Chris Wood, CEO of WIOCC, was interviewed by Larry Madowo of NTV Kenya during the East Africa Com event in Nairobi, Kenya on 5th and 6th April 2011. Below is a transcript of the interview:
Larry Madowo (NTV Kenya): The East Africa Com conference is happening right next to where we are at the KICC. There’s a lot of interesting people coming through for the next few days at the conference. Chris Wood is the CEO of WIOCC – the West Indian Ocean Cable Company – which is the majority shareholder in the EASSy fibre-optic cable… and he is with us.
What it is you’re here to talk about is the EASSy cable – how is that coming along?
CHRIS WOOD: It’s very good – we went live last year in August and we’ve had great sales since then. It’s been a very import cable for the Kenya market, but also for the rest of East Africa because it means there’s now diversity on the coast. Up until August last year there was only one cable serving most of Africa on the east side. In Kenya we had TEAMS as well, but now that EASSy is there we have a lot more diversity and a lot more service quality in the network.
LM: In fact the EASSy cable is slightly different from TEAMS and Seacom in terms of who’s in EASSy – explain that one.
CW: EASSy is owned by a number of telecoms operators around Africa. WIOCC is the largest shareholder, but there are other companies like Vodacom and TSA in South Africa, MTN Group, Orange–France Telecom. So its owned by the operators who actually use the cable, which means that the cost structure is very different from a private system which has to go out into the market and raise a lot of capital. Whereas we’ve actually distributed the cost of the system around 26 different carriers, which means that our cost bases are very low.
LM: So how much capacity have you sold so far?
CW: As WIOCC, we have sold about 400 STM1s – which is a lot of capacity. If you break it down into Gbps – another technical term – we’ve sold about 50Gbps of capacity, for delivery over a long period of time, not all delivered now – but delivered over the next 4 or 5 years.
LM: Put that in to context for us based on the capacity of the cable itself…
CW: It’s still only a very small fraction of the total capacity of the cable. The cable itself has about 4.7 Tbps of capacity ultimately, which is more capacity than you could possibly imagine. You could download something like 10,000 high-definition DVD full-length movies in 1 second…
CW:… if you used the entire cable just for that purpose, so it has an enormous amount of capacity and we’re only starting to use it. What we’ll do next year is to light another large chunk of capacity in January next year. The EASSy cable will be upgraded and we’ll have a lot more capacity in the market from that point.
LM: So the fact that you’re upgrading – at least doubling the capacity. Do you see there is a market for this?
CW: Absolutely. In fact we announced in December that we were going to more than double the capacity. We’ve now re-looked at that and we’re probably going to increase it by 2 or 3 times more than we originally thought we were going to have to do because demand has moved so fast.
LM: Who exactly are you selling capacity to?
CW: As WIOCC, we sell capacity to all of the major operators and ISPs in the Africa region on the east side. So one of our customers in Kenya, for example, is Orange Kenya; we are also selling to Uganda Telecom in Uganda, to Onatel in Burundi and UCom in Burundi. So we sell to a large number of the big carriers, and then they on-sell that to their own customers and use it for their own networks.
LM: How has this changed the internet landscape in the region – in your estimation?
CW: It’s enabled the prices to come down – and I know price is always the hottest topic.
LM:..right, because I was getting there…
CW: I’m sure you were! Prices have come down considerably in the last 2 years. If you look to what people were paying for a very slow internet connection 2 or 3 years ago, we’ve seen probably prices come down by 70 or 80% already and the speed is going up commensurately with that. We’ve probably seen a trebling in the individual speeds you can get at the home or on your dongles, and that’s all because the international capacity pricing has come down so much.
LM: So give us a sense of how much for example – I don’t know in what sort of bandwidth/capacity you sell to these operators – how much it costs them for a certain unit of it. just for more of a technical aspect
CW: We sell large chunks of units – 155Mbps is our standard unit of capacity that we sell to the operators, and we’ll sell that from Nairobi to London for around $30,000 a month. That’s a far greater reduction than what was in the market less than a year ago, when prices were up to $60 – 70,000 a month. So we’ve reduced prices considerably.
LM: Based on how much you sell to these operators – do you believe the end consumer – somebody like me, I’m using a dongle over here – the costs that I pay for the internet; have they come down considerably? Is it fair?
CW: It has come down considerably but what you have to remember is that the operators who sell you the dongle have a lot of other costs in their network. They have to get the capacity out into the country. They have all their wireless networks that they have to maintain. They have fibre networks that they have to maintain. So there is a large additional cost that they have within their network. It’s not just the cost of the international capacity, but it’s certainly one big factor that’s come down.
LM: What is the redundancy set-up like for EASSy.
CW: EASSy has redundancy between its own landing stations, so if we lose Mombasa we have terrestrial capacity between Mombasa and Dar es Salaam, so we can take the traffic out through that way. On the network itself, we have what is called a ‘collapsed loop’ – we have two fibre pairs which back each other up on the actual cable itself. Which is unique on the east coast of Africa – no other system has that. So if we have a cut on a landing in Dar es Salaam, it doesn’t affect the rest of the system.
LM: How come you’ve not had that many cuts compared to others, because I believe that your business is prone to cuts – it happens?
CW: Fibre cuts do happen. We’ve not yet had a cut on the cable other than one cut off the Madagascar coast on the trunk cable that goes to Madagascar – which was repaired within 5 days and that only affected Madagascar traffic. We’ve had no other cuts on the EASSy cable apart from that. So you could say we’ve been lucky, but we’ve also built the cable in the right way in the most safe areas of the sea to ensure we don’t have cuts.
LM: We’ve just grabbed you from East Africa Com conference right next door. What is your sense of the conference?
CW: Its excellent. The conference itself is one of the key conferences for the industry in this region. There’s a lot of operators there that I want to talk to. We’ve just met up with one of our other partners in Kenya, called FON. They’re building a network terrestrially in Kenya. They’ve put 200km of fibre into the Nairobi area and they’re lighting their network soon. So we’re having great discussions with them about how we’re going to jointly attack the market.
LM: Alright, so there’s obviously a lot of contracts inside here…
CW: Absolutely, yes.
LM: Chris Wood, CEO WIOCC, thanks for dropping by.
CW: Thank you
With thanks to Larry Madowo and NTV Kenya for permission to publish this interview.