Africa faces broadband glut: report

By Leon Engelbrecht, ITWeb senior writer

Johannesburg, 24 Jul 2008

A new BMI-TechKnowledge report suggests that Africa is over-investing in broadband and could be stuck with a major glut in capacity that could last up to a decade.

BMI-T research analyst Maxwell Chanakira says the total design capacity of all planned cables is 10Tbps - up from the baseline capacity of less than 400Gbps currently.

"When these cables have been completed, there will be a vast amount of excess capacity," says Chanakira about his report titled "Outlook for submarine and terrestrial fibre-optic cable developments in Africa".

Chanakira says he expects demand from Africa will increase to just 300Gbps by 2015, and a maximum of 2 000Gbps (2Tbps) by 2019.

"This would represent a significant capacity glut in excess of 9Tbps in five years time, and would remain a glut of 8Tbps 10 years from now," says Chanakira.

"This excess capacity means that the business cases for some of the cables are not watertight and consequently, BMI-T expects some consolidation to take place among the cable projects and some could even fall by the wayside."

At present, there are at least 10 submarine fibre cables and a significant number of supporting terrestrial cables that are either planned or under construction in Africa, with SA, Nigeria, Kenya, and to a lesser extent, Tanzania driving the demand for international connectivity.

If these go ahead, business and government will spend a combined $6 billion in the next 24 months.

A contrary view

World Wide Worx analyst Steven Ambrose says he disagrees. "I don't agree with that statement, usage has a way of matching capacity in most cases... Usage is exponential and who knows what applications and technologies will demand next year, never mind 10 years into the future."

"Secondly: planned cables do not mean actual cables and a few of those planned will not reach fruition, so the situation of overcapacity is unlikely to occur."

BMI-T research director Brian Neilson adds to this that Chanakira indeed expects some projects to fall through, particularly those that start late. But, he says, he is sure there will be a glut.

"There's a limit to how much of that capacity can be taken up, especially if the various projects come on line more or less at the same time," he says.

He adds that both Cisco and Intel predict that up to 90% of Internet traffic will be video of the YouTube variety in a few years' time "but even that will not take up all the surplus capacity," he says.

Neilson adds the glut will "definitely" result in a "very significant price drop" but this will "not necessarily all be passed on to the consumer", although he expects most of it will be.