Fibre to the home (FTTH) is starting to make headlines in South Africa, but while consumers are eagerly awaiting higher broadband speeds, companies argue that it is challenging to develop a sustainable FTTH business model.<\/p>\n
The cost of connecting a home via a fibre connection \u2013 hence the last mile \u2013 is usually the biggest cost, and too high to provide an affordable service to residential users.<\/p>\n
Businesses in South Africa\u2019s major cities have long-enjoyed fibre broadband access from companies like Neotel<\/a>, but to date residential customers had to settle for either ADSL or a wireless solution.<\/p>\n One industry player, however, argues that telecoms operators can make FTTH work as long as they explore non-traditional business models.<\/p>\n Making FTTH work financially<\/strong><\/p>\n According to Gerhard Loots<\/a>, commercial director at ATEC<\/a>, which operates numerous commercial FTTH networks in South Africa, the business models the companies are considering are wrong.<\/p>\n \u201cLast mile connections can\u2019t be completely subsidized by the operator in a developing country. Even in developed countries like America and Australia, last mile FTTH has become a government deliverable,\u201d says Loots.<\/p>\n \u201cIn an ideal world the government should provide these connections as connectivity is a massive national asset, however in the South African context, a nationwide FTTH network expense can\u2019t be justified for as long as we have people who don\u2019t even have the \u201cH\u201d of FTTH.\u201d<\/p>\n \u201cI do however think that we need to tackle the problem with existing South African mechanisms in mind: If you want better infrastructure you have to pay for it.\u201d<\/p>\n