O3B gets financial support from Google and HSBC

Mergers, Acquisitions and Financial Results

Finance Minister Trevor Manuel welcomed a landmark initiative by internet giant Google and Europe's biggest bank HSBC to support a plan to provide cheap, high-speed web access via satellite to millions in Africa, including SA, and other emerging markets.

"The information gap is very real and clearly whatever we can do to close it must be encouraged," Manuel said at a press conference in Berlin on the United Nations-backed Millennium development goals.

"Any initiative that can leapfrog over traditional means of getting information to people must be encouraged. Information is power and it supports democracy and it supports decision-making," he said.

Internet penetration in SA is still low mainly due to lack of access by the majority population and also the relatively high cost of usage. According to estimates, just more than 11% of the country's population of more than 43-million has access to internet, up from about 3,1-million who had access to internet at the end of 2002.

Google has joined forces with the bank and cable operator Liberty Global to back a group called O3b Networks, which stands for the "other 3-billion" people who do not have access.

It will provide high-speed backhaul for telecoms operators and Internet providers, which can then sell services to businesses and consumers. O3b networks said the satellites would be constructed by Thales Alenia Space and should be operational by the end of 2010.

The company's founder, Greg Wyler, said coverage would reach from Spain to SA, include most of South America, large parts of Asia and all South Pacific Islands. The project intends to offer fibre performance over satellite to parts of the world where it is not commercially viable or practical to deploy a fibre network.

Because its satellites orbit earth at lower altitudes than those used to beam television signals to homes, they worked better for internet access where latency - the amount of time it takes for bits of information to travel from source to destination - was an issue, Wyler said. The project was expected to cost $650m until the launch, he said. Initial equity of $65m had been raised.

In some parts of the world, the company will compete with fibre-optic cables under construction - for instance, over a dozen cables have been announced connecting Africa to Europe, the Middle East and Asia.

Richard Hurst, an analyst at advisory firm IDC, said that, on paper, the project should be a good initiative. But he warned that the potentially limited capacity for satellite spectrum in Africa means there would still be a need for some fibre optic cables.

Business Day