Fibre-to-the-home (FTTH) is currently a serious discussion point in many sectors of the communications industry in South Africa. We all know that it is costly, particularly for a widespread population.
Ultimately the kind of broadband that we all aspire to can largely only be provided by fibre. So the first question I asked in our virtual panel was: Is fibre to the home a practical approach for providing high speed broadband to the majority of South Africans?
The panellist were divided in their views, some agreed that it is an option while others had their reservations.
Tim Parle, senior telecoms consultant, BMI-TechKnowledge (BMI-T) is not convinced it is an option. “There are over 14-million households in South Africa and these are widely dispersed. FTTH projects are often measured in terms of “home passed” and “home accessed”, and has a relatively high entry level cost. The sheer scope and scale suggests that FTTH is not a practical approach for the majority of South African homes (at least in the short- to medium-term).”
Dobek Pater, telecoms analyst, Africa Analysis agrees. “No it is not an option, or at least not in the existing scenarios. The part of the SA society that can afford services delivered over fibre lives mostly in geographic areas currently not conducive to economic FTTH deployment, i.e. on relatively large plots in areas that are not sufficiently dense. Socio-economic segments of our society that live sufficiently dense areas for economic FTTH deployment represent lower income groups and cannot afford services delivered over fibre in the current form. The exception is households located in gated communities with small plots and apartment complexes. This represents a small segment of our society.”
Juanita Clark, CEO FTTH Council Africa has a more optimistic view. She says FTTH will soon not be a luxury. “Today we live in an always-on, always-available world. While mobile communication provides us with the ability to socialise through sms, whats-app, Facebook, and verbal communication on the go, anywhere and at any time, the aim of FTTH is not just focussed on these applications. FTTH considers other aspects such as smart homes and villages, security, entertainment, over the top/ triple play services. In addition, with more people working from home and needing to access remote bandwidth-intensive applications, FTTH will soon not be a luxury.
Reshaad Sha, chief strategy officer, Dark Fibre Africa: “Fibre to the home deployments in multi-tenant environments are far more viable than having to deliver FTTH to a single dwelling of some kind. The majority of South Africans live in single tenant dwellings which makes an already challenging FTTH business case even more difficult. FTTH deployments may therefore be limited to dense multi-tenant environments or residential estates where residents or organised home owners associations co-invest in the passive infrastructure. New residential developments do however have the advantage of including the most expensive part of the deployment (civil infrastructure) into their building costs. Even though FTTH is ultimately the best solution for high speed broadband, the majority of South Africans will probably have to live without it.”
Michael Colin, sales director, BitCo does not quite agree that FTTH is a pipe- dream. He says “I believe South Africa follows closely behind European trends in which both fibre to the curb and fibre to the home are extremely popular. This is mainly because it serves more than one purpose. Traditionally, FTTH would only be used to deliver high speed broadband access. In a residential environment, the speed requirement is often not high enough to warrant FTTH so traditional copper to the exchange and fibre backhaul are adequate for this equipment. With IPTV rapidly developing and more services moving to cloud- based solutions, FTTH is becoming more of a requirement to residential users who can have a single FTTH to supply IPTV servicesand high speed broadband access.
Johan Pretorius, CEO, Conduct Telecommunications says that broadband demand has increased exponentially in the last three decades, doubling every 18 months. “The combination of deregulation and triple play convergence (voice, video and data) is changing the market. The pattern of growth is clear and it will become progressively difficult for any technology, other than fibre, to support the future demands for speed and capacity.”
Gert Jansen van Rensburg, OSP product manager; Dartcom also believes that geographical constraints will impede large scale FTTH deployment. He says ”the practicality of fibre to the home is limited to the network infrastructure deployed in order to reach every household.”
Would fibre to the curb, with the last mile by wireless or VDSL, be a more realistic option?
Johan Pretorius: “Ultimately no single technology will be sufficient to cater for all the needs. The end customer requirements and cost to service varies widely across South Africa. It remains uncertain that one technology will be able to satisfy the investment return expectations in all cases. Ultimately the marketplace requires a resilient eco-system of multiple technologies delivering broadband access for varying customer segments and locations.
