Letter from Ghana: Buying satellite connectivity – You get what you pay for

Mergers, Acquisitions and Financial Results

I am back from my little trip to Ghana and once again had interesting experiences while looking for satellite connectivity for my organisation. One vendor we were looking at was a local reseller for a well-known satellite company. It was all looking fine until I actually did some speed tests on one of their customers connections and then met with the representative of the local reseller.

The client who allowed me to check their connection told me that they had a 512k Downlink and 256k Uplink. I ran a simple web based speed test that was normally designed for DSL connections but can give you some rough numbers for a VSAT link as it was just uploading and downloading files of a set size to a known server. It was not very impressive. Over an hour period of time with several tests the connection averaged 125k downlink and 20k uplink. The tests were only a few minutes so QOS speed reductions should not have kicked in to that extent.

Then a few days later I had a meeting with the representative of the local reseller. He claims that he is a supplier to a local embassy in Accra and has over 70 clients and expects to see another 40 in 2006. All very impressive until we talked details. I told him about my test and he said that it was due to congestion on a shared connection. So I asked him what the contention ratio was and he said 10 :1, that all his offerings were 10:1. So then I asked him how we could protect ourselves from losing all of our bandwidth to congestion if we became a client - he told me of his QOS software that prevented congestion . So I came back to the upload speed of 20 k on what was supposed to be a 256k upload connection on a 10:1 ratio. I asked how it could get that bad for over an hour, considering his QOS and speed of connection and contention ratio of 10:1. This got a response of a blank stare. He never said anything in response - but rather changed the topic.

Then I asked about the US$4000 dollar a year VSAT permit fee. He responded that his clients did not have to pay that, nor did they have to pay import fees on the equipment, as his license with Ghana covered all of that.

He then quoted me a price higher than the one that was in the original project description. I asked him about this and the core of his answer was that new clients would be charged more than old clients - which struck me as an interesting thing to say to a potential new client - who by the way was now shopping for about 4 parties. This was because , once it was known that I was consulting for our office other parities asked for help finding a solution for them as well.

In my follow up correspondence with another company, it has said that there are a number of operators who are paying bribes and not paying the required fees and customs charges - but that they had to collect the US$4000 a year and had to file for the permit before they could import the equipment into Ghana. But at least a client with this company does not have to pay the US$16,000 start up and one time fees. So I am still talking to this company about pricing and have consigned other reseller to the scrap heap of shady vendors that we can't work with.

On the quality of DSL in Accra , I stayed at a guest house in Accra and it had a great DSL connection - 256k down 64k up . It has had it for a year and it is down about one day a month. The key though seems to be the neighborhood. It is located near a number of embassies and apparently GT keeps the lines maintained in that area. I was contacted by someone in another organization who lived 5 kilometers away and had a terrible DSL connection. Same old sad tale - it was great to start with, then started to get a bit worse. Now it is often off line and the field service has declined on the same schedule. The organisation is now looking for another solution.

If you go though Ghana anytime soon make sure to have some flex in your schedule - there were aviation fuel shortages while I was there and some flights were either delayed or cancelled because of it.