Content hastens adoption of fibre to the home
Before the explosion in locally available online content from rental and subscription videoon-demand (VOD) services, telecoms providers found themselves in a catch-22 situation — without a material need for high-speed fixed-line broadband services, consumer demand for fibre to the home (FTTH) remained muted, and without adequate demand, over-the-top content providers remained noncommittal to the local market.
STATUS QUO
What the industry needed was a major content play that would disrupt the status quo. Following a few nonstarters, the industry got its shot in the arm in August 2015 when Naspers bet big on VOD and launched ShowMax. US-based paid-for streaming service Netflix then launched locally in 2016, with VOD solutions provider Discover Digital recently entering the fray with its Digital Entertainment on Demand (DEOD) service.
The significance of VOD and internet protocol TV to the success of FTTH is borne out in customer usage stats shared by Mark Slingsby, director at RSAWEB, which show that YouTube currently dominates traffic over FTTH, followed by Netflix, Facebook video and then ShowMax. “The majority of users opt to stream this content in full high-definition (HD) format,” he says.
Around the same time that ShowMax was making its move, the FTTH land grab was gaining momentum. Incumbent mobile operators were staking their claim with verticallyintegrated offerings, while Telkom sought to shore up its dwindling ADSL subscriber base with FTTH. However, the parastatal was late to the party, giving an opportunity to independent open-access providers such as Vumatel, Frogfoot Networks, Metrofibre Networx and Octotel to secure prime high-density upper income suburbs in Joburg, Cape Town, Pretoria and Durban.
SUBSCRIBERS
The two trends advanced in unison, with the past 12 months proving to be the tipping point as active FTTH subscribers more than doubled since March 2016, recently breaking the 20,000 mark, with 415,700 homes passed as at March 2017
(compared to 196,000 in March 2016 and just 60,000 in March 2015, according to stats released by Africa Analysis).
According to Slingsby, about 50% of RSAWEB FTTH customers opt for a 10Mbps line, with the remainder selecting faster options. “We are, however, seeing a trend whereby customers on more conservative packages elect to upgrade after realising the extent of content available, especially as there’s a marginal cost escalation for every 10Mb increment in line speed.”
This HD content glut is, however, posing challenges for providers, with huge spikes in demand from 5pm to 10pm on weekday evenings. Providers are already looking at ways to balance load without implementing fair use policies that water down the FTTH value proposition.
“We’re finding that a mix of daytime business customers and night-time home users provides this balance.”
However, Slingsby adds that the industry is expecting another surge in bandwidth demand as HD screens are replaced by 4K resolution ultra-
HD options. Overall demand is also expected to rise as consumers begin accessing other web-based services.
“For example, gaming is popular due to fibre’s low latency and stability,” he explains. “The proliferation of FTTH is also accelerating the adoption of triple play solutions — the provisioning of internet, video and voice over a single broadband connection. Customers are increasingly porting landline home phone numbers to voice over IP (VoIP) and there’s a distinct increase in the number of WhatsApp voice and other VoIP and video calling services via smartphones terminated over our fibre network.”
Jacques du Toit, CEO at Vox, adds that “the more stable, reliable connectivity offered by fibre makes accessing tools such as Skype and cloud-based services easier and quicker, which will fast forward the notion of the remote workforce”. This will help drive greater collaboration between teams or individuals in geographically disparate locations, helping to grow the work-from-home trend in SA.
SERVICES
Additional services include a growing number of in-home Internet of Things (IoT) networks that control automation of geysers, lights, home appliances and air-conditioning systems.
Du Toit is particularly bullish on the market’s potential for growth, predicting that FTTH subscribers will grow exponentially from the about 20,000 today, to 1-million by the end of 2018 and, potentially, 2.5 to 3-million by 2020.