Update on fibre

deployments in South Africa

& drivers and inhibitors

Tim Parle

Senior Telecoms Consultant

tim@bmi-t.co.za

@timpbmit

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Agenda

National long distance networks

Update on fibre deployments in South Africa

National long distance routes

Source: BMI-T,2014

National long distance routes

including Broadband Infraco

Source: BMI-T,2014

National long distance routes

including Broadband Infraco

and Telkom

Source: BMI-T,2014

National long distance routes:

Planned or proposed

Source: BMI-T,2014

NLD route distances (current and future)

FibreCo

Cobuild

Liquid

SAS

DFA

BBI

Telkom

As built As built plus known

build programme

Source: BMI-T,2014

Source: BMI-T,2014

Cooling off of submarine cables projects, upgrade of

existing systems

Source: ManyPossibilities, 2014

Metro fibre networks

Update on fibre deployments in South Africa

The FTTB/FTTP market heating up

Consolidation in the market

Metro municipality tenders and development

Fibre optic tender

August 2014

Broadband tender

October 2014

3rd party use of fibre

April 2014

MetroConnect

continues

LinkAfrica?

1000km network

build completed in

2013

It’s not all plain sailing: Legal wranglings

Access and FTTx networks

Update on fibre deployments in South Africa

The most exciting news of the year?

Telkom has shown its cards

Source: Telkom,2014

Telkom - the Wildcard in the FTTH market?

Source: Telkom,2014

Telkom FTTH suburbs

Source: Telkom,2014

Changing price of ADSL services (at Telkom rates)

R -

R 50

R 100

R 150

R 200

R 250

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

Average cost per GB of ADSL bandwidth

Min Average Max

R -

R 2 000

R 4 000

R 6 000

R 8 000

R 10 000

R 12 000

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

Average annual cost to user of ADSL service

Source: BMI-T,2014 NB: excluding line and ADSL service costs NB: includes line and ADSL service costs, 12 m TCO

Drivers Inhibitors

FTTH drivers and inhibitors

Global content consumption trends

IPTV: global revenue 11.8% CAGR, reaching $43bn in 2018*

Supply-driven trends, e.g.

Telkom or Vodacom partners with Netflix?

What MultiChoice does

Mobile operators ‘bridging’ with wireless access

Risk-taking by property developers (e.g. Century) and telcos like Telkom**and Neotel (Maboneng)

Business case

Fibre is expensive compared to the cost of a standard DSTV subscription via satellite, plus a broadband service based on ADSL or wireless alternatives.

DSTV’s grip on sport content, and the reasonable pricing of its bouquets, especially when compared against the alternative of a fibre-based connectivity service.

Require high residential density for reasonable ROI.

26 *China, France and the US account for half the global IPTV market.

**Telkom FTTH pilots in Rosebank, Bryanston, Waterkloof, La Palma and Plantations in Durban. 45 customers.Technical trials

underway in three gated communities. Telkom has earmarked end 2014 for commercial launch of FTTH.

Neighbouring countries / Southern Africa

Update on fibre deployments in Southern Africa

Fibre development in Southern Africa

Source: AfterFibre, 2013

Road lengths in neighbouring countries

0 50000 100000 150000 200000 250000 300000 350000 400000

Botswana

Lesotho

Mozambique

Namibia

South Africa

Swaziland

Zimbabwe

Paved

Unpaved

Source: United Nations, BMI-T, 2013

Fibre and optical technology

Update on fibre deployments in South Africa

Evolution of DWDM capacity

0

2

4

6

8

10

12

14

16

18

20

Syste

m c

ap

acit

y i

n T

bp

s

Evolution of DWDM capacity (Commercial systems, single fibre pair)

Coriant Sets Guinness World Records® Title

with the World’s Highest Data Transmission

Rate Over Hollow Core Optical Fiber

Coriant Continues Its Push For Innovative, Bleeding-Edge Research

NAPERVILLE, Illinois, 3 June 2014 – Coriant, a global supplier of

dynamic metro-to-core transport solutions, announced today that

Guinness World Records has certified Coriant's achievement of the

world's highest data transmission rate of 57.6Tb/s (gross rate of

73.7Tb/s) over hollow core optical fiber. This award becomes the

Company's first fiber optic feat to be recognized by Guinness World

Records, which is the authority on record-breaking achievements

around the world.

Record breaking

Source: Image credit MyBroadband, 2014

South African provincial broadband projects

Update on fibre deployments in South Africa

Progress with provincial broadband projects

Legal and regulatory developments

Update on fibre deployments in South Africa

Change in DoC to DoC & DOTPS in 2014

Size of the market:

2 mobile operators since 1994/5

1 fixed operator until 2005

400+ individual licensees since 2008

probably around 40 are operational today

Changing landscape

0

200

400

600

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

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08

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14

Active licenced telecoms operators

At the end of October 2014, four Councilors end their term of office

The Minister of the DOC has told them to leave

No need for a handover

The Minister would like to change the number of councilors from 9 to 5

The CEO may gain a vote on the Council

….. despite the provisions of the ICASA Act, which has only just been amended

ICASA changing shape

Source: Incyte Consulting, BMI-T, 2014

There will be little if any movement on land access and rapid deployment guidelines this year

ICASA has yet to publish reasons for its General Licence Fee Regulations

Despite the expiry of the PAJA deadline in August

ICASA is unlikely to publish any ownership and control regulations for comment for some time and the previous findings seem to have disappeared

Regulatory outlook

Source: Incyte Consulting, BMI-T, 2014

The four pillars of SA Connect:

Digital readiness

Digital future

Digital opportunity

Digital development.

National Broadband Policy: South Africa Connect

SA Connect could languish in a drawer

We will probably talk about “access” in terms of coverage because rural areas

have patchy electricity, no access to devices, and very little understanding of

what the internet is or what it can be used for

Operators also have little incentive to cover these areas because they are

uneconomic

The ambitious speed targets could become largely irrelevant while we decide

what “open access” is and if any licensee/SOC should take the role of the

open access provider

The progress made in so many other developing countries in e-government,

e-education and e-medicine might be noticeable only by its absence

Some more loose ends:

12 Source: Incyte Consulting, BMI-T, 2014

The end of the road (for today)

Update on fibre deployments in South Africa

Summary and conclusions

NLD network consortia being revised and holding back for next wave

Delays benefit incumbent providers

New build submarine projects rationalised & existing routes upgraded

Metro municipality fibre and broadband projects again in vogue

Implications of unnecessary duplication in fibre building coming to roost?

FTTB is hotting up with consolidation in the market

Vodacom & Neotel, DFA & Conduct, LinkAfrica & ???

FTTH made great strides in 2014

Parkhurst is the innovative project

Telkom remain the wildcard

Summary and conclusions

Provincial projects started in Gauteng and Western

Cape

Preliminary steps in other provinces

DWDM technology advances provide new life to old fibre

(routes) and defer the need for investment in new routes

Decision to split the Ministry of Communications and

create the Ministry of Telecommunications and Postal

Service has hampered progress

Long-tail effect

Rapid deployment guidelines on ice

Green shoots for SA Connect

Regulatory uncertainty remains – investor confidence?

45

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