High transponders prices continue to be the biggest concern for many in Africa and jumped to the forefront of discussions at Satcom Africa 2007.

During the opening sessions of the March conference, an audience member launched a question-and-answer session with Alintuma Nsambu, Uganda’s minister of state for Information and Communications Technology, by asking why Africans, “the poorest people on the planet,” pay the most for telecom services. The minister could not, or would not, provide an answer.

An explanation for a recent jump in what many consider to be excessively high prices is the loss of the NSS-8 satellite. According to some industry officials responsible for procuring bandwidth over Africa, at least one major provider has raised prices since the SES New Skies satellite, slated to provide C- and Ku-band coverage to Africa, was destroyed in a January launch failure.

The jump in prices in the wake of the NSS-8 loss is simply a symptom of overall supply-and-demand issues in Africa, and operators and customers are debating whether there is enough bandwidth available to satisfy the growing demands of the continent. One panel session seemed to leave the impression that there will not be enough capacity to meet everyone’s needs in the future.

After years of transponder overcapacity, the pendulum looks to be swinging toward the satellite operators, who have done a good job of rationalizing the supply — perhaps too good a job in the case of Africa.

SES New Skies plans to move the NSS-5 satellite from the Pacific Ocean region to Africa once the new NSS-9 satellite is in orbit, but that is not scheduled to take place until 2009.

Intelsat, the dominant supplier of transponder capacity over Africa following its acquisition of PanAmSat, is seeing higher prices for its services, the company said in a March telephone press conference to discuss its 2006 financial performance. The post-consolidation era has brought rationalization of capacity, “allowing for favorable pricing in virtually all regions we serve,” said Jim Frownfelter, Intelsat’s COO. “We are taking advantage of that as we look to maximize our revenues.”

With many users already complaining of high transponder prices prior to any satellite losses, it will be interesting to see what the response will be to these price increases. There do not seem to be any other options for many users, but it also seems that if prices continue to rise, many satellite-based services provided by companies without sufficient profit margins will simply come to a stop.

Many Africans are putting hopes that some home-grown satellites will help provide more transponder capacity as well as some price relief.

Nigeria’s first communications satellite project, Nigcomsat-1, was conceived to boost satellite bandwidth in Nigeria and throughout Africa. This satellite will carry four C-band, 18 Ku-band, four Ka-band and two L-band transponders and is scheduled to be in orbit before the end of 2007. Another entity, Rascomstar-QAF, expects to launch its own satellite, with about 12 transponders, shortly after.
 
There is high demand for affordable bandwidth in Africa, and until a number of fiber backbone projects take shape, satellite remains the best option for providing this bandwidth in most part of the continent.

The questions is whether the satellite providers can meet the demand.