Addressing Backhaul Costs and Customer Experience
In 2012 an article by Calabrese, Calarco, and Richardson entitled, “The Most Expensive Internet in America” made its rounds via the various news networks, and was shared thousands of times on social media. The general response was righteous indignation that these remote Pacific territories were being deprived of affordable, fast, and reliable Internet access by profit taking telecoms and governments. It would turn out that the truth was more complicated than that.
Prior to 2009, American Samoa was limited to traditional geosynchronous satellites for Internet access. In 2009, BlueSky Communications and the American Samoa Government partnered to repurpose a decommissioned portion of the PACRIM EAST submarine cable that was installed in 1993 and was superseded by higher capacity cables shortly after it was installed. The repurposed cable to would connect American Samoa and Hawaii, and it went into service in 2009.
Between 2009 and 2015 both service providers invested deeply in acquiring more capacity from the ASH cable system, eventually committing to about 6 DS3s worth of capacity for the territory. This is approximately 135 Mbps per service provider or 270 Mbps servicing all of American Samoa’s nearly 11,000 thousand households, 55,000 residents, and business and government offices. This works out to about 5 Kbps per person of active capacity at the start of 2015. For comparison, the kbps per capita of Australia in 2012 was approximately 150 kbps and is estimated to be around 650 kbps per capita today, and in mid-2017 New Zealand’s per capita Kbps was an estimated 300 Kbps, but is expected to increase to upwards of 450 Kbps by the end of 2018. The significant growths in capacity demand and lit capacity growth in Australia and New Zealand is being driven in large part by the deployment of national fiber networks and 4G LTE mobile networks and devices, with subscribers consuming large quantities of video content. The disparity between American Samoa’s per capita Kbps metric and that of New Zealand and Australia is stark.
American Samoa is located in a patch of the Pacific Ocean with too few neighbors and too far from any one of the major continents to piggy back off of submarine fiber or satellite infrastructure built and subsidized by larger population centers. Until four years ago 1 Mbps of geosynchronous satellite capacity cost about $2,000.00 to $3,000.00 USD, and a bulk purchase of 15-20 Mbps might have dropped the price to $1,500.00 per Mbps. Between 2002 and 2009, American Samoa’s only Internet service provider, ASTCA, serviced their Internet customers using such expensive satellite capacity. In 2009, BlueSky Communications, landed a refurbished submarine fiber optic cable named the American Samoa-Hawaii (ASH) cable, and both ASTCA and BlueSky subscribed to capacity on the new cable; however, prices were comparable to the cheapest satellite capacity. Still, it was an improvement, as the available capacity was cheaper than, and there was significantly more capacity on the cable, of a higher quality, than what was available via satellite at the time.
To compare the backhaul costs between American and Guam to the West Coast or Hawaii, an STM1 or 155 Mbps of capacity in Guam will cost around $1,500.00 per month for a 5 year contract. In contrast a service provider in American Samoa, between 2009 and 2015, would have to spend about $170,000.00 per month for a similar connection. That was a difference of two orders of magnitude. That difference in orders of magnitude was then reflected in the retail prices and the quality of experience noted by the article, with American Samoa’s retail price for a 1 Mbps connection being one order of magnitude more expensive than Guam’s GTA in 2011, and the cost difference between the single order of magnitude in difference between the two locales retail pricing and the two orders of magnitude difference in wholesale/backhaul pricing was factored into a smaller capacity purchase, leading to excessive congestion and low throughput metrics for American Samoa Internet service subscribers.
In regards to their Internet service pricing and performance, the residents of American Samoa have been more the victims of unfortunate geography than corruption.
Solving the Internet Capacity Issue with High Throughput Satellite and Submarine Fiber Optic
In mid 2015 ASTCA added another 400+ Mbps of capacity to their total Internet capacity. In April of 2016, ASTCA signed a deal with Hawaiki to land a new submarine fiber optic cable to connect American Samoa to the U.S. mainland. Both events will eventually drop the cost per Mbps by 50%, narrowing the cost gap between wholesale and retail in American Samoa by one order of magnitude from the pre-2015 prices. If the retail price tiers stay the same, the quality of experience would be able to improve by 10x. This means that the max advertised speed for each tier could be bumped up by 2x (to match the cost savings), and the current speeds the subscriber will experience will likewise see a 10x speed bump. (1 Mbps tier will go to 2 Mbps, and experienced speeds will go from 150 Kbps to 1.5 Mbps.)
In 2015 the addition of the O3b capacity effectively tripled the total capacity available to ASTCA Internet subscribers. When Hawaiki goes online later this year this capacity will likely double again, resulting in the 10x total increase in capacity over the pre-2015 capacity by the end of 2018. Pre-2015 the per capita Kbps metric for American Samoa was just shy of 5 kbps. If both providers in American Samoa subscribe to my predicted sustainable 1.5 Gbps of backhaul capacity each (mixed satellite and Hawaiki), the per capita Kbps of American Samoa will rise to 54 Kbps, and the per Mbps wholesale cost to the providers should drop by 50%. To conclude, Hawaiki would allow the service providers to acquire up to 10x their pre-2015 bandwidth for the same pre-2015 spend.
Internet customers should see their max advertised rates double and their experienced throughput rates increase by 10x. This will affect the lowest tier subscribers more than the higher tier subscribers, but every subscriber should see a significant and real increase in their user experience.
(Note: Due to ASTCA’s contracted O3b capacity, their spend will be somewhat higher but they will be the only provider to offer redundancy, which will allow them to charge a premium for certain business accounts.)