Two If By Sea…

[This week’s Communications column for the Vanuatu Independent.]

This week, I’m going to channel the spirit Paul Revere and try to determine where the next invasion is coming from.

The invasion, of course, is the Internet, and the question is: Will we use satellite-based services to meet our needs, or an international fibre-optic cable link, or both?

First, I need to make something clear. Last week’s column looked at the fundamental issues behind financing a fibre-optic cable link to the outside world. It appears to have come across as pessimistic to some because it laid out some considerable challenges and risks.

My contention was never that fibre is a bad option. On the contrary. There are risks inherent to all projects on such a scale and I wanted to make them clear. But my point was only that the traditional role of government as underwriter or guarantor of major infrastructure projects is beyond Vanuatu’s capabilities. There’s nothing stopping us from finding other backers, though.

Last week at an ITU-sponsored conference for Pacific ministers, the World Bank presented a report on the feasibility of fibre-optic cable links throughout the region. The picture it paints is of a timely and fundamentally important opportunity for island nations, and for Vanuatu in particular.

In recent years, the idea of a fibre-optic link has been repeatedly considered, investigated and, on at least one occasion, touted as a serious option for Vanuatu. As this goes to press, I know of at least two serious, viable proposals. If the World Bank’s detailed technical analysis is to be believed – and more on that in a second – decision-makers are now faced with an opportunity of potentially revolutionary consequences.

Currently, all Internet and telephone communications enter and leave Vanuatu via satellites positioned well over 30,000 kilometres above the Earth. This kind of service is well understood, having been in continuous use worldwide for decades now. It has its shortcomings, but they can be accommodated.

Satellite’s biggest problem is that, while the service may be relatively stable, it’s not the best quality and it’s frighteningly expensive. So expensive, in fact, that the entire country is using an amount of bandwidth that would be embarrassingly small for even the most modest data centre elsewhere in the world. The World Bank reports that in 2007 our total national bandwidth was less than 25 megabits per second. That’s smaller than the latest generation home broadband services available in North America, Western Europe and parts of Asia. It’s about a quarter of the capacity of a standard office network.

That number has likely doubled since Digicel purchased the state of the art satellite earth station on the Ellouk plateau. The practical limit to bandwidth via this kind of satellite service is much higher, but consider that Digicel’s satellite station cost in excess of US $12 million to build.

At the Pacific Ministers’ conference in Tonga last week, O3b Networks presented a newer approach to satellite communications. Using a series of satellites circling the Earth at a much lower altitude, they plan to provide service to most equatorial and tropical countries at much reduced costs. In a project backed by partners including Google and HSBC, they intend to offer tens of thousands of megabits to customers in sub-Saharan Africa and Central & South America. A fortuitous by-product of this service is that the satellites will be passing over the Pacific region largely unused. This means that O3b can offer higher quality bandwidth at significantly lower prices than their competitors.

This bodes well for small-scale Internet service in the islands. It’s now possible to install a small (1.2 metre) dish and associated equipment for about 500,000 vatu, and to buy Internet service for rates similar to what we currently pay for broadband in Port Vila and Santo.

This kind of service is useful if we want to take a piecemeal approach to Internet, buying small chunks and distributing them over areas of a square kilometre or so. That will work great in the islands, but it makes more sense to take advantage of economies of scale in our metropolitan areas.

The 170 page World Bank report on fibre-optic technology looks at numerous factors, including three different scenarios for economic and demographic change. In every case, it finds that the cost of Internet services via fibre-optic cable becomes competitive with satellite as early as 2010 and no later than 2012.

In all but the worst-case scenario, the bandwidth usage predictions contained in the report anticipate an orders-of-magnitude increase in demand between now and 2017. My personal feeling is that even the best-case scenario estimates are low. A few back-of-the-napkin calculations with fairly modest assumptions seem to indicate that the expected 542 megabits of usage is probably short of the mark by a significant margin. (But that’s the difference between writing a technical report and a newspaper column – I get to go with my gut.)

While the prospect of fibre will only become more attractive in the future, time is of the essence. The sooner we act, the greater the ultimate benefits of the undertaking. Think of it as buying a house as soon as you can afford the down payment rather than waiting until you have enough the buy it outright. The cost savings, equity and leverage that owning a house provide more than outweigh any liability that you might incur.

More importantly, there’s a fibre-laying ship working in the region right now. Getting it to come back later would increase costs significantly.

This lesson is not lost on local entrepreneurs. Simon Fletcher, president of Interchange, a Vanuatu-based data processing operation, has been sanguine about the prospect of a fibre link to New Caledonia for years now. While at the helm of Pacific Data Services, he pioneered the first serious investigations in this area. Although he and his partners concluded at the time that a satellite earth station was more feasible, circumstances have since conspired to make it reasonable to revisit the fibre option.

Vanuatu is uniquely positioned to benefit from fibre. Because of our proximity to New Caledonia, who have just completed their own fibre project, we can simply tag on a connection to theirs with a relatively short hop of about 600 kilometres. By taking advantage of other fortuitous circumstances, we can also use a cabling method that’s less costly than it would be for other island nations.

The cost? Probably on par with satellite in the short term, with prices dropping over time. Better yet, the quality and the quantity of bandwidth would be vastly greater than for any other alternative.

“I’m excited by this project,” said Fletcher when I spoke with him recently. Describing himself as an Internet ‘evangelist’, he went on to state, “Market demand for bandwidth, as we have historically known it in Vanuatu, has changed dramatically with the introduction of competition and significant advances in technology.  This enables us to redefine projects that were deemed unprofitable in the past.  Vanuatu, despite its seemingly inferior market size, can support the installation of a submarine fibre optic cable.”

He concluded, “I’d be proud and humbled to be able to take part in such an historic undertaking.”

Other fibre options exist. There is at least one other proposal under serious consideration by regional players, and the time and effort invested by Institutional players such as the World Bank indicate that support for the creation of a Pacific fibre-optic network would not be insiginificant.

Satellite isn’t going to go away any time soon. There is room for new satellite technologies such as that provided by O3b Networks, especially in the islands. But none of this takes anything away from the historic opportunity facing us now.

In his famous ride, Paul Revere was to be informed of the British approach by a church-top beacon. One lamp would be lit if they were coming by land, two if they came by sea. Well, today I’m lighting three little beacons of my own.

Vanuatu has done well by satellite in the past, and the new VSAT technologies available today are great, but we should not limit our options. Direct investment in a fibre-optic link may not be an option for the government, but it’s reached the point where private sector and institutional funding can take up the slack. Costs will be lower, megabit for megabit, than any other alternative.

So what are we waiting for? Start telling your friends: a cable is coming.