Liquid Telecom is talking to operators of regional networks in other
parts of Africa about linking up 
                                   
                              

                             
Nic Rudnick: Internal demand, from financial institutions and
supermarket chains, is driving traffic on Liquid Telecom’s network 
                               
Liquid Telecom is $200 million through a $400 million-plus project to build the first extensive regional and international optical fibre network in southern Africa.
The company, a sister company of Zimbabwean mobile operator Econet, has already built 8,500 kilometres of cable linking towns and cities in four countries, and will soon reach another three countries, says CEO Nic Rudnick.
The project started because of the number of submarine cables than have been laid along the coast of Africa in the past couple of years. That has driven demand for the connections to be extended from the coastal landing stations inland.
“In 2009 we saw all the fibre around the coast and a complete dearth inland,” says Rudnick, a former lawyer who has worked for the Econet group for 13 years. Some companies were building short links to the main cities “but in bits and pieces”, he says. “There was no regional network with full redundancy.”
The Econet group charged its wholesale operation, Liquid Telecom, with the task of building a ring-based fibre network that would not duplicate existing fibres — laid by companies such as rival South African operators Telkom and Neotel, for example — but would extend regional services throughout southern Africa.“We want to cover minor cities and towns on the way,” says Rudnick. “Our market is to build where there is no fibre.”
With commercial operations well established, the CEO is finding that the demand for services within the region is greater than the demand for connections to the world outside. “Financial institutions want us to connect their branches, and so do supermarket chains,” he says. Companies and internet service providers are “a significant growth area” for Liquid Telecom, which is 60% owned by the Econet Wireless Group. 
                   
                            
Botswana co-build planned
                                           
“We run from northern South Africa through Zimbabwe to Zambia to the Democratic Republic of Congo,” says Rudnick. “Next year we will build to Botswana as a co-build.” He won’t name the company he’s partnering with on that link: “They’re sensitive.”
The Liquid Telecom route diagram shows that the company plans to reach Lesotho, a country completely surrounded by South African territory, and has planned links towards Namibia in the west and Mozambique in the east.
“We’re not sure of the length [of the complete build] because we’re still modelling the routes.” The total construction will increase the length of the existing network “by 50-60% or more over the next couple of years”. That will put the total route length at something like 13,500 kilometres.
The company has further aspirations, to link with similar networks in east Africa. Conversations are continuing that should lead to networks working together to cover central, southern and east Africa but the physical connections have not yet been made “because our fibres haven’t quite got to the point where we can meet up”, says Rudnick.
It has been — and continues to be — a huge construction project for Liquid Telecom. More than 95% of the network runs along roads, with the fibres in red, yellow or green ducts buried a metre below the surface and often protected with concrete to stop rats chewing up the plastic. “Large rats burrow down. We’re also getting rat-repellent ducts,” he says. “We’re building this all to international standards, with electronically lockable manholes at 500 metre intervals. It’s one of the biggest construction projects in central Africa in the last few years.”
The fibre in the ducts “have more capacity than we will ever need”, but Liquid Telecom has the ability to put in extra fibre if necessary.
A bigger challenge for Rudnick and his team has been getting licences and wayleaves along the route, not just from national regulators but from local authorities, some of which “won’t give wayleaves at all”, he says. “It takes an inordinate amount of persuasion, and sometimes takes years.” 
                
