By Jennigay Coetzer – Business Day, 29 July, 2011

A lot of fibre infrastructure has been been built in metropolitan areas over the past couple of years in South Africa, but it is expensive for service providers to connect customers to it. Some ISPs are leasing infrastructure from Dark Fibre Africa, which lays the cable in its ducting and the service providers light it up and use it to provide services.

But, it can cost more to build a fibre extension to deliver a service to customers’ premises than they can afford or are willing to pay, says Stuart Hardy, MD of Africa Independent Network Exchange. On top of this, lead times for a fibre connection can be as much as a year.

So ISPs are opting to use Neotel’s fibre infrastructure to connect to customers over the last mile or extending their fibre networks with a wireless connection. He says fibre infrastructure needs to be developed further before it will be possible to connect large numbers of customers to it.

Until then wireless, Diginet leased lines and microwave will continue to play an important role, although the need for it will decrease every year in urban areas. He says infrastructure sharing would provide better margins and lower the cost to the customer, but service providers tend to view owning their own infrastructure as a competitive differentiator.

“But the customer does not care who owns the infrastructure,” says Hardy. Craig Holmes, communications and utilities lead for Middle East and Africa at IBM says there are a lot of different players building telecommunication infrastructure, but they are all working in isolation.

He says a lot of telecommunication infrastructure could be shared, as is happening in other countries. “But in SA the mindset of the operators is still to own their own infrastructure.”

IBM provided the infrastructure that supported the scoring, statistics and website transmission of the recent Wimbledon Tournament using high-speed fibre on a on-demand basis. This involved dynamically provisioning systems capability as and when needed from its global data centres.

He says the infrastructure to do this exists in South Africa to do this, but connecting customers to it is a challenge. The regulator Icasa is pushing to unbundle the local loop, which will open up Telkom’s last mile infrastructure to other market players, and is in the final stages of deciding how to do this, says Holmes.

This regulatory process allows multiple licensed operators and service providers to share and provide services over the physical wire connection between the local telephone exchange and the customer, which is known as the local loop. This has already happened in many parts of the world.

Infrastructure sharing is also gaining momentum among the mobile operators and specialist companies are emerging that will take over and manage base stations and let out space to multiple market players. Ten years ago, the number of base stations a mobile operator owned was important, because coverage was a market differentiator.

“So you get competing towers right next to each other,” says Keith Boyd, sales and marketing director at Eaton Towers. He says owning towers is costly in terms of maintenance and running costs, and gives rise to environmental issues.

“If multiple operators share a tower they will only use two or three litres of diesel per hour between them instead of per operator.” He says 90% of mobile towers in Africa are reliant on generators for power.

In India, cellular calls cost three to four cents a minute, due to the economies of scale that have been achieved, and tower sharing has been a significant contributing factor. Locally, American Towers recently purchased Cell C’s 1,300 towers and committed to funding more in the future.

Cell C subsequently dropped its data prices and Vodacom reacted by doing the same.
As prices come down, users will consume more data capacity, creating more demand and the need for more towers. The next generation Long Term Evolution (LTE) 4G mobile technology will also require more towers.

So the operators have to find ways to reduce costs, and tower sharing reduces capital expenditure. In other parts of Africa, Nigerian operators have been sharing towers for the longest through Helios, a local tower company that builds them and lets out space on them.

Tower sharing is also going on in Uganda, Tanzania, Kenya, DRC, and Ghana. In Ghana, Eaton Towers provides power and security for towers it manages for Vodafone, which are shared by MTN, Airtel, Vodafone, Tigo (Millicom) and others in Ghana.

“This reflects the willingness of operators to share.” He says operators also sometimes swap tower space between them on a more informal basis.

Jennigay Coetzer is a freelance business and technology journalist and she writes regularly for Business Day. She also runs media training and writing skills workshops, and is the author of A Perfect Press Release – or Not?, a guide to writing and distributing effective press releases, an electronic version of which can be downloaded free from her website: www.jennigay.co.za.

Comments are closed.