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Should African Operators Deploy Fibre to the Home Networks?

05 February, 2013
 
ICT Africa writer
February 5, 2013

Why FTTH?
With over 700 million mobile subscriptions in Africa and almost non-existent last mile wire-line broadband connections, it would appear that wireless broadband is the only logical approach to broadband access is through mobile networks. The adaption of Long Term Evolution (LTE) by several African operators promising speeds of 100Mbps seem to compound this notion – why should operators deploy expensive Fibre to the Home (FTTH) networks when one can get 100Mbps from LTE mobile networks?

What might not be well understood by the average African consumer is that LTE is a shared service. While 100Mbps is the maximum throughput under perfect conditions, that bandwidth is shared with others using the same cell and the actual speed is a function of the number of people sharing the service.

Take Verizon Wireless in the USA, for example. While Verizon promotes 100Mbs speeds in their white papers, they never really promise 100Mbps speed but quote 5-12Mbps downlinks and 2-5Mbps uplinks in all their marketing materials as what you can expect in the real world.

Before I get incinerated for LTE bashing, let me put things into perspective. While 12Mbs may not sound like a lot, it is enough to play back 1080p video content and many other applications currently not possible with conventional broadband access. Moreover, even in the USA with far more advanced broadband infrastructure, the average Internet user accesses broadband services at 5.1Mbps. On the other hand, there are hardly any Africans accessing broadband services at 12Mbs, making the deployment of LTE a very welcome effort that will boost the quality of broadband for Africans. Just don’t expect 100Mbps!

There is growing evidence that future applications are increasingly becoming more and more bandwidth hungry. For many of these high end applications and for the ability to receive multiple services on the same broadband connection, Fibre to the Home (FTTH) is the most suitable solution. The table below shows a comparison of the estimated download times for conventional and next generation video systems at different broadband connections, assuming 80% network efficiency for all services. In reality mobile based services typically have lower efficiencies. Please see the online download calculator [1].

Internet Service STDTV (300MB) 1080p (3GB) 1080p (25G)
GPRS (56.7Kbps) 15 hours 7 days 55 days
EDGE (384Kbps 2 hours 23 hours 8 days
HSPDA (2Mbps) 26 minutes 4 hours 1 day
ADSL (8Mbps) 6 minutes 1 hour 9 hours
LTE (12Mbps) 4 minutes 45 minutes 6 hours
VDSL (50Mbps) 1 minute 10 minutes 1 hour
FTTH (100Mbps) 32 seconds 5 minutes 45 minutes
FTTH (1Gbps) 3 seconds 32 seconds 4 minutes


While 4G/LTE will be able to handle most of today’s applications in Africa, FTTH is a future proof technology that is better able to handle very power hungry emerging applications.

Should operators deploy FTTH in Africa?
In most African countries, terrestrial long haul and metropolitan fibre optic networks are already being deployed. The next logical step is to improve access networks by bringing fibre closer to the end users either to improve the quality of mobile networks, deploy higher bandwidth copper based access networks such as Hybrid Fibre Coaxial (HFC), Fibre to the Node (FTTN), Fibre to the Building (FTTB) or FTTH. Although many operators and service providers have proposed, planned or deployed some form of FTTH in Africa, some of the business models have failed. We identify a few criteria namely payback period, take-up rate, multi-play services and innovation that operators should take in consideration before embarking on an FTTH deployment.

Like any telecommunication network, the payback period for an FTTH network can be very long, up to 20 years or more in some cases [2]. It is important for potential FTTH network operators to set realistic goals and plan accordingly. We are very aware that most finance institutions and investors may not be well informed about the technology and may not be prepared to finance projects with long pay back times. The initial step in any FTTH deployment is to educate investors and financial institutions to understand the FTTH business model and for them to understand the longer term benefits of such a network.

Closely tied to the payback period is the take up rate, the percentage of households with access to the network who sign up for the services. The higher the take-up rate, the shorter will be the payback time. In several deployments elsewhere in the world, the breakeven point happens when more than 30% of people connected to the network have signed up for service. For most FTTH operators in Africa such as JAMII Telecom and Mwananchi in Kenya, Smart Village in South Africa and ATEC in South Africa, deployment have been concentrated in affluent communities where take up rates tend to be significantly high reducing the payback period. This is not the case for larger scale deployments planned by the likes of Link Africa in South Africa, Liquid Telecommunication in Zimbabwe and Algerie Telecom in Algeria. It is recommended that operators conduct surveys and get a realistic number of people willing and able to sign up for services before deploying the network.

For almost any FTTH model to work the operator should plan on offering at least three services; usually Internet access, video and voice services. Others, especially in gated communities have included security surveillance as part of the services. Once an operator has invested a lot of money in deploying the FTTH network, it only makes sense for the operator to bundle as many services as possible since the fibre capacity is almost endless. A number of plans in sub-Saharan Africa have been thwarted by the inability by network operators to acquire video or TV content rights as a result of DStv monopolistic stranglehold on content. In South Africa, Telkom’s vision of creating a content company, On Digital Media (ODM), that was to compete with DStv and provide the much needed content in preparation for an FTTH deployment failed when the ODM collapsed. Mwananchi had to strike a deal with an Indian entertainment giant, STAR, for video content and live cricket broadcast as the most prominent football channels are monopolised by DStv. To cut a long story short, any meaningful FTTH plan starts with a search for video content.

Due to fibre and electronic system innovations, the average cost of passing or connecting a home has been falling steadily since the first FTTH network was deployed. We have consistently emphasised on ICT Africa that Africa should leapfrog older technologies as we follow those who deployed these technologies before us. It is important for operators to learn about innovative new fibre, hardware and installation methods that can significantly reduce the cost of deploying FTTH networks.

Conclusion
As bandwidth hungry applications continue to evolve, it is imperative that African operators consider deploying FTTH networks at least for the affluent community niche market. Payback period, take-up rate, multi-play services and innovation are important considerations for successful deployment and operation of an FTTH network.

[1] http://www.azaleatech.com/download_estimator.html

[2] http://ppp.worldbank.org/sites/ppp.worldbank.org/files/documents/The_Economics_of_Next_Generation_Access_Final_Report.pdf
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