FTTx presents game-changing opportunities for operators, particularly due to the advent of open access challengers to Telkom’s fixed line network and the highly competitive retail ISP market.

DFA and Vumatel were pioneers with FTTB and FTTH deployments, respectively. To a large extent the success of their initiatives caught the market by surprise. Telkom responded aggressively and led deployments until mid-2017, including a good spread across cities and even smaller towns. Vumatel initially concentrated in a few geographies and later accelerated development. The company acquired Fibrehoods and parts of Link Africa’s infrastructure, was later acquired by DFA’s parent CIVH.

As at mid 2019 there are a number of signs of change in the market, which BMIT believes are working together to create a new cross-roads for investors. Firstly, in the residential market, most of the ‘landgrab’ to connect the so-called ‘plum suburbs’ is now complete, and the focus is extending into into lower-income suburbs and secondary and tertiary opportunities. Other symptoms of changes in the market are: re-evaluation of the profitability of some of the largest FNO players, staff cutbacks in some departments and FNOs (like Openserve) cutting back on fibre-related capex and instead focusing on connecting more customers to their existing infrastructure assets. Alternatives wireless access media options are also being pursued for secondary and tertiary markets by ISPs and Telkom alike, and some players are watching the imminent arrival of South Africa’s first 5G network with growing interest on the impact it will have on the broadband landscape overall.

Despite all of these factors demanding due diligence on the part of investors, FNOs and analysts alike are forecasting a seven-figure FTTx subscriber base, revealing that much of the market growth still lies ahead. Telkom’s announcement that it will actively phase out its copper network, and hence DSL, is another driver of growth for alternative broadband access media, including fibre.

On the ISP side we are witnessing robust competition, which is stimulating improved service levels, pricing and innovation. This puts pressure on margins, and a few large ISP players are emerging in a broadband market that has historically favoured ‘volume players’. That said, all ISPs must participate in the FTTx market as a ‘ticket to the game’ along with other access media.

Research focus areas and objectives

The report compares competing fibre and other technologies – fixed and mobile wireless, reviews the key players in the emerging ecosystem, describes key market constraints and models uptake scenarios. This edition of the report features an increased emphasis on (a) the impact of 5G as a potential fibre substitute and (b) the impact of Telkom’s announced end of life of its copper network, including DSL, and the resultant substitution trend. The research and analysis provides a sharp focus on FTTx as a commercial opportunity. The following table of contents highlights the focus areas and objectives:

Preamble

Executive summary

Introduction

  • What is FTTx (background)?
  • Glossary of terms
  • Application driven demand
  • Increases in access technology speeds
  • Increases in access technology demand
  • Access speed increases: UK example
  • Relative positioning of fibre, copper and wireless as access technologies
  • Characteristics of fibre as an access technology
  • Characteristics of fibre and wireless as access technologies
  • Fibre: Reasons given by operators for choosing to deploy fibre
  • Fibre: Examination of cited benefits
  • Characteristics of fixed wireless as an access technology
  • Coexistence of fibre and fixed wireless access technologies
  • Characteristics of mobile wireless (especially LTE and 5G) as an access technology
  • Coexistence of fibre and mobile wireless access technologies
  • Openserve and the decision not to deploy G.fast
  • A bit of history – Resident-driven deployment initiatives (residents “take to the trenches”)

Key issues relating to fibre   

  • FTTx deployment – a massive global trend
  • Global Comparison Snapshot
  • FTTx deployment – a massive global trend
  • FTTx deployment – the trend projected to continue
  • Case Study – Fibre deployment in the United Kingdom (UK)
  • Case Study – Fibre deployment in the United Kingdom II
  • Choice of fibre technologies
  • Choice of cable plant network architecture: Point-to-point
  • Choice of cable plant network architecture: Point-to-Multipoint
  • Choice of cable plant network architecture: The GPON roadmap
  • GPON global deployment
  • Choice of cable plant network architecture: WDM-PON as an alternative point-to-multipoint solution
  • Choice of fibre installation options: Introduction
  • Choice of fibre installation options: Trenching
  • Choice of fibre installation options: Aerial
  • Choice of fibre installation options: Brown water pipes
  • Potential impact of 5G on FTTH
  • Access models and open access
  • Access layers and operator models
  • Four basic models relating to access levels
  • Summary of Open Access and Access Levels
  • Regulatory issues
  • Investment returns and financing
  • Investment returns and financing: Where to next

Market maturity and sources of future growth

  • Connecting the next million – options
  • Overbuilding
  • Connecting the next million – options
  • Low and Medium Income Suburb Deployment
  • Value Added Services (and bundled services)

South African industry and market landscape

  • Overview of operator/service provider typology
  • Physical fibre network (Layer 1) providers
  • Who the Layer 1 Providers are: prominent players
  • FNO player profiles
  • Operator profiles: Vumatel
  • Operator overview: Telkom and Openserve
  • Operator profiles: Octotel
  • Operator profiles: Link Africa
  • Operator profiles: Dark Fibre Africa
  • Operator profiles: SA Digital Villages
  • Operator profiles: Liquid Telecom
  • Operator profiles: Seacom
  • Operator profiles: Vodacom
  • Operator profiles: Vox Telecom / Frogfoot
  • Operator profiles: Metrofibre Networx (MFN)
  • Operator profiles: MTN
  • Operator profiles: Bitco
  • Operator profiles: Cybersmart
  • Operator profiles: TT Connect
  • Operator profiles: Other fibre operators (examples)
  • ISP Ranking on MyBroadband Recent Rating Survey
  • Industry organisations involved in the fibre segment

Pricing and Affordability

  • Residential services (FTTH) pricing and affordability
  • Residential services (FTTH) pricing
  • Residential services (FTTH) pricing (cont.)
  • Residential fibre price vs performance trend
  • Business services (FTTB) pricing and affordability
  • Medium-term historical trend in retail Layer 3 FTTB prices
  • ‘Enterprise grade’ FTTB retail access price trend: BitCo example
  • Illustrative entry level SME prices – Vodacom Busines

FTTx market model

  • Fibre (ME & GPON) connections by customer segment
  • Telkom DSL to Fibre/Wireless Migration
  • Fibre vs DSL: combined business and residential connections
  • Residential fibre versus other fixed broadband connections
  • Residential fibre revenue
  • FTTH – fibre network operator (FNO) market shares
  • FTTH market shares by ISP
  • Business fibre connections (FTTB – ME & GPON) by application
  • FTTB (ME & GPON) Revenue

Research team

The team for this research includes Brian Neilson (BMIT director and senior telecoms analyst) and Christopher Geerdts (senior telecoms associate).

Deliverables and format

The outcomes of the research and analysis will be documented in a rich PowerPoint document with supporting graphics and tables.

Clients will also be entitled to a workshop (in Gauteng or Cape Town), in which the key findings of the report may be combined with topics from other studies at BMIT’s discretion.

Further information

For further information and details on how to subscribe to this research please contact Anita Mathews on 082 466 2317 or anita@bmit.africa