Our take...
In developing markets bandwidth is frequently offered at considerable cost and sparsely populated areas often lack bandwidth demand due to a lack of fixed broadband infrastructure or to poor broadband adoption caused by unaffordable services and PC hardware. As such, the economics of rolling out broadband services to outlying regions have not favoured deployment. Ob3 networks, however, can leverage its directed satellite system to plug gaps where backhaul cost is a bottleneck, while avoiding the investment risk and impracticalities of rolling out expensive fibre to rural areas that have yet to provide an attractive business case for doing so. Indeed, if successfully marketed at low cost, Ob3 networks could help boost fixed and wireless broadband adoption by removing the cost of backhaul bandwidth – a sticking point for expanding rollout in some markets' rural areas. In addition to offering services to private operators, Screen Digest believes the backhaul system could also have signficant appeal for local and national government initiatives in countries looking to lift broadband penetration.

One particularly successful rollout market for the project could be India. The country already has a comparatively high mobile penetration (27 per cent according to Screen Digest) coupled with a low fixed broadband penetration at under 2 per cent of homes at year-end 2007. With a vast population of over 1.1bn, a low-cost backhaul solution for ISPs could help drive the fixed and fixed wireless broadband market and open up significant revenues for the consortium. Google's interest in the backhaul solution is complemented by its stake in the Unity project - comprising a trans-pacific submarine cable that shifts data internationally to and from Asia, including India. Moreover, with 1.1bn potential users, for Google at least, the project also has the prospect of generating significant ad-related revenues from its core online services, in addition to providing access-related returns.

However, a significant hurdle to broadband adoption in India, as in other emerging markets, remains. Low PC penetration - under 5 per cent according to Screen Digest at year-end 2007 - will need to be addressed before adoption can really take off.

Beyond its use for broadband, concerns arise about using the satellite network as a backhaul for delay sensitive mobile applications (voice and real-time), while roaming may be an issue for users moving fast between mast coverage areas. Furthermore, while 3G is not yet deployed in developing countries, it is likely to have appeared by 2010. With classic 3G networks (i.e. without HSDPA) the last mile (i.e. wireless link) however is the primary bottleneck, not the backhaul network. It will take a longer term perspective to foresee the arrival of HSDPA (14.4 Mbps) (as seen in developed European markets) and the accompanying potential backhaul capacity issues that accompany the technology and increased mobile broadband user bandwidth demand. As such, at least judging from the current scenario, the network seems more suited to WiMax and fixed broadband operators in remote regions in its target countries.