SA's milieu hampers fibre-to-the-home

The likelihood of broadband penetration in SA being bolstered in any marked way by fibre-to-the-home (FTTH) technology in the near future is slight. This is in light of the complex competitive and regulatory environment the country finds itself in, says Internet Solutions (IS) CEO Derek Wilcocks.

IS, a division of Nippon Telegraph and Telephone Corporation-owned Dimension Data, has been trialling FTTH technology, in a limited trial coverage area, since last year. The company has no plans to expand the investment for the time being. Wilcocks says, however, that IS will continue to use the trial area, which includes local residential parks, as a laboratory to try out new vendor equipment and business models.

Due to the high cost of FTTH deployment and a precarious return on investment, in order for more widespread FTTH to prove viable, Wilcocks suggests that public-private partnerships are needed, whereby the indirect economic benefit of broadband connectivity can be factored into the required returns.

The main costs involved in instituting the fast access technology, he says, is firstly the equipment required to build the network, and secondly, the cost of managing and applying for permission to build such a network with a wide variety of government departments. He says these costs need to come down before FTTH can be deemed viable.

“There also needs to be clarity about the competitive landscape, as FTTH investments require a long-term view and, therefore, a fine balance between market forces and some degree of protection for investors.”

As for the chances of major FTTH networks materialising in SA any time soon, Wilcocks says there is no doubt that the technology will become more widely available over the next few years, in areas within gated communities, mixed-use commercial and residential developments and “very few” suburbs. However, he says the more widespread deployment of FTTH at a level that will have an impact on broadband penetration in SA as a whole remains uncertain. “Some projects under way in major metropolitan areas, driven by the metropolitan governments, may change this. Most of them are a long way from delivering widespread connectivity for large numbers of residents.”

As far as short-term prospects go, Wilcocks believes mixed fibre and wireless networks and the future of Telkom's DSL network in the light of local loop unbundling hold greater promise to increase broadband penetration. “[But this] ultimately cannot compete with the capacity offered by cable and FTTH networks in more densely populated areas elsewhere in the world.

“For this reason, SA must continue to explore FTTH models to ensure medium- to long-term globally competitive broadband penetration and capacity levels.”