Facebook Looks To Build Underwater Ring Around Africa

Courtesy of The Wall Street Journal, an article on Facebook’s plan to give its European and Asian data centers a dedicated and reliable link to growing African markets:

Facebook Inc. is circling Africa. Literally.

The company is in talks to develop an underwater data cable that would encircle the continent, according to people familiar with the plans, an effort aimed at driving down its bandwidth costs and making it easier for the social media giant to sign up more users.

The three-stage project, named Simba after the lead character in “The Lion King,” could link up with beachheads in several countries on the continent’s eastern, western and Mediterranean coasts, though the exact route and number of landings is in flux, the people said.

Facebook spokesman Travis Reed declined to comment on the company’s plans for Africa. “We look all over the world when we consider subsea cable routes,” he said.

Simba isn’t Facebook’s first foray into subsea cables, the high-capacity fiber-optic lines that carry most of the world’s core internet traffic. The company has led projects linking markets in North America, Europe and East Asia, usually sharing the investment burden with traditional telecommunications companies, which lack the cash to lay down the cables on their own.

“When you’re one of the biggest users of bandwidth, it’s entirely rational to cut out the middleman and get the capacity at-cost,” said Alan Mauldin, an analyst at market researcher TeleGeography.

Negotiations for the Simba project are continuing, the people said, cautioning that talks could still fall apart.

Google parent Alphabet Inc. is also in talks to build a cable system called Equiano down Africa’s western coast, according to people familiar with its plans. China’s Huawei Technologies Co. is rolling out subsea cable links to Africa through a subsidiary building a cable through the Indian Ocean.

Industry executives say the proposed Simba system is uniquely ambitious. The project would give Facebook’s European and Asian data centers a dedicated and reliable link to growing African markets where its apps like WhatsApp are already popular. The company has funded regional networks in developing economies like Uganda to help connect the roughly 3.8 billion people across the globe who still lack internet access.

The system also could benefit partner telecom companies like MTN Group and VodafonePLC that already serve booming economies in South Africa and Nigeria. Those companies could help pay for the cable project in exchange for some of its fiber-optic capacity, said one of the people familiar with Facebook’s plans. An MTN spokeswoman declined to comment. Vodafone didn’t immediately respond to a request for comment.

Tech companies like Facebook and Alphabet, wary of the wholesale telecom market and the regulatory burdens that come with it, tend to avoid selling bandwidth on cables they help fund. They have access to whole strands of fiber-optic wire, allowing them to shuttle most of their data through private networks separated from the broader internet.

Facebook has taken a long-term view with past network investments. Its Internet.org nonprofit has financed access to a small group of websites through Free Basics, a no-cost wireless service offered in several countries. Regulators in other countries have banned the program, arguing against the limited version of the web that the Facebook-backed group has curated.

Facebook is one of several large U.S. technology companies that have taken a growing role in planning and financing the internet’s plumbing to serve their interests. In the process, they have supplanted traditional telecom companies that used to dominate the industry.

Alphabet has built fiber-optic cables in several cities and launched broadband-beaming balloons over hard-to-reach areas. Microsoft Corp. is pushing U.S. authorities to allow broadband service to use the “white spaces” in the radio spectrum between the channels reserved for television broadcasts.

A project as large as the one proposed by Facebook could cost up to $1 billion to build, said Greg Varisco, chief executive of Cinturion , a privately held company planning its own cable system in the Indian Ocean.

Mr. Varisco said the social networking company will likely see the project through because its executives are planning for needs several years in the future. But working with several different telecom companies and government regulators could pose a challenge.

“They’re not small projects, and they’ve got a lot of politics to work through,” he said.

This entry was posted on Sunday, April 7th, 2019 at 1:18 pm and is filed under Uncategorized.  You can follow any responses to this entry through the RSS 2.0 feed.  You can leave a response, or trackback from your own site. 

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Wildcats & Black Sheep is a personal interest blog dedicated to the identification and evaluation of maverick investment opportunities arising in frontier - and, what some may consider to be, “rogue” or “black sheep” - markets around the world.

Focusing primarily on The New Seven Sisters - the largely state owned petroleum companies from the emerging world that have become key players in the oil & gas industry as identified by Carola Hoyos, Chief Energy Correspondent for The Financial Times - but spanning other nascent opportunities around the globe that may hold potential in the years ahead, Wildcats & Black Sheep is a place for the adventurous to contemplate & evaluate the emerging markets of tomorrow.