Convergence cuts capex by 50%: F&S
Network convergence offers communication service providers (CSPs) the opportunity to reduce their capex and opex in the long-term, with cost savings projected to be as high as 50% and 35%, respectively, from legacy networks.
This is according to market research firm, Frost & Sullivan (F&S).
F&S noted that the market for converged networks in Sub-Saharan Africa is still at an early growth stage as operators begin to invest in infrastructure.
The research firm said that an overview of converged networks in Sub-Saharan Africa, found that the number of subscribers is set to expand from 1.1 million in 2010 to reach 21.4 million in 2017. The research covers South Africa, Kenya, Uganda and Nigeria.
“With improving bandwidth, CSPs are able to expand their revenue-generating opportunities by providing content-rich offerings such as TV and video services of IP networks,” said Frost & Sullivan’s ICT research analyst Lehlohonolo Mokenela.
“This trend is being reinforced by customer demand for ubiquitous connectivity, as businesses and consumers seek on-the-go access and digitalised resources.”
It is expected that the uptake of converged services will be driven by the increasing broadband penetration rate in Sub-Saharan Africa, thus motivating CSPs to invest in developing broadband infrastructure.
By providing last mile fibre solutions, such as FTTP, CSPs are preparing to offer triple play packages that include IPTV, F&S says.
It cautioned that, while migrating from legacy networks to an all-IP network will provide cost savings in the long-term, it can be very expensive in the initial stages. CSPs are therefore only gradually migrating to all-IP networks, more so as the business model for network convergence is still uncertain.
“CSPs are still unable to estimate the ROI from deploying a fully converged network, as the business model for convergence in Sub-Saharan Africa is still uncertain,” explained Mokenela.
“As a result, the move towards convergence has been gradual, with service providers offering broadband as stand-alone services and not as part of a bundled offering.”
With improving bandwidth, Mokenela urged CSPs to take advantage of increasing broadband uptake and position themselves to provide converged services.
“This will require investment in network infrastructure so that operators can provide content-rich multimedia services that will boost the uptake of their converged services.”
“A gradual shift to converged networks, using IMS solutions, will aid CSPs to gain a foothold in the market while preparing for a complete migration to next-generation networks (NGN),” Mokenela said.
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