“In the short term technologies such as VDSL and LTE will allow customers to experience incremental increases in broadband which will in turn stimulate the appetite for high speed broadband and the development of new and value- adding services. In the long term this will drive requirements for greater broadband which leads to a strengthened case for the deployment of FTTH.”
Tim Parle: “There is no one-size-fits-all technology solution for access. Different solutions are needed for different areas. A mix of FTTH, FTTC, (terrestrial) wireless and satellite makes for a complete solution set. Certainly FTTC enhances the values of the installed base of 4-million copper lines.”
Gert Janse van Rensburg: “In order to have fibre to the curb, fibre needs to be installed or exist between the exchange and the cabinet. In areas where existing copper infrastructure exists this can then be used to provide high speed broadband to households at a relatively low cost and high speed of deployment. Where the infrastructure does not exist and tenants are widely distributed, wireless technology for the last mile would provide a cost-effective solution.
Reshaad Sha does not agree with the sentiments expressed by most other participants in the discussion. He says: “The practical challenges with a fibre to the curb deployment with an alternate last mile solution are greater than one would expect. Going from fibre to anything else at a street cabinet level requires a significant infrastructure investment in electronic equipment which needs to be secure and have power delivered to that street cabinet. Besides the capital expenditure required, the practicality of such a deployment does come with its challenges. It would probably be more economical to deliver the fibre to home or business from a central location a few kilometres away.”
Juanita Clarke: “Wireless broadband will always remain an integral part of any advanced digital infrastructure. Whilst there is some overlap, the major usages are complementary. Seamless integration between FTTH and wireless technologies are critical.
“Current mobile networks already operate 2G, 3G and LTE and these networks are already congested. To ensure that these networks can accommodate the uptake in data, they have to ensure on-going investment in fibre as a backhaul technology.”
At what stage of technology development is the passive optical network (PON) system? Is it ready for deployment and from a cost point of view a viable option to provide fast broadband connections?
Dobek Pater: “PON is ready for deployment. In SA, there are Gigabit passive optical network (GPON) pilots currently undertaken. However, in other African markets (e.g. Zimbabwe, Kenya), commercial GPON deployments have been done. The economic / financial feasibility of GPON depends on the target area characteristics (geography, uptake, etc.) and the deployment method. Whilst GPON in general can be deployed at a lower cost than point-to-point FTTH, it does not automatically translate into a successful business case.”
Reshaad Sha: “PON-based systems have gained significant traction over the last few years as more telecom operators adopt PON as their primary fibre delivery system, and the associated costs have come down. GPON and GE-PON systems have commercially demonstrated the effective delivery of gigabit services – this is high speed connectivity. A number of Asian, European and North American telecom operators have claimed success in their PON deployments.”
Johan Pretorius: “This technology is fairly mature now and internationally there have been proven successful deployments. Especially in gated communities and estates this is an effective solution to service home owners. The challenge is to overlay the architecture with competitive open access business models so that all service providers can access customers over the shared infrastructure on an equal basis. This fosters competition at the consumer level, which drives innovation and reduces costs. This is needed to drive sufficient uptake to enable utilisation across the investment to satisfy the business case requirements.
Gert Jansen van Rensburg: “Current technologies on the PON system such as GPON are capable of delivering 2,5G bps split over 64 end users. Even with GPON bandwidth shared over the 64 users, it greatly exceeds anything achievable by cable services or ADSL2+ over a radius of 20 km. With the typical scenario of 32 end users it relates to 80 Mbps per end user. GPON is widely accepted across the world by some of the largest operators. This technology will allow the operator to change all the energy hungry cabinets closer to the premises to passive cabinets thus bringing the operational costs of the network down. This will result in a lower cost per Mbps service. Looking at the cost of deployment the use of passive optical splitters in the network architecture will allow for simplified network infrastructure that inadvertently lower the cost of deployment and will have a positive effect on the cost per Mbps.”
