Dark Fibre rollout of affordable telecommunications

The South African telecommunications market has witnessed dramatic changes over the past two years, whose impact will only become fully apparent during the course of the next five years. The combination of deregulation and triple play technology convergence (voice, video and data), has revolutionized the market and will result in a new order, which bares no resemblance to the status quo that has existed for the past century. These changes will dramatically alter the challenges and opportunities faced by regulatory bodies such as ICASA.

To put this discussion in perspective, a brief analysis of past and future telecommunications environments provides a good illustration of the challenges that will have to be dealt with in coming months.

Historic scenario

Telecommunications services in large metropolitan areas were delivered by:

• A monopoly national telecommunications supplier (Telkom)
• The primary product was voice services, pricing was fixed, the customer base stable, customer billing simple and supplier imposed
• Wire line infrastructure was the primary medium for service delivery
• Right of way secured in collaboration with metro city councils who were also responsible for co-ordination of service delivery for a limited number of other utilities (water, power)
• This infrastructure had a long life
• the regulatory environment was stable and simple with very little scope for diverse interpretation
• the city metro was a relatively stable, low growth environment with predictable demands on service delivery

Future scenario

1. Services will be delivered in a competitive environment by multiple service providers including
   • fixed line carriers – Telkom and Neotel
   • cellular providers such as Vodacom and MTN
   • Internet Service Providers such as Internet Solutions, Mweb and numerous other Value Added Networks
   • City Metros
   • Broadcasters and media companies – Sentech and Multichoice


2. Product ranges will be far more extensive (voice, data, video) and will often be bundled. This environment will be characterized by rapid product obsolescence and new product introductions, complex pricing models, high customer churn.


3. Services will be delivered over a variety of media types including wire line (fibre and copper) wireless, satellite etc. Massive increases in the demand for communications bandwidth will necessitate full-scale replacement of most existing wire line infrastructure with fibre optic cable.


4. Each licensed operator is entitled to commission their own transmission infrastructure, which will potentially result in massive environmental damage and societal disruption. Time to market is absolutely crucial to each service provider, but skills infrastructure build is rare and capacity is limited. There is a real risk of unnecessary duplication of infrastructure as larger operators seek to raise barriers to entry.


5. Capacity will be constantly upgraded and the pace of technology innovation will increase.


6. The new regulatory environment is still evolving. Amendments and additions to recent legislation will be frequent. Environmental issues and legal objections from competitors and affected parties will further exacerbate the situation, resulting in uncertainty and an ever changing environment.


7. Metro environments are undergoing huge growth and massive change and city metros with limited budgets are all under enormous pressure to deliver an ever increasing range of services to a rapidly growing customer base.

THE CHALLENGE

While the communications service providers who will compete in this market have differing capabilities, product offerings and business objectives, they all share a common requirement and hunger for more communications bandwidth and access to a fibre optic backbone. Several are capable of funding the construction of this backbone, but most will have to purchase this capacity from larger infrastructure providers.

Even though the market is deregulating, there is a strong probability that barriers to entry will remain prohibitively high for all but the larger incumbents, who will continue to dominate. Their investment in capital infrastructure and ability to cross subsidise profit margins with bundled pricing solutions will make it difficult for smaller entrants to make an impact. Wireless technologies may level the playing field in the last mile, but without access to cheap fibre backhaul, it will be extremely difficult to build a viable service provider business and to create a truly dynamic and competitive market.

THE SOLUTION

The construction of an open access dark fibre ducting infrastructure.

This will comprise a ducting system capable of housing independent fibre strands which are commissioned on an "as required" basis by licensed operators. This dark fire infrastructure should have sufficient capacity to cater for all the current and future requirements of all operators that may wish to provide services customers on that particular route.

The deployment of such a "dark fibre" network will enable users of telecommunications capacity to enjoy logical separation of ownership of communications capability, whilst sharing the same physical right of way access routes with their competitors.

In the construction of telecommunications infrastructure, the major portion of capital expenditure (in excess of 70%) is consumed by the civil engineering component (trenching, access manholes, protective ducting etc). Each trench has the capacity to house fibre to support the combined capacity requirements of all current licensed operators many times over. This portion of expenditure is identical and common to each service provider and could, potentially, be unnecessarily duplicated.

From a city metro or roads agency perspective, a common, open access physical infrastructure would make it possible to meet the access requirements of a diverse range of telecommunications services providers without having to accommodate differing implementation and deployment timeframes and the responsibility of maintaining multiple iterations of almost identical access routes.

CI Ventures was the first company to make the strategic business decision to identify this massive market inefficiency when it decided to invest in metropolitan and long haul fibre optic ducting systems. This has resulted in the establishment of a new company to make high speed broadband connectivity a viable solution for all network operators, service providers and metropolitan council initiatives via a common dark fibre infrastructure.

This company is carrier-neutral and provides a network that is open to all players on equal terms. The company’s only product offering is capacity in it's fibre-optic infrastructure. Telecommunication and value added services will be provided by ICASA licensed telecommunications network operators and service providers. Dark Fibre Africa does not compete with telecommunication service providers, it merely provides a low impact, shared ducting system which enables cost effective sharing of the major cost element of telecommunications infrastructure.