Fibre from the sky: the missing link in rural connectivity?

O3b Networks was created with a vision to connect the other three billion (hence O3b) potential mobile subscribers who currently lack mobile broadband access. Their vision is to leverage a growing constellation of Medium Earth Orbit (MEO) satellites set a little over 8,000km above the Earth, enabling O3b to offer the global reach of satellite with the speed of fiber. They have set out to overcome the dual challenges of satellite connectivity: high cost and poor performance. To find out whether the O3b business model is complimentary or competitive to traditional networks of ground based telecom towers, TowerXchange spoke to CEO Steve Collar.

TowerXchange: Please introduce the business model of O3b Networks for readers and investors who are unfamiliar with the concept of using MEO satellites to deliver connectivity.

Our value proposition is pretty simple, and is not so dissimilar to terrestrial based connectivity. We use a constellation of Medium Earth Orbit (MEO) satellites to provide MNOs, towercos, ISPs, government and enterprise customers with high capacity, low latency bandwidth at a fraction of the cost of traditional satellite solutions. O3b enables high quality mobile broadband connectivity in places that are harder to reach due to challenging geographies where traditional satellite backhaul has been prohibitively expensive. Our objective is to drive high performance connectivity further and further out into the network.

We enable MNOs and towercos to economically extend their reach while providing an outstanding customer experience. O3b and our investors see untapped demand for connectivity and for mobile data in remote areas, island communities and landlocked countries which lack subsea cable or substantial underground fibre connectivity.

O3b Networks has raised US$1.4bn to date, with another round of fund raising imminent. Our investors wanted to expose themselves to high growth emerging markets where networks expand and grow.

TowerXchange: How many satellites do you have in MEO now and what does that mean about the capacity of O3b Networks to deliver services to more customers in more countries?

We’ve got 12 satellites in MEO. With our constellation at a height of 8,062km, compared to traditional satellites at a height of 36,000km, we have been able to cut latency to around a fifth of what it was. That is huge for data network performance – it’s typically a 600 milliseconds round trip delay with traditional satellite compared to 120 milliseconds with O3b – in a mobile context that’s 60 milliseconds voice to ear, which means the delay is undetectable. The data network is a key performance driver – with a throughput of 12GB/second, we enable a fantastic Quality of Experience (QoE) for mobile subscribers anywhere in the world, albeit our focus is on emerging markets and expanding networks.

TowerXchange: Is this a solution for remote areas, island nations and offshore connectivity, or does it have more widespread applications?

It’s both and much depends on the way in which O3b is deployed within an operators’ network.

Connected into the core, O3b is a great solution for places where there is either no submarine cable or underground fibre available or where fibre performance is poor. Landlocked countries like the DRC and South Sudan are great opportunities for us. There a large areas of the Amazon we can serve. We’re connecting into core networks for island nations like PNG, East Timor and the Cook Islands, and using O3b to deliver a different level of mobile broadband service, replacing traditional satellite backhaul with a solution that offers significantly more bandwidth.

But we also provide connectivity to the tower network, providing backhaul in markets and regions that don’t need core connectivity, such as Brazil, Indonesia, Pakistan and Malaysia. For example we’re working in Malaysia where, within 700km of Kuala Lumpur, there are still a significant number of towers backhauled by satellite or by poor performing microwave links with extremely thin route connections. This represents a huge opportunity for O3b, the MNOs and for towercos to offer a new service proposition.

TowerXchange: Is O3b Networks value proposition complimentary or competitive to that of independent tower companies?

O3b is highly complimentary to the towerco business model. As MNOs are looking to outsource more and more, towercos are considering opportunities to expand their service proposition beyond passive infrastructure. Towercos have a massive opportunity to aggregate backhaul, and O3b represents an interesting means to do that, quickly and more easily than with ground based fibre.

O3bCell provides a more flexible way to connect cell towers and the core mobile network, supporting 2G, 3G and 4G voice and data services. We are very interested in the ongoing development of the towerco’s in Africa and see ourselves as a good fit for companies like Helios Towers Africa and Eaton Towers as they look to consolidate and grow their offering. As their businesses mature and move beyond building their core business and aggregating towers, towercos are uniquely positioned to upgrade backhaul capability. To reduce the complexity of their own businesses, they can work with a neutral party like O3b to provide a managed, smartly aggregated backhaul network, creating a new service and revenue stream, creating a competitive differentiator, and deepening their customer relationships.

A number of the new tower markets created by Airtel’s African tower sale are very much in the sweet spot for O3b as many lack subsea cable connections, and there is limited fibre.

TowerXchange: How does Quality of Experience (QoE) compare with delivering service from a conventional ground based network?

O3b is very comparable to the performance of a ground based network – that was our target from the outset. Given the previous issues of cost and performance, satellite was seen as a solution of last resort, so we wanted to give MNOs and towercos a different option.

O3b has been deployed for over a year now, and our customers say we’re delivering performance comparable with terrestrial backhaul technology. This in turn is enabling tremendous network growth – for example one of our key customers Digicel have seen backhaul demand growth of 3-4x within 6-12 months! Improved QoE results not just in increasing customer numbers, but also increasing demand from existing customers, as a new range of apps are enabled by that change in performance.

TowerXchange: How does O3b’s turnaround time to provide connectivity compare to traditional ground based networks?

We can deploy anywhere very quickly. Typically within 30 days we can provide anything from 10MB to GBs of connectivity. You can architect backhaul very much like a microwave network – exactly like you would think about ground based connectivity, only without the barriers of geography, time and cost.

Much of the backhaul from SSA towers is still carried over traditional satellite, which makes the economics of transitioning from 2G to 3G difficult, and which makes it tough to deliver the desired network performance. O3b Networks can help. For example, Raga Sat is a neutral provider to Orange, Afrinet and some of the major enterprises and NGOs in Kinshasa, DRC. They built a local fibre ring and use O3b as their core international connection. When we started they took couple of hundred MB, but that’s risen to over one GB and is looking at doubling again in the near future.

TowerXchange: What is O3b Networks’ vision of the future of connectivity?

Demand for mobile data continues to grow, and we see untapped demand in a significant number of emerging markets where O3b can provide service. The most successful MNOs, towercos and ISPs will leverage a growing range of connectivity technologies to expand their networks and deliver superior QoE. O3b Networks’ vision is a complimentary alternative to traditional ground based networks, offering MNOs and towercos the ability to expand beyond their current geographical and affordability limits.

Our business is incredibly scalable. We have another series of satellites planned, and have an ambition to grow to a TB/second in orbit by 2020 – roughly a tenfold expansion in capacity over what we have today.