With the imminent launch of its first commercial fibre-to-the-home (FTTH) offerings, Telkom is planning to shake up the way Internet service providers sell broadband on its fixed-line network as well as the way consumers buy fixed broadband services.
Telkom CEO Sipho Maseko tells TechCentral that the launch of FTTH will offer the company a testbed for providing services on an “open access” basis and this will be extended to the company’s traditional copper-based digital subscriber line (DSL) network over time.
In telecommunications, open-access networks involve the separation of the infrastructure and services layers. Though often favoured by new entrants, the open-access model is often shunned by incumbent operators, which tend to favour a more vertically integrated approach where they provide most if not all services to end-user consumers.
“FTTH will be launched as a wholesale product on an open-access basis, not only accessible to Telkom Retail,” Maseko says. “How will that impact copper? We still need to unscramble that omelette.”
In practical terms, what it means is that consumers will be able to purchase all the components of their broadband service from their Internet service provider for one fixed monthly amount, without having to buy any services directly from Telkom, Maseko says.
“This has huge ramifications for our copper network,” he says. “But there needs to be a quid pro quo. It mustn’t harm the firm or destroy the goose that lays the golden eggs. From the start, we will ring-fence fibre and see how the market responds to it. We will then reflect on this, on how we deal with copper going forward.”
He says Internet service providers must also come to the party and “commit to demand”. FTTH requires “mega investment” by Telkom and service providers need to play a role by identifying areas where there is demand for such infrastructure.
Tied to this, Maseko has promised a range of wholesale price reductions in the coming months. This is linked to the announcement of the company’s wholesale FTTH pricing, which will be made some time in October.
“We are looking to rebase our prices,” he says. “Hopefully, by the end of October, we will have made progress.”
Already, Telkom has cut the wholesale price of very high-speed DSL, or VDSL. TechCentral last month reported that Telkom had reduced wholesale VDSL fees by as much as 37%.
The company’s chief technology officer, Alphonzo Samuels, said at the time that the price cuts to Telkom’s wholesale 20Mbit/s and 40Mbit/s VDSL products were made possible by economies of scale as the VDSL network is expanded to more consumers and by the company “taking a future view of uptake on the higher speeds”. — (c) 2014 NewsCentral Media