Should metro councils be responsible for laying fibre to each home, and follow the local loop unbundling (LLU) principle with each customer having the option to subscribe to a provider of his or her own choice?
Tim Parle: “Metro councils should be accountable for laying fibre, viz. facilitate the laying of fibre which is funded by a mix of private and public sector benefits. The role of metro councils should be to be responsibility for coordination of wayleaves and appropriate planning measures. Councils also have a role as important anchor tenants.”
Reshaad Sha: “LLU should be reserved for an existing infrastructure that has theoretically been paid off; the merits of LLU in South Africa for the copper infrastructure should also be tested against the perceived benefits which I don’t believe exist. Any new fibre deployment whether funded by private investment or public investment should have one key principle: duplication of passive infrastructure should be avoided at all costs. In new residential and business premises, it would be easy for the passive infrastructure to be deployed cost- effectively even by a municipality.
Juanita Clark makes a valid point by referring to the Universal Service and Access Agency of South Africa (USAASA) and its obligation to underserviced areas. But are they delivering? ”The delivery of high speed broadband is a complex eco-system that requires co-operation at both levels. Firstly private sector has already indicated willingness to service areas where returns on investment are easier to achieve. In addition, as a result of the thousands of km of private sector fibre, companies might have points of presence in areas that government could leverage to supply telecommunication to under-serviced areas. The private sector contributes to the USAASA fund which was established to provide communication to underserviced areas; however we have not seen efficient spending in this regard. Instead, local authorities are assuming the role of player and referee.”
Gert Jansen van Rensburg: ”With technology changes happening at exponential rates, metro councils will be forced to change their current infrastructure whereby they manage the monitoring and supply of basic utilities to each household. This will require them to have infrastructure in place that can accommodate high bandwidth requirements. With the local loop unbundling principle on current infrastructure this could be a win-win situation for metro councils and local operators if the metro councils build infrastructure in green field applications and benefit from other operators in brown field applications.
Michael Colin is less optimistic of this ever happening. “This would be a good idea but unfortunately I can’t see it working well in Africa due to current lack of service delivery. An ideal solution would be for Council to lay tubing with micro-duct to the curb and to the home.”
If FTTH is a viable option in South Africa, what bandwidth should each customer be provided with and at what price?
This seems to be a tricky question. Reshaad Sha says that bandwidth for the end user should ideally be determined by the type of applications that the customer will be using, if we assume that at the minimum the customer will use voice, video and data with a component of real-time applications like video calling. “The costs associated with deploying even a 1 Gbps connection are negligible and therefore a 1 Gbps connection is ideal to the end user, the actual delivered speeds through the telecoms operators’ network and to the internet however can be scaled over a period of time starting with a 100 Mbps connection. Pricing is a sensitive matter and importantly bundling other services like premium television and voice over IP should be done in conjunction with overall packaging to really address the overall available spend from the customer. A large cap of 200 GB with an access speed of 100 Mbps should be priced in the region of R2000 per month.”
Michael Colin: “I believe in the built-up metropolitan area’s FTTH is a viable option. Users should have the freedom to connect to the internet service provider of their choice and run various value added services over the fibre (triple play – PON). I believe broadband access should always be uncapped and services available in multiples of 10 Mbps. I do not foresee this is a viable option for rural or outlying areas.”
Juanita Clark: “Customers of FTTH should not expect less than 100 Mbps speeds. It is difficult to put a definite price tag on FTTH. It has been a volatile market in the last few years. Prices have dropped significantly, mainly due to the fact that today we have in the region of 500 Electronic Communications Network Service (ECNS) licensees. Competition will drive down prices but this will take time as companies are re-investing all profits into expanding of networks.”
Johan Pretorius: “South Africa is still in the early stages of high speed broadband adoption. FTTH will initially make sense in densely populated areas with a sufficient customer base who can allocate disposable income towards high speed internet access. As new services emerge and prices reduce adoption of FTTH based broadband will increase. Over time the investment case in the current more marginal markets will become more attractive and less risky. Like all new technologies adoption of FTTH will take time. We should see a minimum of 100 Mbps being deployed at sub R1000 pm pricing.”
