The future of fibre
Is there still a demand for fibre?
Juanita Clark, CEO, FTTH Council Africa: There are many businesses that haven't been migrated and FTTH is by no means dead. Many fibre companies will still spend the foreseeable future just deploying fibre. There's still a lot of demand.
Syed Faiz, strategic consultant, ZTE: If you look at markets such as Australia, the number-one thing people want first is fixed broadband. Fibre isn't going to die. There's still 0.4% penetration in Africa and only 2.4% household penetration in South Africa.
Wayne D'sa, MD, CipherWave: What kind of metrics are we using to measure fibre penetration? The number of homes or addressable market? So the one thing about all this data is the opportunity looks large. Most of Africa is dark. Per capita, there's a greater opportunity. However, nobody is going to invest that broadly. We've done relatively well from a penetration perspective. But the limitations of ADSL are driving that. So the smarter people have seen that opportunity and decided to do something better. That's why we're stepping over each other - it's where the addressable market is.
Daniel Jaganath, CMO, SA Digital Villages: When we look at consumer sentiment right now, most consumers want to have a fixed line at their home. We're seeing the adoption curve shift up the bandwidth requirement threshold. They want fixed-line for their own consumer experiences. I think content is driving a lot of that behaviour.
Hugh Sonn, strategy executive, DFA: We don't really see the market stalling. We still see high demand from companies that service those areas. We're still putting more fibre in the ground. But many who installed it designed it for their own use only, and they're running out of capacity. Then they have to dig up again and that's where they have to find a business case for ROI.
Our research shows we need about eight times the current amount of fibre to achieve 5G.Juanita Clark, FTTH Council Africa
Henda Edwardes, executive head, Vox: By 2021, we expect around two million homes to be connected. We've had a massive DSL base and we've been proactively migrating the customers to fibre areas. At Vox, we've been constructively contacting customers and going through that process. Cost is still a problem because they can get a cheaper DSL service even though fibre is better.
Does 5G pose a threat or opportunity for fibre?
Simon Butler, commercial director, Vumatel: 5G isn't a threat; it's a complimentary service. You do need the deep fibre to achieve 5G rollout. But cost is always a factor. Mobile cost will always be higher than a fixed line. Affluent areas are using over 500GB a month. To do that on mobile would be prohibitive. That dynamic won't change. On a 5G network, you'll have a higher operating expense. So cost will drive adoption in time.
Junaid Munshi, CCO, Cell C: Mobile is still priced more expensively, but also addresses a need where fibre is relevant. If we had more penetration, then we'd see more adoption price barriers lowered. But the opportunity for mobile is the still-low uptake of 4G, so there's still massive room to grow. We recently saw a phenomenal uptake on fixed LTE. We're starting to see momentum building rapidly, in orders of magnitude higher growth rates compared to the core business - five, 10 times faster. So consumers have the demand - it's a choice in what they can get. Fixed if they could, but mobile if they can't.
Is there enough fibre out there, especially as 5G looms?
Junaid Munshi, Cell C: In 2018, the GSMA published a report about mobility forecasting to 2025, with only 3% 5G penetration across the Sub-Saharan footprint. It will take a while. Of course, there will be niche applications. But mainstream fibre has a long way to go.
Juanita Clark, FTTH Council Africa: Our research shows we need about eight times the current amount of fibre to achieve 5G. It needs an antenna every 150 metres or so. We're nowhere near where we need to be in terms of coverage. That's just 5G, not even the other promises.
Is cost limiting the fibre market's ability to expand?
Simon Butler, Vumatel: Cost is a major factor when talking about uptake in certain neighbourhoods. There's no reason why a rural person wouldn't want content, streaming, access to education and so forth. The challenge is how we reach that end of the market. But there's plenty of room to grow. The major metros are covered, but now the challenge is to address the fringes. That's where we see the massive digital divide. But that will come in time.
Henda Edwardes, Vox: Density and commercial viability drive the prices down, especially for smaller business. Those using DSL services aren't attracted to 50MB price packages, so SOHO businesses are bringing prices down due to tremendous uptake of smaller services. When you create that density in the outlying areas, it becomes more affordable for other consumers in the area.
Hugh Sonn, DFA: It's not a lack of focus, but a lack of cooperation in the industry. That cooperation will deliver efficiencies that grow the market. We work with small and large players across the board, but some of the others don't. The biggest driver of price at the moment is cost. If you can't manage your cost effectively, there's no way prices will come down. And cost isn't only about digging up roads to install fibre. It also involves fees paid to municipalities, landlords, maintaining towers and maintenance teams. When you reach large scale, the costs become huge and margins are thin. We're still getting back the investment we made 10 years ago.
Are consumers getting what they pay for?
Grant Parker, GM, SEACOM Business: There's so much smoke and mirrors out there; if you try, you can find anything, maybe even 10gbps. But the smoke and mirrors and usage policies are a nightmare for people.
Junaid Munshi, Cell C: Fit for purpose - it all depends on what's being done. The always-on consumer wants fibre, that's the choice for them. It's a typical teen experience I have every day: "Why is the latency on Fortnite in triple digits? You gotta get it down!" But for a more average lower middle-class 4G consumer, it's not an always-on thing. It's about watching a movie, downloading a file, listening to some music. That's also fine. In an IoT world, it's more about narrowband, but, again, that means different things to different people.
Where to next for the fibre market?
Wayne D'sa, CipherWave: How do we get to those outlying areas? Most of the time, we just want to build and we're not taking stock of how much coverage we have. But the real number is how many are activated. Today, Alexandria already has a service and access to speeds for those content requirements.
Simon Butler, Vumatel: Fibre is capital expensive, so you start with the high LSM, high e-density areas and you start mushrooming out. As you get further and further, you start going down an LSM. Those areas are looking more economically viable, including some informal areas sitting right next to high LSM areas, like Sandton. Here, leveraging existing infrastructure is starting to make that business case make sense.
Henda Edwardes, Vox: It's value-added services that come to FTTH that you can't offer on DSL. Everything becomes online: work, education, content, streaming services - that's where technology is driving. The current generation is totally connected all the time. That's what they require - the quality and availability of service - which at this time is what FTTH fibre provides best.
Grant Parker, SEACOM Business: You have the two main fibre providers that own most of the fibre in the country and that's where a lot of the market is controlled. We can work with many last-mile providers to give customers that experience. But people are oversharing stuff and over-complicating networks. Consumers will react to marketing and price, but they don't know what they're getting at all.
There's so much smoke and mirrors out there; if you try, you can find anything, maybe even 10gbps.Grant Parker, SEACOM Business
Will consolidation help? Is it happening?
Juanita Clark, FTTH Council Africa: Definitely, and that's the sign of a good, solid market. Everyone's talking to everyone - that's the bottom line. That's good business. If the competition commission is savvy, it would encourage that. There's still one really large company out there and the market needs more competition. Coming together would give more muscle for that. Even smaller guys want to get all the small guys together. There's a lot of movement, it's an incredibly exciting market at the moment.