Wiring for the future

Fibre is the new heroin for bandwidth-hungry South African businesses and consumers. A piece of dark fibre can be rented for a few hundred rand per month and lit up to whatever speeds you're willing to pay. Clearly we've come a very long way from the early days of Diginet lines. But, apart from some high-profile areas that have it, fibre remains tantalisingly out of reach for many users of mobile broadband and ADSL. What can the channel do to help?

The channel's history putting in connectivity solutions harks back many years notes Grant Parker, head of business segment at Seacom.

"It started with the analogue connectivity and moved on to ADSL and digital. One of the biggest challenges to fibre is just getting it put in but everyone is in the same boat there."

Simon Butler, executive head of carrier and connectivity, Vox Telecom, says the first push came from the introduction of ADSL.

"It kicked off in 2003 when ADSL entered the market and has been driven by content: Facebook, Youtube and other services. In the last few years before fibre to the home, it was mobile broadband that drove the biggest growth."

Butler says fibre will be driving the next wave of growth. "Fibre's greater capacity enables more cloud services certainly, and further down the value chain it improves quality of service on solutions like VoIP," he says. "So there's been a spike in the demand for VoIP services as customers cut copper out of their networks. Also, the prices for fibre has come down so that local hosting is more realistic."

Kevin Hall, national sales manager for Elingo, says the call centre industry will also benefit from more widespread fibre.

"In the call centre industry, a lot of providers are going for the home agent option. In the past when we used ADSL, we had to use one large connection for the voice and another for the web application. With fibre online, the user can access proper applications in the background and start getting more complex business functions via the call centre. They were constrained beforehand. As South Africa goes the BPO route, no one wants to buy more office space and you start thinking about how you can go the virtual route: home agents, call centres and that conversation."

Levelling the playing veld

Robert Marston, global head of product, Seacom, says South Africa will emulate the overseas progression. "If you look at what's going on, we will be no different from the rest of the western world: cloud services, voice and data are converging onto a single data connection. You obviously need a scalable data pipe all the way down to a client's premises that can cope with a very high speed connection when you need one."

Brenden Pronk, chief commercial officer at Comsol, thinks we have caught up already. "Traditionally, Comsol has always been in the middle of all of this. We started as a dialup business and then Diginet became a solution of choice where we sold 64k links for R24 000 per month. But Diginet didn't grow as fast as the orders we were getting so we put in wireless services using unlicensed spectrum. They weren't always the most stable but we needed to support the growth of Diginet. We've almost come full circle: our strategy is again how to enable all this fibre. We used to say 'imagine if we had an undersea cable!' Now we have an undersea cable. 'Imagine if Google was here!' Now Google is here. What we're lacking is the ability to access all of this content. I think we've caught up with the rest of the world. In some cases we're actually ahead of some markets, for instance in New York where they have fibre networks but have to access them with cable connections."

When a Fibre To The Home (FTTH) connection is hybrid, then technically it's not true FTTH. Frits Haas of the FTTH Council explains: "There are many priorities from the council's point of view but from a technical perspective, what we're trying to do is standardise what it means when you sell FTTH or FTTX. I have to mediate when an ISP is selling what it calls FTTX but technically there's copper between the road and the home. We're there to recommend a standard for construction and from a technical point of view."

Taking advantage

How then should resellers approach this opportunity? Carriers are certainly not going it alone – Seacom's Parker says he wants the majority of Seacom's business through resellers: ""Our goal is to have 70 to 80% of our business through resellers and partners; we already have 195 partners signed up and we have agents. What we want to be is the enabler for those services."

Vox Telecom's Butler says that from a consumer perspective it does present challenges and opportunities for the reseller channel.

"Resellers may have an existing base where they've created a niche – selling and supporting DSL for example – and that might disappear overnight. You might get competitors advertising better and faster and the customers take those offers up. On the other hand, there are traditional providers who can change their offerings overnight from small IT shop to substantial service. One opportunity is in-home support. People want their smart TVs connected, their tablets connected and WiFi isn't good enough. Our biggest challenge is getting to our customer base before everyone else does."

Actually replacing ADSL with fibre is not as easy as it sounds though, notes Seacom's Parker.

"We do need to step back a bit. If a reseller needs to resell an ADSL line, there is most likely a copper line into that home and it's just a DSLAM configuration to get connected. Fibre is different: every single home that wants fibre has DSL already. There are a finite number of operators building fibre networks and it's expensive stuff – R600-R800 per metre – just to put the trench and ducts in. To get that into homes, you have to physically drill through people's walls, connect a termination box and put an ONT (Optical Network Terminal) in there. This might not be one company doing this. One will put the fibre down, another will come in and do the active equipment and a third which is probably an ISP that would come in and drop another router behind the ONT. That's three touchpoints and it's almost the most efficient way of doing it. The industry has to come up with an efficient way to do 'home drops' as they are called."

Time to returns

The other obstacle is the cost recuperation. Parker says the current model for fibre is in some ways similar to the launch of mobile in South Africa.
"We are repeating history. MTN and Vodacom launched and covered rich areas first. The commercial model for a tower is straightforward: an operator spends R1 million on a tower and gets its money back in two to three months. But a fibre network, if you do your job well and construct it well, you might get your money back in seven years. So of course you will target areas where people pay more. But it's changing. From R24 000 per month for a Diginet line in the early 2000s, you can now get a piece of dark fibre for R300pm and you can light it up to whatever speed you want."

One thing is clear: end users, be they businesses or home-based, will need help putting in fibre solutions. Perhaps resellers could learn from the DSTV model: a countrywide network of installers who can get it all done for some margin.