Gert Jansen van Rensburg: ”The goalpost of what the minimum bandwidth should be, changes on an annual basis. On the current requirement where bandwidth is mostly used for video calls and limited high definition videos and the current infrastructure available, the minimum requirement would be,10 Mbps per household. With the current trend worldwide in application and content development it is estimated that by 2016 the minimum requirement would be in the region of 30 Mbps per household and by 2020 it would be a minimum of 100 Mbps per household in South Africa.
Dobek Pater: “This is a bit like asking how long is a piece of string? The amount of required bandwidth depends on the applications one uses. At present, there is limited uptake of the VDSL/ADSL2+ services at 20 Mbps /40 Mbps download speed. This indicates that most residential users struggle to find a useful application of such a service at this point. However, new applications (e.g. internet TV / IPTV) will begin to emerge and gain market share. This will drive the demand for higher speeds.
“Price reflects the value of a product/service to the buyer. I think that an average household would be prepared to buy triple play services over fibre, if such were provided at a cost lower than the current combined cost of telephone, internet access and DStv (e.g. less than R1200 per month).”
With broadband provided by high speed wireless do you see a requirement for widespread provision of FTTH?
Juanita Clark: “The level of reliability, security, privacy and quality required will be impossible to achieve without very significant investment in mobile infrastructure. However such investments will make the delivery of FTTH-like mobile services economically unviable. In addition, true high speed wireless need a fibre connection as back-haul. Having said that, I don’t believe that this is an “either-or” discussion and believe that FTTH and wireless will develop side by side and play an immensely complementary role.”
Reshaad Sha: “Wireless broadband will always have a role to play in a consumers connected life and even with the theoretical speed improvements that we are seeing in South Africa FTTH does have a significant play.”
Michael Colin: “Yes, unfortunately we have a very limited amount of spectrum available so the majority of wireless internet service providers are working within the ISM band (open spectrum). What this means is that the equipment is vulnerable to interference which limits the throughput (data) of the radio equipment.
“In light of this, it would be almost impossible to offer a reliable high speed service over wireless equipment unless you are operating within a licensed spectrum; in which case you are liable to pay spectrum fees which would result in your services being very expensive and out priced in the market.
Due to the demand in metropolitan areas for voice, video and broadband, there is certainly a requirement for widespread provision of FTTH.”
Johan Pretorius: “South Africa’s challenge for an ubiquitous FTTH deployment is its low population density. Initially wireless will play a vital role to drive bandwidth consumption as it is a cost-effective and fast way to introduce consumers to high speed access. In time though, bandwidth limitations will emerge over wireless as the number of users competing for wireless spectrum become greater and the networks struggle to deliver capacity. More capacity will have to be introduced via fibre infrastructure.”
Gert Jansen van Rensburg: “The current high speed offering on wireless is most probably the biggest reason why FTTH take up rates have been so low. As time goes by and more content and application development takes place and the need for higher bandwidth grows the current technology on wireless will reach its saturation level in densely populated areas and fibre will be the only medium on which these high bandwidth demands can be delivered.
“There will always be an application for wireless and all the other currently available technologies due to various factors but the need to have fibre closer to the home and ultimately in the home will grow exponentially. Thus it is important to provision for an infrastructure that will support this demand in future.”
Dobek Pater: “FTTH will be provided in greenfields residential complexes (gated communities, apartments) and some brownfields complex sites, and to a limited degree in the traditional high-end residential areas. VDSL/ADSL will service households in residential areas where it is available and no fibre has been deployed. Wireless (e.g. LTE) will provide connectivity to all other households not connected on cable and that can afford high-speed broadband services. Naturally, there will be some overlap between the different technologies. This is also a five-year view. Things may look somewhat different in ten years’ or 20 years’ time.
“Currently, connecting a traditional residential house on FTTH can cost up to R20 000 per house. This price would probably need to decline to below R5000 to make FTTH a more viable option.”