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Fibre to the home (FTTH) could reach more than 360 000 active subscriptions in South Africa by 2019, with the majority of the growth coming from subscribers in residential suburbs,  where much of the recent action has been focused.
This is according to a new report from BMI-TechKnowledge, entitled “The Fibre Land Grab: the Status of FTTx in South Africa”.
FTTH deployment and uptake has gained a major lift in 2015, with impetus from the initiatives started in communities such as Parkhurst, and the advent of open access models incentivising internet service providers to offer attractively priced broadband services over these fibre links. Telkom’s launch of Openserve – with aggressive new wholesale FTTH pricing – fits in with this trend.
Accordingly, FTTH impetus has shifted from gated estates to suburbs. “Prior to 2015, gated estates had seen a higher rate of FTTH deployment and service uptake, but without achieving a significant presence in the broadband market overall,” says the report’s co-author and BMI-T research director Brian Neilson. “Across South Africa, there are also far more houses in suburbs (15-million) than in estates (420 000) although estates, in general, have an obvious economic attraction of higher uptake and lower per-unit costs.”
Telkom is proceeding with an aggressive strategy to win the FTTH deployment race, with a particularly strong move in suburbs, but also in estates. Vodacom is by far the most aggressive in terms of the sheer number of estates deploying, but Smart Village (recently acquired by MTN) has two very large estates, giving it a significant market share of both “houses passed” and active subscriptions.
The report unpacks deployments in individual suburbs and estates on a player by player basis, as well as projecting actual subscriber uptake levels. BMI-T analysed the plans and implementation status of all the key players in 448 areas across South Africa, consisting of 368 suburbs and 80 gated estates. These areas contain more than 500 000 houses, with the number of ‘houses passed’ increasing with deployment over the forecast period. Some key observations include:
* Of the 15 most prominent ‘fibre builders’ identified, seven made up the majority of the deployments.
* Telkom’s aggressive rollout plans are clear from the analysis of areas completed vs planned or in progress. After completion of the rollouts, Telkom appears to catch up, with a similar number of areas (217) to that of all other players combined (232).
* The majority of the fibre deployments completed and underway use GPON and trenched fibre technologies. Active Ethernet and aerial fibre are the lesser trend. For most of the players, funding rather than consumer demand is the primary constraint.
* The report talks about community activism (“suburbs taking to the trenches”). Residents are encouraged by success stories to band together and drive deployment. For example 35 residents associations followed up on the Constantia process and the site content (steps to follow, providers to contact, RFP content, notifications) is openly available for replication.
Prices are coming down so fast that there is a real potential to undermine the business case for new deployments. This could slow the pace of investment in new suburb deployments, resulting in a lower forecast scenario. In such a scenario there would typically be more VDSL connections, enabled by FTTC (fibre to the curb) rather than to the home. However, the general trend is still one of FTTH being the new “land-grab” on the local telecoms scene, and falling prices will only serve to stimulate subscriber uptake in areas that do have the FTTH option available.
Video on Demand (VOD) is expected to be a key driver of FTTH uptake levels. In a previous statement, BMI-T reported on its South African VOD penetration forecasts, which ranged from 692,000 to 917,500 active user households by 2020, illustrating the low-road and high-road scenarios, respectively. Based on the new FTTH forecasts, it is clear that most of these VOD households will still be using a combination of DSL and wireless technologies.