[kictanet] TEAMS and Open ended circuit

Fri Oct 9 10:37:19 EAT 2009

Kai,

thanx a million for willing to share the maths with regard to the Tier 1 (International) Internet Backbone Providers.

Aki,

I shall await to see the maths with regard to estimated costs for retailing this bandwidth locally.  Obviously it would have been more authoritative if the figures came from one of the players...wananchi? accesskenya? zain? safcom? Remember the bigger % of the internet costs for developing economies are often incurred at the local loop...factor of size, usage, reach, content, etc of the domestic networks.

walu.

--- On Fri, 10/9/09, aki <aki275 at googlemail.com> wrote:

From: aki <aki275 at googlemail.com>
Subject: Re: [kictanet] TEAMS and Open ended circuit
To: jwalu at yahoo.com
Cc: "KICTAnet ICT Policy Discussions" <kictanet at lists.kictanet.or.ke>
Date: Friday, October 9, 2009, 8:49 AM

Dear Kai,

Thank you for the clarifications, it is a big help on cost implications. I hope the VISP scenario will create more uptake of purchased capacity allowing for lower pricing at landing stations to become cheaper.

I think it would be even nicer to do some math which ISPs are not passing on. I hope to list it soon and corrections are welcome.

Rgds.

Aki

On Fri, Oct 9, 2009 at 7:29 AM, Kai Wulff <kai.wulff at kdn.co.ke> wrote:

Aki,

a word from the economist ..

You cannot divide the cost of a system by the capacity one has ... You have to divide the cost by the capacity that can be sold ..

Let's assume we sell in the first year 10Gbps of the TEAMS capacity (jointly between all operators) and the investors want to have at least the return anybody expects from injected cash (I am taking the yields of the latest Infrastructure Bond as benchmark).

So:

130M USD to be returned in 5 years

1st year = 26 000 000 USD + 4% OaM = 31 200 000 USD

That makes per Mbps and month 260 USD

If we say we can sell 20Gbps then it would be 130 USD ... Let me stick to 10 for now ..

Cross Connection in Fujeira between the TEAMS Landing and the SMW4 Landing on lease for 4 x STM16 = 200 000 USD per month = 20 USD per Mbps and month

Onward Capacity from U.A.E. to London per STM16 approx. 150 000 USD per month = USD 60 per Mbps

Add USD 20 per Mbps for all peering and hosting charges in London and you will have: USD 360 per Mbps and month ...

This case assumes the 4 x STM16 are sold from day 1 in full .. Surely we can assume a straight line take-up that might peak in even 20Gbps after 12 month, then the first year will still be as above. The second year would be in the range of 210 - 230 USD .....

All the above is calculating 0 overheads at the operator's level .. 

No magic .. Just math ..

Rgds

Kai

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