[This week’s Communications column for the Vanuatu Independent.]
We need fiber, and we need it soon.
No, I’m not talking about changing the nation’s diet. I’m talking about fiber-optic cable. Made of very long strands of glass fiber, this kind of cable has the unique ability to allow light to turn corners. This means that we can shoot tiny laser pulses into one end of it and have them emerge intact from the other end, even if it’s thousands of kilometers away.
The result? Fast, very high-capacity communications become possible. In laboratory experiments, researchers have achieved rates of up to 14 trillion bits of data per second. Current commercial implementations don’t go nearly that fast, but even a single thread of fiber a few millimeters wide can carry billions of bits every second. Just a few strands would be enough to increase Vanuatu’s total available bandwidth to a large multiple of its current capacity.
So what’s the catch? Why haven’t we invested in a fiber connection yet? Fiji has it, and so does New Caledonia. Why not Vanuatu?
The stock reply is that it’s too expensive right now. But that answer is a little too pat. In order to understand how why nobody has done more than contemplate a fiber link with the rest of the world, we need to understand a thing or two about large-scale projects.
The Christmas edition of the Economist magazine features an article examining the results of the recently collapsed US housing bubble. The author writes that when there’s a boom in investment in material goods (as opposed to finance funds or other services), the prospect of benefits down the line sometimes create a speculator’s market.
People invest large amounts of money, often more than the actual long-term value of the goods produced, but rationalise it by their investment’s resale value. In Florida in the 1920s, land speculation reached such a fever pitch that some people were buying vastly inflated properties and flipping them the very same day.
When the bubble finally did collapse, investors lost their shirts. But that was inevitable; the amount of money invested was way out of line with the actual value of the properties. People’s perception of the properties’ value lost touch with reality.
Most people take a pretty simple (and valid) lesson from this: Avoid speculative investments. Don’t bet the farm and you won’t lose it.
But what happens when the potential benefits of a speculative venture could change the economic landscape? The channel tunnel linking England and France, the Panama Canal and the Golden Gate Bridge were all immense undertakings that opened new doors to business, but whose cost made even the most stout-hearted blanch.
The channel tunnel’s construction was backed by a bond issue, but because of cost overruns of nearly 80% of the original estimate, the tunnel operator has faced chronic financial difficulties. The first attempt to join the Atlantic and Pacific oceans by a French consortium failed in 1898. The US took over, and justified the immense cost for strategic reasons. The Panama Canal vastly improved America’s ability to project its naval power in the region. Begun during the Great Depression, the Golden Gate Bridge was underwritten entirely by the San Francisco-based Bank of America. The last bridge bond was paid off in 1971, a full 37 years after the bridge was completed. In 2006 its operating deficit was estimated at $80 million for the next 5 years.
In each case, the project was (or became) a labour of love for the investors. But the benefit to the larger community was immense, and of enduring value. And this is exactly the point that the Economist makes. Whatever fond hopes prompted people to commit, and whatever the fate of investors, the edifice remains and is still innately valuable.
Given the size of our respective economies, laying a fiber cable to Vanuatu is similar in scale to each of these projects. For some years now, people throughout the Pacific region have been weighing the benefits of fiber optic links against the relatively large financial investment required.
The problem has been sliced, diced and analysed nearly to death. I’d hesitate to say, though, that we’ve really come to grips once crucial detail: The government of Vanuatu simply can’t pony up the tens of millions of dollars required. So who else could pay?
The cost of laying a cable between Port Vila and Nouméa (the nearest location with existing fiber) would cost in the tens of millions. Annual operating fees would likely be in the millions as well. But compared to satellite communications, the cost per megabyte of pushing data over such a link would be much lower.
That’s one reason to move. But what happens to significant investment in infrastructure that our carriers have already made? In Digicel’s case, they’ve only just started to see a return on about $30 million invested. Given the state of financial markets today, would cost savings be enough to motivate them to turn around and drop half as much again – possibly more – so soon after their initial outlay?
TVL may be better positioned to consider this. They’ve been investing heavily in recent months, but that’s consisted mostly of incremental improvements to their existing infrastructure. Arguably, they wouldn’t face as much difficulty integrating fiber into their plans.
Laying the cable isn’t the end of the investment, though. Vastly increasing the size and the quality of our link to the outside world is one thing, but we have to be able to use it. The price of connecting to TVL’s urban fiber loop here in Vila is shockingly high right at the moment. I’m aware of few businesses that have even contemplated purchasing a link. Wireless Internet services from several providers will be rolling out soon, but we don’t know yet what access speeds they’ll be offering, nor what value-added network services they intend to provide.
A Vanuatu-based investor in fiber faces a bit of a chicken-and-egg scenario. Local bandwidth won’t increase radically until international capacity does, but if you increase international capacity via a fiber link, you sure as shootin’ don’t want to wait years for the market to mature.
Normally, this is where government steps in. They guarantee a loan (or offer some kind of concessionary deal) that allows the investor to recoup their outlay over a longer period of time. As I’ve said, though, the government of Vanuatu can’t do that. They manage their financial house moderately well, but there’s no such thing as extra cash in their budget.
The government could bring tools other than financial into the mix, though. By exercising a little regulatory discretion they could help create an environment that rewarded long-term thinking while at the same time ensuring that this new resource is open and accessible to all.
The bottom line is this: The economic benefits of a fiber-optic connection to the outside world cannot be overstated. But it’s got to be seen as a labour of love. The benefits to be derived from the operation of the cable itself might never be great. If it’s not managed properly, the cost of failure could be high indeed. That said, the knock-on benefits to the community are numerous.
Call center services for European customers, online education, interactive tourism resources (video feed from the Nangol, anyone?), live video lectures from universities overseas, online consultations by medical specialists, offshore financial transaction processing… the list goes on and on. All of this becomes possible if we improve our basic infrastructure.
All we need is to find someone foolish – or far-sighted – enough to foot the bill.