High fibre diet

Ventura Team specialises in advising operators in fibre to the home (FTTH) and is involved in a number of projects in the Middle East. It also invests in early stage companies, and since 2004 has backed a fibre-only service provider in Sweden called Riksnet. Partner Stefan Stanislawski tells CommsMEA about some of the FTTX projects Ventura Team is involved in.

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By  Administrator Published  January 28, 2009

Ventura Team specialises in advising operators in fibre to the home (FTTH) and is involved in a number of projects in the Middle East. It also invests in early stage companies, and since 2004 has backed a fibre-only service provider in Sweden called Riksnet. Partner Stefan Stanislawski tells CommsMEA about some of the FTTX projects Ventura Team is involved in.

Tell us what European fibre projects Ventura Team is involved in?

We are a shareholder in Riksnet, a service provider. In Sweden there are lots of municipality owned open fibre networks, and Riksnet is one of a few companies that rent fibre from the municipality to connect an apartment block. What we try and do is provide the apartment block with a single group tariff.

The default structure is that there would be a committee in charge of buying various facilities, and Riksnet and maybe two or three other companies will bid for the contract.

A lot of FTTH projects are justified on the idea of combining broadband, TV and telephony to get one bigger revenue stream, Riksnet is deliberately a single play company in the consumer space.

There is enough business in the residential and the commercial market for the business to be profitable and to be growing. They keep a very lean operation. One of the things that is not really debated in the industry is that people talk about locking people in to reduce churn but it costs a lot of money.

Do you think the Riksnet approach would work in the Middle East?

I think so. First of all, if there were a completely open and competitive market in the Middle East, I'm sure some people would try that strategy. In the Middle East there are extra factors, for example the voice service is either very restricted or there is a monopoly or a duopoly, so if you are an independent ISP you may not have the option of providing voice anyway.

And when you look at the television market, there are masses of satellite, there is very little or no cable TV and that's a completely separate challenge. In the Middle East there is massive piracy and very little, as I understand it, in the way of paid premium programming. It's very hard to know what you would do if you were trying to be a cable TV or IPTV operator in the Middle East.

I think Riksnet's strategy might be the only one open to certain ISPs, because they can't offer voice as it is prohibited by regulation, and the television is extremely difficult to see what mass-market opportunity there would be in the Middle East, because of the huge volume of free channels. In a way they don't have a choice, but Riksnet has chosen that strategy when it was free to do anything.

What incentive is there for operators to invest in FTTX, and when should it be deployed?

The bottom line is that not much happens without the threat of competition. The threat really is mobile: mobile broadband is developing and it can offer reasonably basic speeds. As a fixed-line entity you've got to sell the idea that people need a lot more speed than they can get through mobile broadband, and mobile broadband keeps improving.

There are no new killer applications at the moment, so the options are to load on high-definition TV, but the satellite business is upgrading its capacity. You can do much, much faster broadband which for high-end users is attractive but most people want more for the same, or for less.

If it is an incumbent operator their motives will, in all likelihood, be defensive whereas a new entrant will be developing a new business without much - if any - legacy. Building density and the presence or not of cable TV networks are key factors. In a high population growth area of course fibre is increasingly the technology of choice for new build and there it can also be a question of defence if one or more rivals are also investing.

For all operators it is now clear and accepted pretty much worldwide that fibre and ideally triple play services are the future of wire line communications in the home. The only questions relate to timing and details of the network and business strategies which in turn depend of course in part on local regulation as well as existing assets.

How can operators minimise expenditure costs associated with deploying a fibre network?

We just saved Haya, the waste water utility for the Muscat region, in Oman, an absolute fortune in terms of manholes and ducts by changing their network design. We have produced an internal business case and are now assisting them to set up a fibre business unit.

It is generically true worldwide that co-operating with a local utility to share the costs of digging up the streets can make a huge difference to the business case. Similarly, overhead wiring might also be preferred but in the ME region I think the heating effect is perhaps too extreme.

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