Q&A: MetroFibre Networx

Gary Webster, head of wholesale at MetroFibre Networx, on expanding connectivity and the impact it can have on companies and society

Q&A: MetroFibre Networx

Q: What is the current state of SA’s fibre market?
A: The major centres are quite saturated with fibre operators and high competition, but outside of that there is still opportunity for tremendous growth. Getting fibre to more remote areas remains a challenge due to the high infrastructure cost, but the demand for bandwidth is growing exponentially.

Fibre delivers the content of knowledge, enhanced communication, collaborative interaction and a climate for growth. Right now, the entire industry of private fibre-infrastructure providers faces the same challenges in terms of local government restrictions and backlogs of wayleaves, not to mention the onerous and escalating cost of obtaining wayleave applications from some local councils. A wayleave is a legal requirement giving permission from the owner of property/land to have building works undertaken on the land, and without it no fibre infrastructure development can commence.

The hope, therefore, is that local government embraces fibre-optic roll-out, which will result in the economic and social well-being of their residents and entrepreneurs. A fibre-connectivity community has the potential to enable the efficient and cost-effective delivery of services, such as health, education and social upliftment. The majority of businesses – of all sizes – depend on this.

Q: How close is SA to universal coverage in the metros and outlying areas?
A: Last-mile fibre connectivity remains a challenge in outlying areas, as it is often not feasible. However, connectivity to a central point within small towns is in progress, from which distribution to outlying areas will take place, utilising wireless technology. The fact that the main speeds to these central distribution points or cellphone towers are faster and more robust inevitably translates into better-quality connections, even in outlying areas. Connectivity is also set to become cheaper as the cost of data decreases.

Q: How is the growth of FTTB affecting the cost of the service?
A: The cost of FTTB has come down dramatically – and with the commensurate increase in bandwidth, clients are now getting a lot more value and speed for their spend. With fibre reliability and speeds, cloud computing has been well and truly unleashed.

In fact, much of the fintech innovation and disruption in traditional business models that we are seeing today is made possible by the capacity, speed and reliability that fibre provides.

One important note to make for SMEs is that the difference between an FTTH and FTTB package is more than just the pricing thereof. Some small businesses opt for an FTTH package to save on costs but may overlook the service and latency limitations that come with it.

Q: What has your experience been in terms of growth in the fibre market?
A: MetroFibre started operations in 2010 as a fibre-connectivity provider to medium-to-large SA companies. Over the past nine years, we have expanded our service offering to both residential and corporate customers in line with our strategic objective of being a diversified operator. In 2015, we launched our FTTH offering, focusing on the northern suburbs of Johannesburg and Pretoria in the Gauteng province. The FTTH segment has seen homes-passed growth in excess of 216% CAGR and connected-homes growth in excess of 151% CAGR since inception.

In the FTTB segment, MetroFibre has grown its services from providing Layer 1 and Layer 2 services to include Layer 3 services, which are provided to wholesale and retail customers nationally. We have strategically developed our FTTB competency to service blue-chip customers and created a niche in the financial services, with both local and international corporates among our customer base.

Q: What has the investor interest been?
A: In November 2017, MetroFibre’s shareholders and management embarked on a capex expansion drive that would see the company invest more than R2 billion in our core network, to enhance our FTTH and FTTB offering.

To support the capex expansion plan, the current shareholders, including Sanlam Private Equity and African Rainbow Capital, agreed to contribute additional equity capital and attract a new investor to MetroFibre’s shareholder group.

In March 2019, STOA – a joint stock French infrastructure investment firm owned by Caisse des Dépôts and Agence Française de Développement – announced a 23.08% equity investment in MetroFibre. (STOA has a capital base of600 million earmarked for equity and quasi-equity investments in the infrastructure and power sectors of developing and emerging countries, with a strong focus on Africa.) This successful capital raise will enable us to further expand our infrastructure and capabilities off an already strong base, while growing rapidly to achieve mass scale in a highly competitive and fast-paced telecoms sub-sector.

Q: MetroFibre owns and manages the country’s first globally compliant carrier ethernet 2.0 open-access fibre network. What does that mean?
A: In a nutshell, carrier ethernet 2.0 (CE 2.0) is a next-generation network protocol that provides improved access, scalability and reliability. Our CE 2.0 open-access fibre network enables us to connect more than 190 cloud, application, voice and internet service providers directly with our customers.

We have a strategic partnership with national data centres, which means our clients have a direct link to cloud operators, and a single point of contact in terms of managing their services.

This partnership delivers data connectivity and Layer 2 services, data centre express and cloud operators, all with local servicing, 24-hour support on call, local billing and a dedicated servicing team on the ground.

All the biggest players in the world operate on this level, and it’s a best-of-breed standard, so it’s a massive differentiator for MetroFibre in terms of how our network operates, compliance, security and so on.

Q: Fibre is often described as a game changer. What does FTTH enable home users to do that they couldn’t do before?
A: Fibre not only provides access to the internet but the low latency and high bandwidth are also enablers for cloud computing, movie and music streaming, interactive gaming, online education, automation of household appliances, faster mobile access and many other services not possible without high-speed connectivity.

Previously, internet connectivity into a house was used for surfing the internet, checking mails and Skype. The options were LTE and ADSL connectivity, where the former was quite expensive and the latter quite slow. Both LTE and ADSL are limited in streaming capabilities from a cost and speed perspective.

Fibre connectivity has opened a whole new spectrum of entertainment and security applications, enabling households to connect multiple devices and subscribe to streaming entertainment services, in addition to accessing live camera feeds of security footage from their home. From an energy perspective, households can now control their power usage by remotely controlling devices such as fridges, stoves and washing machines, or even keep track of how much energy their solar system is generating.

When completing an installation within a residential community, it pays to consider all the applications and services. For example, in a residential complex, a fibre line that connects individual units to the gate intercom can double as an intercom system between residents on the estate.

Likewise, security footage can also be shared with an off-site security control room. However, privacy remains a gold standard that operators need to be sensitive to, which normally requires buy-in from all members within the complex.

Q: How has FTTB changed the way that businesses operate?
A: For business, the big game changer has been cloud computing, which is now a reality due to fibre connectivity, speed and bandwidth. From a business perspective, investment in the cloud is cheaper than ploughing money into traditional hardware. Physical infrastructure requires ongoing updates when a business wants to scale or develop, whereas the cloud offers a more cost-effective, agile way of testing, implementing and scaling services.

Enterprises are transforming their communi-cation services by migrating on-site telecoms infrastructure to cloud-based resources, which helps reduce investment and operational costs while providing agility, flexibility and productivity.

At the same time, to keep up with the pace and complexity of technology, there is a need for trained and highly skilled human resources teams. Hence the role of the CIO in unlocking and directing the technological direction of the business has become more critical than ever.

Q: Fibre enables technologies such as VoIP. Are we reaching the point where businesses are swapping their landlines for fibre-enabled phones?
A: In the modern business world, video conferencing and VoIP are almost expected. Adoption of VoIP does translate into cost savings. It means that the business wouldn’t need to invest in an on-site PABX system, for example. It also benefits businesses through the use of VoIP mobile applications and enabling an increased uptake of remote working.

It is still considered a relatively new concept that challenges traditional processes and will require training and educational efforts aimed at making users comfortable with these platforms over traditional solutions.

By Mark van Dijk
Image: Haleema Rawoot