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Video on demand and other services drive requirement for fibre to the home

12 March 2015

Eckart Zollner, Business Development Manager, The Jasco Group

 

Broadband speed, availability and pricing have all made great strides in South Africa in the past few years, largely as a result of the connection of multiple undersea cables on the East and West Coast of Southern Africa. The next challenge was to create infrastructure from these undersea cables to the metropolitan areas, allowing businesses and consumers to make use of the additional, faster and more affordable broadband. The delivery of Fibre to the Home (FTTH) has become an essential next step in the evolution of local broadband, driven by demand for enough stable bandwidth to support intensive new services such as Video on Demand (VOD). Operators are well positioned to leverage off of this demand, supplying not only the necessary broadband connectivity, but also new services that will deliver additional value for customers, and therefore revenue for operators themselves.

 

Consumers today want guaranteed high speed Internet and high volumes of data, ideally without consumption limits, as traditional ADSL connectivity has become highly contended, unreliable and slow. This challenge is exacerbated when high-consumption technology such as video streaming is put into play. The entry of video on demand players such as the recently launched Vidi subscription streaming video-on-demand (VOD) service in South Africa by Times Media Group, MTN Front Row and Altech’s Node is one of the most significant driving factors behind the demand for FTTH. When it comes to delivering the necessary last mile of connectivity, many projects are evident and underway, particularly within the more metropolitan areas of South Africa. However, the challenge with delivering FTTH lies around achieving the required economies of scale. The success of FTTH relies on being able to reach a large number of residents using as little infrastructure as possible, as can be seen in its initial rollout in high-density apartment blocks in Europe, where one fibre cable can be used to service all residents.

 

In South Africa, this proves to be a difficult scenario to replicate, as the higher income target market for FTTH tends to live in more spread out geographical regions. However, gated communities and secure suburbs offer an ideal alternative, and some innovative operators have spotted this gap in the market. In addition, some residents and even small business owners have become frustrated with the progress of FTTH delivery, and are taking charge of the issue by going out on tender to privately deliver such networks to selected areas. The pressure for the delivery of FTTH is driven from both an operator and a user perspective, and this is particularly evident in gated communities, secured suburbs and even office parks.

Some examples include Century City in Cape Town and Waterfall Park in Johannesburg, where fibre rings have been implemented to service residents and businesses in the area.

 

In addition, new developments are offering FTTH as a competitive differentiator to attract new tenants, residents or businesses. The delivery of fibre connectivity is thus an excellent opportunity for operators to deliver fibre networks to entire residential areas, gated communities and new developments. This also enables them to bundle additional services on top of the network infrastructure, offering a complete end-to-end service to consumers from connectivity to equipment.

 

 

Despite the opportunities, operators still face a fairly complex, costly and lengthy process when it comes to delivering the physical fibre networks necessary, not to mention the on-going expense of managing and maintaining these networks. Partnering with a neutral solutions integrator that has access to a wide spectrum of high quality fit for purpose solutions can assist operators to deliver the best balance of cost and quality infrastructure to ensure a solid business case and value for money. In addition, partnering with a provider that can deliver infrastructure and components of infrastructure as managed and financed services can assist operators to break into the market with new services faster and more cost effectively.

Convergence is driving the requirement for greater speed and availability of broadband, including fibre to the home networks. Data consumption is set to multiply exponentially, with the introduction of VOD and other bandwidth-intensive services. Data has become heavily commoditised, and is no longer a driver of profit. In order to cater to customer demand and remain relevant, operators need to look at creating full service, end-to-end solutions, from the fibre network to additional services like data backup and recovery and value-added content. FTTH offers operators a springboard from which to launch these services which will enable them to compete in a data-driven future market.