidth and achieved price reductions. At the same time, the presence of two to three cable projects on either side of the continent ensures that each offers competitive pricing.
Through a combination of these factors, the price of bandwidth has dropped from $7,000 to $10,000 per mbps per month to $500 to $1,000 per mbps per month due to two new cables (called Seacom and Teams) that will be completed in mid-2009. These low international prices will put pressure on national operators to lower national prices, as it will be difficult to charge more for taking traffic between cities in an African country than for going all the way from that country to Europe.
Although market pressure has done a lot of the work in lowering prices, international organisations and African governments have also played their part. The World Bank's involvement in financing one of the cables (called EASSy) in a way that ensured open and fair access, set the terms of the debate and also helped shape the market.
Continue >>page 2
Put simply, bandwidth is what carries voice and data from one place to another. It is the petrol of the new, global economy and it must be affordable for any developing country to remain competitive in a changing world.
Arguably the use of bandwidth will increasingly substitute for tasks previously done by saying "send a driver" in many developing nations. In July 2008, the South Korean government, which almost completely depends on imports for its oil, ordered that all government vehicles be used only every other day to cut fuel costs. So there is an imperative to address the cost of things such as information collection and delivery, meeting people and gathering opinions, which were previously reliant on conventional means of transport.
Cheap and accessible bandwidth encourages information, ideas and money to flow quickly within a country and between countries. Despite the best efforts of backward-looking governments, it allows a country's citizens to know what is happening in the world and what the world thinks about what is happening in their country.
The world's tyrants may still be able to dominate their citizens, but they are that bit more vulnerable when faced with a freer flow of information about their deeds. Recent crises in places as diverse as Burma, Tibet and Zimbabwe attest to the power of information to influence those in power, even if it does not necessarily change who is in power.
There is a connection between the social and the economic. If it costs your country U.S. $7,000 to $10,000 per megabit per second (mbps) per month – one of the units used to price bandwidth – to communicate with the rest of the world, you are likely to do less of it than another country where the same bandwidth sells for below $1,000 per mbps per month. Those developing countries that have access to cheap bandwidth have some chance of staying ahead in the "dog-eat-dog" world of the new global economy. They can respond to new needs in the global economy and not simply rely on the changeable fortunes of selling agricultural produce, minerals and tourism.
Used strategically, bandwidth can create new "think work" industries such as business process outsourcing (BPO) and call centres. For example, a single company in Ghana (ACS) employs 1,200 people doing data processing. The Indian Ocean island of Mauritius employs more than 4,000 people in a combination of BPO and call centres. More than 10,000 people in the South African city of Cape Town work in these sectors.
If communications costs are not lowered, then the cost of financing trade and ultimately the prices of the goods themselves will be higher than necessary for everyone. Many African countries rely on goods traded between themselves and nearby neighbours. The goods traded are not simply luxury goods, but also essential foodstuffs that make up the daily diet of all citizens. Cheap and accessible bandwidth encourages regional trade integration that helps reduce air miles: the product grown to meet local demand is not one that needs to be imported or exported half way round the world.
But perhaps the most crucial impact that cheap bandwidth – taken together with competition – may have is on the cost of transferring money. There is considerable movement of people both between neighbouring countries and internationally.
Take the example of West Africa. According to a report by the Organisation for Economic Co-operation and Development (OECD) and the Sahel and West Africa Club, there are three waves of population movement in and from West Africa. Since the early 1960s, 80 million people have moved to the cities from rural areas. Populations also move from one country to another, representing 90 percent of inter-regional migration. Finally, West Africans represent three percent of migrants from non-OECD countries living in Europe.
Each of these people needs to be able to communicate with their family. The son who has gone overseas rings his mother back in West Africa. That same mother rings her grandmother in the village. Financial remittances flow all the way down this chain of communication and, according to the International Fund for Agricultural Development, in 2006 these were worth $10 billion to West African countries. These remittances exceed the amount of money spent by international donors.
But the cost of sending that money is around 12 percent of the total, whereas elsewhere in the world, such as Latin America, it has fallen to six percent. Cheaper communications and competition can bring cheaper transaction costs, and more of this money will arrive in developing countries.
The first wave of the communications revolution in Africa was the spread of mobile phones, which are now within reach of 60 to 70 percent of the continent's population. By contrast, the Internet is only accessed by 12 to 15 percent of the population. Until recently, the experience of the Internet in Africa has been like having to eat a three-course meal by sucking it through a straw: time-consuming, unreliable and expensive.
While new mobile interfaces will increasingly allow mobile Internet access, the second wave of the communications revolution will be the spread of relatively cheap Internet use. For developing countries, particularly in Africa, the Internet has been the poor cousin of much more widely distributed technologies such as mobile phones and radio. However, despite the limitations of speed and cost, a surprisingly large number of people use it.
Based on national survey samples from a range of 12 African countries of different income levels, a study by the University of the Witwatersrand in Johannesburg shows that between two and 15 percent of the population use the Internet (except in the two poorest countries) and between one and eight percent use it on a daily basis (except for the four poorest countries). On this basis, there might easily be tens, or even hundreds of thousands of broadband subscribers, depending on the size of country. Literacy plays a part, but probably not as bigger part as price.
There is a clear link between the price of international bandwidth and the retail price of voice and Internet services to the consumer. However, this link is not just a result of the price of international bandwidth, but also a reflection of both its cost and availability within a country. Cheaper international bandwidth means that there should be cheaper national bandwidth. Indeed, without this occurring, anomalies are found whereby it costs more to communicate between neighbouring countries or two cities within a country than it does to link the capital and a European or North American destination.
Except for widely distributed rural populations where satellite is more appropriate, the cheapest bandwidth can be delivered using fibre.
International bandwidth prices in Africa have come down for a number of reasons. There has been an extended discussion about how to ensure open and competitive access to new international fibre-optic cables currently being built. As part of this process, national Internet service provider associations have lobbied the telecoms companies selling bandwidth and achieved price reductions. At the same time, the presence of two to three cable projects on either side of the continent ensures that each offers competitive pricing.
Through a combination of these factors, the price of bandwidth has dropped from $7,000 to $10,000 per mbps per month to $500 to $1,000 per mbps per month due to two new cables (called Seacom and Teams) that will be completed in mid-2009. These low international prices will put pressure on national operators to lower national prices, as it will be difficult to charge more for taking traffic between cities in an African country than for going all the way from that country to Europe.
Although market pressure has done a lot of the work in lowering prices, international organisations and African governments have also played their part. The World Bank's involvement in financing one of the cables (called EASSy) in a way that ensured open and fair access, set the terms of the debate and also helped shape the market.
Continue >>page 2
Comments
Post a Comment