Dark Fibre Africa talks 5G opportunity

The fibre densification needed for 5G is great news for infrastructure players like Dark Fibre Africa (DFA), which are already preparing and testing for the business boom 5G is likely to bring.

“They say that when 5G comes, your fibre densification will be between five and 10 times more; so for every base station that you currently see, there will be eight to 10 of those around. That will all require fibre, so we will be digging up streets for a while,” Thinus Mulder, CEO of DFA, told ITWeb in an interview.

“We are already building backhauls for the current 5G companies that are rolling out, so for us it’s fantastic. The mobile operators, they have done a lot of homework on it, but it seems they are waiting for the standards to be finalised at the end of the year. We are only looking at major work, from our perspective, in 2024/2025. Of course, the likes of Comsol or Rain will roll out a bit now but I think the mobile operators will start a bit later,” he said.

5G represents the next evolution of wireless networking, with potential speeds hundreds of times faster than consumer 4G networks and very low latency. It is also expected to provide a considerable boost to the performance of wireless broadband services.

Data-only network operator Rain announced in February that it had launched the first 5G commercial network in SA, with plans for commercial services in mid-2019.

Comsol Networks is also planning commercial 5G trials this year, with national commercial deployments earmarked for 2020. The group in May 2018 trialled a live 5G pilot network in Vilakazi Street in Soweto and DFA did the backhaul for the successful three-month project.

While SA’s top mobile operators are testing their 5G capabilities, none have come out with serious roadmaps or deadlines for launch.

“For [Rain and Comsol] it’s different because it is new revenue, so if they spend capex, it’s new incremental revenue for them, but for your normal mobile operator, if they have to spend more money just to retain the revenue, it’s going to be tougher. It’s like if you have a copper line and you have to replace it with fibre, it’s expensive to do that and you don’t get extra revenue, you just extend what you currently have, so it’s a challenge,” Mulder explained.

A lack of spectrum also remains an issue for 5G deployment. While most SA telcos will have to wait until at least 2020 for government to allocate 5G spectrum, players like Comsol and Rain already have spectrum in the 28GHz and 3.6GHz spectrum bands respectively, which gives them a head-start.

The first local 5G adopters aim to use the “fibre-like” speeds of 5G for fixed wireless Internet services, which some believe could be competition for Internet service providers (ISPs) that offer fibre connectivity.

“If I speak to our technology people, they don’t think that fibre has any competition, because of the physics of spectrum, it can only go so far. When these new players started rolling out their networks it was fantastic initially, because it was not contested. Because if you are the only mobile user then you have a great signal, but if there are 20 000 users on it then it becomes a problem,” Mulder said.

“That's why the mobile operators want fibre as close as possible to their base stations. So the only mobile part of your phone call or your text is from here to that tower over there. The rest is all on fibre.”

Mulder believes 5G will complement fibre. “It will maybe give you that deeper reach but you will still need fibre to that last tower. If you really want to have rich data in your home, if you want to watch 4K TV or use augmented or virtual reality or gaming, you need fibre because it’s more stable. I think definitely it’s complementary but I don’t think it will compete.

“Our focus has been on the street furniture, getting that closer to the towers and making it acceptable for the communities. So we have done a few pilot sites using lamp-posts as 5G sites, underground manholes and all sorts of things. We are busy testing it now with the equipment suppliers like Nokia, Ericsson, Huawei, etc, and we will see what works and what doesn’t work and then we will start planning for rollout, but I think that’s two or three years away from now,” he explained.

In March, DFA announced it had opened an office in Harare, Zimbabwe, marking its first network expansion into African markets outside of SA.

“We have always looked at Africa as a territory that we want to move into and we’ve had a lot of requests in the past. We looked at the few opportunities but there were always more opportunities in South Africa at that point in time. Capital follows where the best returns are and we were making better returns in South Africa,” he explained.

“Now we are doing a proof of concept in Zimbabwe to see if it works and what the impact would be for the country and whether we will get the support from the players out there. If it works then we will expand.

“The idea is to start exactly like we did in South Africa; build a fibre route in Harare focusing on the big data centres and connecting up some base stations and maybe some big corporates. From there, we will see what the requirements are.”

He said there could be more African expansion in the future and DFA is “looking at other countries but we have not made an investment decision yet”.

“We would probably focus on capital cities first in Southern Africa; so for example, Maputo could be an opportunity. There are actually a few opportunities but I can’t say which will happen first.”

SA, however, remains the group’s key focus and Mulder said the business is performing solidly.

“We still see huge growth opportunities for the next two or three years in terms of fibre-to-the-business. There is a lack of fibre coverage in business areas; percentage-wise, I think we are probably sitting at maybe 15% to 20%.

“So there's still a lot of opportunity to grow and if cloud computing is going to be the thing of the future, and everybody says it is, then you need a strong fibre backbone to make sure you can do the connectivity. We are going to probably invest in the next year roughly around R1 billion again. I also foresee another two or three years of good spending to happen. On the fibre-to-the-home side, we are just scratching the surface at the moment,” he added.

DFA started rolling out its fibre network in SA in 2007 and to date has deployed over 13 000km of ducting infrastructure in major South African metros, secondary cities and smaller towns. DFA is owned by investment firm Community Investment Ventures Holdings (CIVH), whose biggest investors are Remgro and New GX Capital.

In 2018, CIVH also bought 34.9% of Vumatel for an undisclosed amount and entered into an agreement to acquire the remaining 65.1%. In April 2019, the Competition Tribunal finally green-lit the merger.

“Size does matter in this business and Vumatel is the biggest fibre-to-the-home player and we are the biggest fibre-to-the-business player so it makes sense to combine,” Mulder told ITWeb about the deal.

“There is not really overlap in terms of footprint because they are focusing on suburbs and we are focusing on CBDs, for example; but if you combine the networks into one network there will be synergies.”

Mulder said DFA plans to remain a purely infrastructure player and has no desire to become an ISP in future.

“If we do that, we lose our reason for existence, which was to be open-access. If we become an ISP we compete with our customers, which is not the intention. We will see if we can consolidate the infrastructure and instead of having 15 highways running between the same cities, let’s rather have one highway. That will always be our purpose,” he concluded.