                       
Challenging monopolies 
                 
The problem is that officials are used to the era when telecom networks were run by a state-run company or a government department, which never asked for permission to install cables, and they have had difficulty accommodating to today’s competitive era.
But that’s a field where Rudnick shines. Before he was in the telecoms industry he was a Zimbabwean lawyer acting on behalf of Econet and its owner, Strive Masiyiwa, who were trying to get a mobile licence to compete against the state-run operator. The struggle went to law, challenging Robert Mugabe’s government, “the longest running case in Zimbabwe”, he recalls. “We were the first to take on the system and win. In the end, the supreme court gave Econet its licence.” Today Econet has 70% of the Zimbabwean mobile market.
After the case was won, Rudnick joined the Econet group to become its in-house legal executive, but “now I do very little law and a great deal of telecoms”.
The experience has helped him and Liquid Telecom challenge people “who have a fondness for state monopolies”, he says. “I spend my time fighting against monopolistic tendencies, either in law or in people’s minds.”
Liquid Telecom went into commercial operation soon after the first lengths of cable were installed two years ago, but “in the last 14 months we’ve seen enormous growth”, but more is to come.
Customers are moving bulk bandwidth away from satellites and on to fibre, and at the same time the price has dropped and the speed has increased. “As a result we’re about to see an explosion in the number of users.” Until now, existing customers have been using more capacity; in future newcomers will drive demand.
The voice market in Africa has grown hugely in recent years thanks to mobile — to way beyond the level ever achieved by fixed networks. But now, as in other parts of the world, there is a growth in demand for data. And “there are lots of WiMax systems being built” in the area covered by Liquid Telecom as well as “LTE and other technologies, not only wireless”.
Is he hinting at fixed network investments in African cities? It seems so. Does he know of projects? “Yes. Some exciting things are coming out next year,” he says, but he won’t say more.
                
               
Intense competition 
                  
Though Liquid Telecom has the only network of such a size in the region, it is still a highly competitive market, he points out. “There is competition from multiple small players. Intense competition.” And he’s aware that the company is a pioneer that others may follow: “As we fund something that’s never been done before, we’re only unique until the next person does it.”
He wonders whether he will look behind him and “see 20 people hot on our heels”, but so far “we haven’t seen anyone building a regional network to the scale we’re doing”.
But “multiple small players are driving prices down and the market is very price sensitive”. The market is still price-dependent, but Rudnick is hoping for a transformation so that customers pay more attention to quality — an advantage Liquid Telecom believes it has because of the redundancy built into its network.
“People will start to become more and more intolerant of service failures, but at the moment they’re used to service failures. There’s a higher tolerance than we’re used to seeing [in other markets]. At the moment price counts, quality less so. As the market matures and the internet becomes essential, service attitudes will change.”
Liquid Telecom has a peering point and switching centre in South Africa, and also connects via duplicate cables to two internet hubs in London. “We use Seacom and [the older] Sat3 cable, and we’ll shortly use WACS. We plan to use the EASSy cable, but not yet,” he says. 
                 
                        
Fibre redundancy
                             
It’s important to have redundant routes to the rest of the world. “One of the biggest lessons that African networks are learning is that fibre is not as reliable as they hoped. Fibre submarine cables can go down.” And sometimes it takes days to repair them.
When Liquid Telecom started “no one was interested in redundancy in fibre. After the experience with sea cables redundancy is now on the agenda. We’ve always used redundancy.”
But there’s a risk, he warns, of overcapacity in the cables serving the east and west coasts of Africa. Prices are being pushed down, but most are owned by consortia of operators, “so we’re not likely to get the sort of crash we had at the end of the dotcom boom”. The operators that use the new cables “are not going anywhere”.
Rudnick is cautious about saying how well Liquid Telecom is doing financially two years after starting up. The company employs “just over 300 people in all the countries” and “parts of the business are already making money”, he says, adding: “Breakeven depends on a variety of factors.”
However, it is “a very strong business model that we’re following”, he says. And he can be comforted with the knowledge that the African telecoms market is growing fast and has much potential for growth. GTB

Further reading from Global Telecoms Business: 
Orascom to invest $70m in Zimbabwe unit 28 Nov 2011
Liquid Telecom builds Zambia fibre net 11 Nov 2011
Econet invests $400m on Zimbabwe net 20 May 2011
Lighting up the African continent 24 Aug 2010
Leadership in connecting Africa to the world 20 Aug 2009
end