Africa and the economics of satellites

Last week’s AfricaCom conference had a heavy focus on satellites but how many people actually understand the economics of satellite connectivity? We didn’t, so we asked Intelsat.

The focus on satellites at the conference is an obvious one. If comparatively miniscule countries like the UK cannot justify the expense of a fibre roll-out, how on earth is a continent like Africa going to solve the connectivity problem? The connectivity challenge is bigger in terms of mileage, and progress to date. So the answer might be out-of-this-world; satellites.

This is certainly the case for South Africa. At the same conference, Deputy Minister for Telecommunications Stella Tembisa Ndabeni-Abrahams outlined her grand plan. Satellites would deliver the connectivity which is so urgently needed in the rural areas of the country, and the country has the ambitions to own and operate its own satellite. But is this ambition economically viable?

According to Brian Jakins, Regional VP of Intelsat Africa, it might not be as easy as some people think, and this is a man in the know. Intelsat currently operate 52 satellites, 26 of which provide coverage to the African continent, including three EPIC assets, one of the most advanced satellites to date.

To launch a satellite into orbit takes between two to three years, which includes the negotiations, the build time, setting up a suitable business model and booking a space on the launch platform. And it costs between £300-500 million, for an asset which will be operational for 15 years. Jakins highlighted to us the ambition should be to own and operate a satellite when the business case is there, but it can be prohibitively expensive. The Nigerian government has found this and Jakins feels it might be the case right now for South Africa. Baby steps are needed.

The business case might not be there for owning and operating exclusively for the moment, but that doesn’t mean satellites should be dismissed. When you consider joint ventures and setting up successful partnerships, it is a perfectly viable solution considering the expense of laying physical infrastructure on the continent.

The size of Africa is another scale, and until you actually visit the rural villages, you can’t appreciate the challenge. Jakins highlighted that unlike in Europe, homes in the African villages are nowhere near each other.

“I’ve been doing business here for 24 years, and I’m still an apprentice,” said Jakins.

A village might contain a couple of dozen houses, each of which would be a couple of hundred yards apart. Trenching and laying able in these areas is prohibitively expensive, just as it is to connect the hub to the rest of the network. But Africa has a huge appetite for capacity and connectivity in the rural environments.

Another challenge, which might seem obvious once you are told but few considering straight away, is electricity. Connectivity and electricity go hand-in-hand, if there isn’t the internet, there are unlikely to be electricity cables to run any new devices you put out into the field. Solar is perhaps the only option here.

Finally, you have to consider the configuration of the antenna. Right now the industry has not advanced to the stage where ‘plug and play’ is a viable option. It might not be far away, but an engineer has to be onsite to set up the antenna. So you actually have to consider how you are going to get someone to these rural sites in the first place. Ultimately, there is a lot more to think about than just firing a satellite into space.

Satellites are certainly a good thought here, but perhaps there are a few who are trying to run before they can walk. Owning and operating a satellite might not be the best idea in the first instance, but that should not stop progress of one of the only viable options to connecting the unconnected.