Email over satellite for ten cents per message?
Calculating the value of being connected

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By Gregg Swanson, Executive Director, HumaniNet
Posted: 8/24/2004

For at least 20 years, aid and mission organizations have sought the "magic ring" that would bring low-cost email to workers in remote areas beyond the reach of the telephone or Internet. Now, with satellite data services becoming highly reliable and lightweight hardware very affordable, low-cost email has become a reality in Africa and Asia, with global coverage arriving in the next year.

We are often asked by field users how to calculate the cost and value of satellite connectivity. While there are numerous approaches to this calculation, the four-step analysis below will yield four different, but useful, ways of looking at the cost of email over RBGAN.

First, a word about the Inmarsat RBGAN. When this technology was introduced in 2003, most purchasers paid $1500 - $2500 for a single terminal. That is $400 - $700 per pound, but that is not a "measure of merit" for electronic gear.

The RBGAN price has recently dropped to $899, with most service providers offering some free megabytes and other benefits (see our Satellite Communications section for full information on the RBGAN service). For this analysis, we will use the new $900 price and one available package of discounts: no activation fee, no monthly fee for six months, and 5 megabytes per month included through July 2005. Assumed purchase date is September 1, with a planned usable life of three years (it will last much longer, but it is a good, conservative assumption).

For a very helpful review of RBGAN bandwidth costs, see Matt Blair's article, "RBGAN: Details on Bandwidth Costs."

Now, the four steps:

Step #1: Purchase and service costs over 3 years

Purchase price (shipping and accessories excluded)
$899
No monthly fee for first six months
$0
Monthly fee for next 30 months, @$29
$870
 
Total with service only (not usage)
$1769
 
Per month, for 36 months
$49.14

(All figures in this article are in U.S. dollars)

Step #2: Life cycle cost, with service and usage (3 years)

Assume 100 emails per week with an average email 10 kilobytes, roughly the size of a text-only email of about 800 words (this article is about 940 words). Note that this is an assumed total of emails, sent and received.

Many text-only emails are 2-5 kb, but of course attachments can be very large. We will assume that the user can send and receive large attachments over a different connection. With an occasional spreadsheet or document attached, an average 10 kb is a fair assumption. Thus:

100 emails @ 10 kilobytes = 1 megabyte (Mb) per week
     
First 46 weeks: no Mb usage cost (special offer)
$0
 
Next 110 weeks: 110 Mb @ $9.60 =
$1056
over three years
Add purchase and service costs
$1769
 
 
 
Total 3-year cost with service and usage
$2825
 

Step #3: Average cost of an email, including RBGAN purchase

Now, we simply take all the emails (both ways) over 3 years: 156 weeks x 100/week = 15,600

Divide this into the "total with service and usage" and you have 18 cents per email – less than it costs to send a postcard in most countries.

Email compression services, such as the excellent UUPlus service (www.uuplus.com) will reduce costs for those who use 5 - 8 Mb per month and up. See our "Tips on RBGAN" page.

Step #4: Post-purchase average cost of an email

The measure is based strictly on service and usage, excluding purchase price and activation fee. The $900 purchase price is considered a "sunk cost." Service and usage charges are added together, then divided by the number of emails

First 46 weeks: no Mb usage cost (special offer)
$0
 
Next 110 weeks: 110 Mb @ $9.60 =
$1056
over three years
No monthly fee for first six months
$0
 
Monthly fee for next 30 months, @$29
$870
 
     
Total
$1926
 
     
Post-purchase average cost per email (divide by 100 x 156) = 12 cents

Not quite down to 10 cents, but usage rates are coming down and could soon achieve that result. UUPlus email compression can reduce this average by up to 75%, but of course the service cost would have to be factored in.

Prepaid plans are also available. These eliminate the monthly service fee, so you pay for the service only when you use it. The per-megabyte price is still reasonable, however. One plan offers a rate of $12 per megabyte. This plan would reduce the per-email cost in #4 by about 3%.

Going global. In 2005, Inmarsat will begin full BGAN (no longer "regional" BGAN) service by launching two new satellites which will expand coverage to "near global" landmass areas. The upgraded BGAN network will offer significantly higher data rates of up to 432 kbps, as well as increased functionality. Will the price per megabyte drop further? It is too soon to say, but it is likely, since capacity will increase. Today's RBGANs will be compatible with the extended global system but will be limited to today's 144 kbps.

In closing, three brief points:

  • Managers should check prices frequently on all satellite services – the trend is decidedly down.
  • Users should examine any major purchase decision not only before the purchase, but a year later, and optimally 2-3 years after purchase. Not only will you determine if your assumptions were correct, but you will sharpen your ability to make future choices.
  • Nonprofit managers should conduct an occasional review of their international long distance phone service, as well as satellite communications. Too many NGOs are paying more than they think for Web access over dialup and even broadband. Lower-cost long distance is usually available – it is easy to check – and VoIP is coming on fast.

If you have questions on this article or on portable satellite communications, please email us at info@humaninet.org.

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