PICK UP THE PACE - JSE MAGAZINE

PICK UP THE PACE

The FTTH Council Africa believes fibre-based internet connections can increase the effectiveness and competitiveness of companies within the global marketplace

If there’s one internet standard that every web surfer would like, it’s a fibre connection. With speeds ranging from a few megabits per second all the way to one gigabyte and beyond, the possibilities are endless. Coupling with this the fact that 90% of all the data in the world has been generated over the last two years will lead one to understand why this has become such a sought-after connection.

However, fibre connectivity is not just for surfing the web. Today it is seen as the fourth utility. Consider how your company will cope without internet connectivity for a day?

Further, good internet connectivity can save companies money as they can move their licensing and applications to the cloud. But in order for this to work they need a stable internet connection.

At home, if you want to watch streaming television, the entire experience is solely reliant on your internet connection.

If you enjoy gaming (SA’s video game industry will be worth R3.6 billion in 2019 – up from R2.6 billion in 2014 and R1.6 billion in 2010) you will need a good internet connection.

FTTH Council Africa CEO Juanita Clark weighs in on fibre technology and investing in the industry.

What is the FTTH Council Africa and for what reason was it formed?
Not long ago, the telecommunications industry comprised a few big national and regional operators. Over the past decade, the industry has been swept up in rapid deregulation and innovation.

The FTTH Council Africa – a lobby group for fibre optic stakeholders – believes that the development and deployment of fibre-based broadband access networks will enhance the quality of life for SA citizens and Africa as a whole, and provide countries with an infrastructure that will allow its companies to increase their effectiveness and competitiveness within the global marketplace.

The council’s charter is to work with African governments, policy-makers, political leaders and investors on why and how high-speed fibre connectivity can be delivered to citizens within the next few year.

In Africa, there is a school of thought that suggests it has bigger problems to worry about than high-speed broadband deployment, but we hold the opposite view. It’s our belief that the answer to our challenges – whether it is a need for skills, education, health services or even just social inclusion – is high-speed broadband. This is why we will continue to work to make it easier for stakeholders to deploy it and for people to access it.

Consider the #FeesMustFall movement. Even if government was in a position to provide free tuition to students, it is not practically feasible. However, if we could give each student a fair internet connection, they would be able to attend lessons from anywhere as if they were in the class. Remote learning will become a widely adopted form of tuition not too long from now. Similarly, with e-health, people in rural communities can be ‘seen’ by a doctor from a city clinic as the technology can do the diagnostics.

Fibre-to-the-home is often touted as the ultimate form of broadband access. Why is this so?
Simply put, bandwidth demand. Things have changed and copper is becoming increasingly outdated. However, this demand runs much deeper than just
basic consumer internet bandwidth. Massive increases in video content, high-bandwidth applications, cloud computing, software as a service and convergence are all driving broadband bandwidth requirements. And although several technologies are available to satisfy this demand, fibre in the local loop – and more specifically, fibre directly connecting the customer premise – will be one of the very few technologies that are able to keep pace with projected increases in the future.

When we consider the fact that fibre has no street value, it allows more throughput, maintenance is easier, it is greener as it consumes less energy, has a longer lifespan and provides improved network reliability, it is the clear winner over any other carrier.

What’s driving the exploding interest in fibre optic deployments?
The complete answer speaks to a few things.
In SA, the Altech ruling ensured that the industry was opened up for competition and in SA alone there are more than 450 telecoms licences issued by ICASA. This has resulted in traditional telecoms companies diversifying their offerings to include that of services – or the other way around – to build their networks.

Mobile operators in Africa are experiencing unprecedented growth on their mobile networks, and in order to accommodate that, many are investing in fibre optic backhaul.

In addition to ultra-fast internet access, FTTH can offer specialty interests such as internet gaming or international television programming. Community and home security are priorities for most residents, and FTTH can support everything from community-based IP cameras to traditional home security.

We recently looked at the potential client on an FTTH network. We estimated that people who live in homes that are worth more than R1 million and are willing to spend approximately 10% of the value of their bond repayment on connectivity make up the FTTH consumer market.

According to the Deeds Office, there are approximately 6.4 million homes registered with a value of more than R1 million. This is a very conservative number for various reasons. However, if you take the 6.4 million potential customers and consider that we have connected approximately only 120 000 homes in the last three years, you’ll begin to see the size of the opportunity.

