Although the cost of international bandwidth to South Africa is dropping, Riverbed WAN optimization product provides ISPs and operators the opportunity to delay the investment in more international bandwidth until prices have dropped significantly. At the end of 2011 Africa will be finally connected to the world with very high speed data connections. This cost reduction is due to the landing of four additional cables to the South African shores. When Seacom (1.28Tbps) landed in June last year, existing prices dropped significantly. We expect this trend to continue as other cables land. Historically, reduction in bandwidth costs have resulted in increased demand for bandwidth. Therefore optimisation still makes sense to ISPs and operators.
We have also seen a reduction of costs of the access networks and demand for bandwidth is increasing exponentially. Even in mature markets like the US where they have experienced 75% pa growth in internet traffic. Africa is starting from a low base where users are hampered by high costs, low speeds, availability of access technologies, and literacy. However, these issues are being addressed which will result in a much greater demand for IP based services thereby driving up the demand for backhaul infrastructure. As access technologies become better, as well as the cost of access decreases, the demand for bandwidth will increase drastically. Neotel has come out with a very competitively priced data bundle offer for their mobile solution, MWEB offers uncapped service starting from R210 per month. Telkom now offers it entry level ADSL users 3Gigs blended usage plus 10 Gigs local usage for R260 per month.
There is also huge demand from government for the cost of all access to drop in the country. The minister of the Department of Communication in South Africa has said that the cost of interconnect is just the start of governments drive to reduce cost of access. They have put huge pressure on ICASA – the regulator to actively reduce access costs. As a result, there is now a commitment to release more Spectrum by December. The reduction of the cost of access is supported by all political parties and therefore this has made it possible for government to legislate regulation forcing ICASA to regulate a reduction in access cost.
As the cost of access decreases, the demand for more bandwidth increases. When new players entering the market, as well as governments drive to drop the cost of access, we anticipate the demand for bandwidth will increase two to threefold during next year.
The Riverbed equipment provides our customers with relief from investing in new infrastructure over the next year while still meeting its bandwidth demands. Riverbed provides operators with the opportunity to delay upgrading bandwidth preventing them from making expense yet necessary upgrades and getting into costly contracts.
Operators in across the world have discovered that there is huge benefit to running WAN optimisation on their networks. Their business is selling either their own or capacity that they have purchased at wholesale from an infrastructure provider. Either way, there is direct cost associated with the provision of the bandwidth. The use of WAN optimisation enables the operator to over subscribe their capacity thereby maximising their profits.
Cornastone together with Riverbed have being doing a POC at some of the large African operators. The results have been promising and there is a clear return of investment within months of deployment.
From a technical side, the operators had the following concerns:
1. How would other traffic such as Voice and streaming be impacted by this device
2. Will we introduce latency in the network?
3. How do we architect the solution into the network while meeting requirements around MPLS and their SCE environment?
Over the last couple of months, we have addressed all of these concerns. Effectively there is going to be no negative impact on the network, and the architecture proposed will address all these technical concerns and issues.
Due to recent activities in the market space, such as government’s interference in the Telecommunications industry, the granting of more Spectrum in December, and the rollout of many smaller specialised ISPs, there is downward pressure on the cost of access. As the cost of access decreases, there is huge demand placed on the backhaul network.
Furthermore, international sites such as Facebook and Youtube as well as online gaming via the game consoles are placing huge pressure on the international links. As uncapped services role out, Torrent applications become more prevalent placing exponential growth on both incoming and outgoing lines.
The riverbed equipment provides African ISPs and operators with the opportunity to reduce the cost of international Bandwidth as well as both application and protocol latency thereby enabling it to capture a large share of the corporate market by offering a much higher quality solution at a lower price than even the existing infrastructure owners themselves.
We achieved 67% optimisation or a three fold increase in capacity on international links. Cornastone can help ISPs and Telecommunication operators maximize the profitability of their international links.