London — Issue no 719 14th August 2014
South Africa's stately progress towards implementing Fibre-To-The Home seems to have taken a turn for the better in the shape of two residents' associations who have taken matters into their own hands. One has appointed a supplier and the other is asking for quotes on delivering fibre-to-the-home to its area. Russell Southwood spoke to Indra de Lanerolle who is heading up the Parkview Residents' Association's fibre project.
The big gorillas of South Africa - MTN, Telkom and Vodacom - are all hovering at the edges of Fibre-To-The-Home (FTTH) implementation. MTN launched a pilot at the relatively small Monaghan Estate just outside Johannesburg in April and it was reported that 60% of the estate's households had signed up. At the announcement of its half-year results, MTN CEO Sifiso Dabengwa said it would expand its fibre network to the homes of its wealthier South African clients.
A lot of people have been guessing that the merger between Vodacom and Neotel will lead to a Fibre-To-The-Home offer but that's as far it gone publicly. Telkom staff have said to de Lanerolle that they will upgrade to VDSL rather than doing FTTH, perhaps fearing that they will cannibalise their own strong DSL base. Also the mentality seems to be that the faster the bandwidth, the more money you can charge for it.
In issue 701 in April we reported that Mark Elkins of the ISP Posix was planning to build his own fibre route from Pretoria to Johannesburg and offer FTTH to households along the route. This plan is still in the works and Posix was a bidder for one of the residents' association contracts.
In June 2014 a new start-up Vumatel said it was planning to raise funds to roll-out FTTH to around 200,000 homes in 100 locations across the country at an estimated cost of between US$188-282 million. CEO Niel Schoeman says that he wants to create an alternative last mile infrastructure on an open access basis. It also secured its first contract from the Parkhurst Residents Association, an area nearby to Parkview.
The Parkhurst residents Association committee reviewed 16 proposals from operators such as MTN, Vodacom, Telkom, Dark Fibre Africa, SA Digital Villages, Atec, Liquid Telecom, ClearlineIS, Posix and Cool Ideas. Security providers Cortac and CSS also submitted proposals.
De Lanerolle says:"I've been going to the FTTH Africa conference for 2-3 years and it was a fairly sad gathering. No-one was doing anything. People would say they'd do it if you paid them but no-one was investing."
The Parkview Residents Association (PRA) set the cat among the pigeons by putting out a tender to supply their area. This kind of "forward leaning" approach where consumer bodies aggregate demand has the potential to shift some of the power away from the sluggish business strategies of the big gorillas. PRA are examining three different options for getting the FTTH service:
1. Build, Own and Transfer.
2. A community owned company: The residents would sign a contract with this company and it would ask the residents to make a down-payment of R1,000 to be used as starting capital.
3. A contract approval approach in which the residents' association approves the contracts with suppliers and in exchange looks to get concessions like free Wi-Fi in public areas and schools.
The PRA already operates its own security company that patrols the public spaces and about 650 out of 1,100 households pay for the service. De Lanerolle says there is some trepidation about the potential monopoly aspect of option 2 but says that the key is to avoiding this is that the PRA must have the ability to sack the supplier if the service is unsatisfactory. But as he says:"I don't know which model we'll go for. We're saying it must be Open Access so I think suppliers like Telkom will ignore it."
In speaking to potential suppliers, they feel that the service should be priced at between US$182-282 a month, whereas PRA's research show that below US$94 is the price consumers have in mind. Speeds as high as 1 Gbps have been discussed but not necessarily at these prices. Comparisons with Kenya are instructive. Jamii Telecom are offering 20 mbps at US$223 a month and Wananchi's high end package for 50 mbps costs US$1,115. As with everything, prices will have to come down, even at the top end of the market.
De Lanerolle is not just your average citizen but somebody who has been closely involved in policy work to get wider Internet access. (see video clip interview on this link: ) As someone who spends a great deal of time arguing for Internet for those who can't afford it, his eyes were opened when he visited Kenya and saw one operator "rolling out fibre in the equivalent of Soweto."
He understands that by itself FTTH will be for the wealthier suburbs rather than the townships but sees it as part of a broader need to upgrade and extend the country's fibre infrastructure.