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<DIV><FONT face=Verdana size=2>Aki,</FONT></DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2>a word from the economist ..</FONT></DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2>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 ..</FONT></DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2>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).</FONT></DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2>So:</FONT></DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2>130M USD to be returned in 5 years</FONT></DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2>1st year = 26 000 000 USD + 4% OaM = 31 200 000
USD</FONT></DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2>That makes per Mbps and month 260
USD</FONT></DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2>If we say we can sell 20Gbps then it would be 130
USD ... Let me stick to 10 for now ..</FONT></DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2>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</FONT></DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2>Onward Capacity from U.A.E. to London per STM16
approx. 150 000 USD per month = USD 60 per Mbps</FONT></DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2>Add USD 20 per Mbps for all peering and hosting
charges in London and you will have: USD 360 per Mbps and month ...</FONT></DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2>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 .....</FONT></DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2>All the above is calculating 0 overheads at the
operator's level .. </FONT></DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2>No magic .. Just math ..</FONT></DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2>Rgds</FONT></DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2>Kai</FONT></DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
<DIV><FONT face=Verdana size=2></FONT> </DIV>
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<DIV style="FONT: 10pt arial"> ----- Original Message ----- </DIV>
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
<A title=aki275@googlemail.com href="mailto:aki275@googlemail.com">aki</A>
</DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A title=kai.wulff@kdn.co.ke
href="mailto:kai.wulff@kdn.co.ke">kai.wulff@kdn.co.ke</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Cc:</B> <A
title=kictanet@lists.kictanet.or.ke
href="mailto:kictanet@lists.kictanet.or.ke">KICTAnet ICT Policy
Discussions</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Friday, October 09, 2009 6:55
AM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> Re: [kictanet] TEAMS and Open
ended circuit</DIV>
<DIV><BR></DIV>
<DIV>Hi, its the techie and a non-stake holder. I'd like to add a contribution
to the subject.</DIV>
<DIV> </DIV>
<DIV>Regarding the costs of internet dropping, a short summary. There is much
more to the scenario than being let out by Service Providers.</DIV>
<DIV> </DIV>
<DIV><U>Consider Teams :</U></DIV>
<DIV> </DIV>
<DIV>- Mombasa to Fujiarah is a technically known as a Half Circuit. Half
Circuits are cost reduction methods and have been in use in as early systems
such as International Private Leased Circuits or IPLCs. The concept works very
well and the Govt initiative got it right. However others may seem to
exploit this scenario. </DIV>
<DIV> </DIV>
<DIV>Assuming that the one time cost of the fiber cable between the 2 points (
Mombasa to Fujiarah ) was USD 130 million and the cable capacity was
40Gbits/sec, therefore the cost of <STRONG>1 Mbit/s is about 3.25 USD on the
half circuit</STRONG>. Because the cable is <STRONG>OWNED not LEASED on a
monthly basis</STRONG>, Teams players get much cheaper cost bandwidth than
compared to Seacom cable on the same route as it is leased.</DIV>
<DIV> </DIV>
<DIV>So the concept of cheaper bandwidth was spot on using a half circuit when
the Govt initiative was done i.e that is how I understood it to be.</DIV>
<DIV> </DIV>
<DIV><STRONG>Now comes forward connectivity</STRONG>. Because of the main
landing stations at Fujiarah for other cable operators which are major transit
inter-continental points for bulk purchasers like telcos who may even take up
STM-16 capacities, players on Teams may be able to get
10-25USD per 1 Mbit/sec. Bandwidth costs at these points has always been
cheap, the problem was that no one wanted to bring that connectivity to this
part of Africa. Seacom is a much longer and bigger project thus its costs for
a 20 year commitment on the capacity is around 80-90USD Per 1 Mbit/Sec of
bandwidth. ( IRUs )</DIV>
<DIV> </DIV>
<DIV>So once more, costs to Teams players is around 30USD per 1 Mbit of
capacity on an IRU form Fujiarah onwards. Add the maintainence of the cable
and costs go up. I'd estimate that the maximum cost is around 60USD per 1
Mbit/Sec of bandwidth for bulk purchasers.</DIV>
<DIV> </DIV>
<DIV>KDN was offering Seacom @600USD/Mbit as early as 1st week of August
2009, Safaricom had already done the move to Seacom within days of it going
live and was offering similar via its other company OneCom. As soon as time
become available, I shall do a simple analysis of the costs inland and list
them here. Service Providers are holding back due to other
reasons.</DIV>
<DIV> </DIV>
<DIV><U><STRONG>Solution :</STRONG></U></DIV>
<DIV> </DIV>
<DIV>- I believe one major solution that is going to activate the price drops
is for CCK to introduce a Virtual ISP license with an annual monthly fee of
Kshs 10,000/-. VISPs do not own or operate any infrastructure. They would
operate a customer support base and would be able to buy the cheaper bandwidth
eg from KDN on Seacom/teams or Safaricom OneCom Seacom/teams and pass the
reductions to the end users. I think this avenue should be looked into.</DIV>
<DIV> </DIV>
<DIV><U><STRONG>Content:</STRONG></U> </DIV>
<DIV> </DIV>
<DIV>- Content is something waiting to happen and there are many examples. As
I mentioned on another list, take the example of Kenya National Museums and
convert this into online catalogue content for use by Kenyan Schools and many
others who use the internet. To create a virtual experience would be an
achievement. If no one has done this within the next 24 months, then I hope
some of us will get to it and move it to a newer level. ( Not advertising nor
marketing here and its a techie thing, but some of us have setup a site like a
notice board where we share what projects are in the pipeline : <A
href="http://www.projectkenya.info/">www.projectkenya.info</A> )</DIV>
<DIV> </DIV>
<DIV>My amatuer thought, corrections are welcome.</DIV>
<DIV> </DIV>
<DIV>Rgds.</DIV>
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