Emerging markets should look beyond the home to cash in on FTTH

20 Jun 2014
00:00
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Emerging markets pondering whether FTTx is worth the effort and investment should think beyond simply providing superfast fixed broadband to homes - and, ideally, should turn to governments to help them get started.

That was the advice Dr. Bernard Lee, president of FTTH Council Asia Pacific, offered to delegates from emerging markets during the CommunicAsia Summit Thursday.

“Look at your market, and if you don’t see a customer base, try establishing a PPP [private-public partnership] with the government,” Lee said. “It’s a long-term investment and there’s very high capex involved, so you’re looking at return of investment in seven to ten years, minimum. So the best model is a PPP. It’s been successful in Malaysia and New Zealand.”

Lee also advised emerging market players to think outside the paradigm of straight broadband connectivity for homes in their business plans.

“FTTx infrastructure can be used for consumer broadband, but it can also be used for connecting base stations - especially mobile-centric countries that are deploying LTE,” he said. “It can also be used for applications such as security, education and e-government. Use it as far you can milk the network and capitalize on that investment.”

According to FTTH Council Asia-Pacific, there were 92.7 million FTTH users in APAC at the end of 2013. That’s just a third of the overall regional broadband market, which is still dominated by DSL, but Lee said that will change by 2017, when FTTH users finally outnumber DSL users in the region.

Much of that will be driven by government-led NBN initiatives such as those in Singapore, Malaysia, New Zealand and Australia, although China and India are expected to be major contributors due to their sheer population size, Lee said.

Amrish Kacker, partner at Analysys Mason, said that government support would be a key factor in any FTTH project in developing markets, although such support can take different forms - full government funding, PPP, or financial incentives such as tax breaks, subsidies or USO schemes.

“The key thing is to have a national broadband plan,” he said. “That’s the first step.”

Even for developing countries that embrace FTTH plans, operators will have their work cut out for them. FTTH still faces numerous rollout challenges, starting with the high cost. Kacker said that while FTTH deployment costs are lower in emerging markets in Asia compared to developed markets, this is mainly due to cheaper labor costs.

“If you look at it in terms of the capex per subscriber, FTTx is by far the most expensive broadband technology option.”

Other challenges include civil works and construction barriers and even the competency of technicians charged with installing the equipment,” said Lee of the FTTH Council.

“Even something such as proper cleaning of connectors is something technicians get wrong,” Lee said. “Lack of cleanliness is responsible for 90% of reported faults, but we see cases where people use tissues or their fingers to clean the connectors. There was one case where the man licked it.”

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