The good news is that there are more players entering the market, and they are well funded, which will allow them to actively participate.

Our role is to help remove barriers to entry and to support our members with rapid deployment. There is still a lot of work to be done. However, the market is maturing fast and the window of opportunity will not be open forever.

Do you think that wireless technology is becoming redundant?
It is not an either/or conversation. In life we will need both wireless as well as wired technology. They play different roles. While your mobile device ensures an always on, always available connection, smart homes and smart cities are not built on mobile technology, they are built on fibre networks.

We will never be able to be without the one or the other. All wireless technologies rely on fibre as part of its backhaul architecture – good mobile, good WiFi – all of it has fibre in its network.

Consequentially, what are the opportunities are associated with the industry?
In a few years from now we will not call what we have today ‘broadband’. True broadband will come as more fibre networks are deployed and access made easier. More applications will follow as people are adopting a smarter lifestyle.

IPTV (internet protocol television) and interactive television will also become widely adopted. And VOD (video on demand) services will change the way we watch television. No longer will you have a few channels that provide you with movies – instead you will download to your television what you want to watch, when you want to watch it, including documentaries, music and more.

Every day, we create 2.5 quintillion bytes of data – well, more or less as this number also increases on an ongoing basis. Every day an increasing amount of data becomes available on the internet. Each and every one of us is constantly producing and releasing data about ourselves, our families, our work environment, our pets and our children.

The volumes of data make up what has been designated ‘big data’ – where data about individuals, groups and periods of time are combined into bigger groups or longer periods of time. Internet companies are awash with data that can be grouped and utilised. In this there are massive opportunities. In our industry we call data the new gold.

IoT or internet of things is the inter-networking of devices, machines and buildings. Anything that can be network connected – which really is pretty much anything – will enable these objects to collect and exchange data. This is opening brand new markets that did not exist a few years ago.

The biggest opportunity still remains in the deployment of fibre networks to connect businesses, homes and mobile towers. We have hardly reached satisfactory levels of LTE and mobile operators are already pushed into 5G. And 5G needs fibre – lots of it.

In telecommunications one cannot avoid the fact that size does matter. It is an expensive business. Contenders need to be large enough and produce sufficient cash flow to keep investment in networks going. However, the business case stacks up and we see large numbers of banks making significant investment in telecoms operators and ISPs. Our members are continuously looking for investment and we are always talking to some or other bank about the markets and forecasts.

Any business operating in Africa knows that infrastructure investment is vital. On the one hand, investment into broadband could deliver the biggest return in the history of the continent. Conversely, SMEs need to exploit the benefits that broadband and the digital economy can offer to create a buoyant and vibrant commercial sector.

It is also in these challenges that we find exceptional opportunities. The continent will see considerable investment over the next few years and the early financiers will reap the rewards in a few years. While there is still a long way to go, we have already seen some market consolidation and believe this trend will continue.

Is this why you started the annual Investors Day?
Each year in October the FTTH Council Africa hosts a conference aimed at its members. It is well attended but naturally it is made up of a lot of jargon and technical conversations. In addition, the conference was very much focused on B2B. While some potential investors attended, they did not feel that they could meet the right people and network. The platform simply did not work.

Since we were doing a large amount of engagement with potential investors we realised that this was also a critical platform for our members. We further acknowledged that there are a lot of potential investors that want to learn more about the industry but they were unsure where to find reliable information. The industry is very new so information – research and statistics – is still limited.

As an association we have access to both parties – the operators looking for investment and the potential investors looking for a service provider to invest in. We felt that we were well placed to facilitate a role in this regard.

We further realised we had to change the format of the conference. Firstly, we started getting operators on board as exhibitors. This makes it easy for investors to identify the market players in a single location. We then decided to do a workshop aimed at investors where we conduct an honest SWOT and allow for Q&A. We also help set up meetings where requested to do so – or facilitate introductions.

In addition, we plan to formally introduce a working group that is focused on investment. We have identified a few serial entrepreneurs with significant investment in the industry and they’ve agreed to work with us in an advisory capacity. They will host to second annual Investors Day in August in Johannesburg. Interested parties can contact me directly at juanita@ftthcouncilafrica.com.


Eco Court, Suite E, 340 Witch-Hazel Street,
Eco Park, Highveld, Centurion, Gauteng
Tel: +27 (0)12 655 2009
Fax: +27 (0)86 579 2606
www.ftthcouncilafrica.com