SEACOM Reveals Pricing Structure
February 20, 2008
Sea Cable System (SEACOM), which is laying a 13,700-kilometre submarine cable from South Africa to Europe and India via Mozambique, Madagascar, Kenya, and Tanzania, has revealed the wholesale pricing it will offer on the cable once it enters commercial service on 17 June 2009. At a press conference held this week in South Africa, SEACOM's president, Brian Herlihy, said that the wholesale price of an STM-1 circuit (155.52 Mbps) from South Africa to a point of presence in Europe such as London (U.K.) would be priced at the equivalent of 673 rand (US$88.4) per Mbps per month, an STM-4 circuit (622.08 Mbps) would be 575 rand, an STM-16 circuit (2,488.32 Mbps) would be 435 rand, and an STM-64 circuit (9,953.28 Mbps) would be 267 rand. By contrast, this compares with equivalent prices of 231,000 rand for satellite, 3,500–11,000 rand for Sat-3/WASC submarine cable, and estimated pricing on the EASSy cable at around 1,400 rand (source: Business Day newspaper/MyBroadband.co.za). SEACOM signed a cable development agreement with the second national operator Neotel in August 2007.
Significance: The SEACOM cable will have a capacity of 1.28 Tbps (terabits per second), some 10 times the 120 Gbps ultimate capacity of the Sat-3/WASC cable and 130 Gbps of the SAFE cable. SEACOM is basing its revenue stream on a low-margin/high-volume wholesale business, and, according to local reports, estimates that it would generate a return on its investment within three to five years. SEACOM will act as a wholesale provider to telcos and other operators and this pricing structure would "drop the international component of prices dramatically", said Herlihy. SEACOM reached financial closure on 9 November 2007, the construction contract with Tyco Telecommunications was signed on 13 November 2007, and construction work began in December 2007. The cable is scheduled to enter commercial service in June 2009, in time for the FIFA World Cup being held in South Africa.