Undersea Cable Operators Make $1,650 Profit on Bandwidth

Major undersea cable companies in the country make as much as $1,650 profit on each Gigabyte of internet sold to telcos, internet service providers, banks, among others, suggesting that business is good.

In simple terms, a Gigabyte is a unit of information or computer storage meaning approximately 1.07 billion bytes

Nigeria CommunicationseWeek gathered that each of the undersea cable infrastructure operators pay $150 per Gigabyte, that is  the unit it is sold at the carrier level.

And each Gigabyte is equivalent to 6.5 STM-1, the SDH ITU-T fiber optic network transmission standard.

The undersea cable operators in turn sell to Tier 2 operators which include telcos and internet service providers (ISPs) in Lagos at $300 per STM-1, meaning that the undersea cable operators make a profit of $1,650 per Gigabyte.

Telcos and ISPs outside of Lagos pay between $1,000 and $2,000 per STM-1.

Mohammed Rudman, managing director, Internet Exchange Point of Nigeria, explained that the difference in prices of global carrier and that of the undersea cable owners is based on investment in transmission infrastructure that transport bandwidth.

“Undersea cable operators have made huge investment in laying fiber from London to Nigeria and need to recoup this investment. Same as national fiber link operators that invested much in in-country transmission infrastructure that facility movement of bandwidth from Lagos where it lands to other parts of the country. This is responsible for huge difference in price obtainable in Lagos and Kano,” he said.

It would be recalled that surviving internet service providers (ISPs) which included, Direct On PC, Mobitel and Spectranet, had decried high cost of bandwidth in the country.

They noted that: “international bandwidth rates are one of the highest in Nigeria compared to rest of the world. National long distance and metro network cost is exorbitantly high”.

Engr. Gbenga Adebayo, chairman, Association of Licensed Telecommunications Operators of Nigeria (Alton), the umbrella body of operators in the telecom space, said that broadband services are anchored on availability of bandwidth, and that with excess capacity of it at our shore, investment need to be encouraged to distribute this capacity to various geographical areas of the country for broadband revolution to be experienced as is the case with voice service.