Think Gbps, says DFA

[thesones]

I don't think it it bull****.

well, Gbps, maybe DFA is getting a little ahead of themselves! The next two years are going definatly going to see huge reductions in price and true broadband speeds.

Slowly but surely we might start to catch up to some of the more advanced (telecoms) countries in Africa

 

[ads]

DFA is jumping on our favourite bandwagon, promising lower prices. I'm sure they actually mean it. From their point of view, they intend lowering the (per unit) price of bandwidth significantly. But there's a catch...

There is no sound economic reason why the monthly price per user (per connection) should go down by much at all. In fact, if you listen to the mobile operators, who have been in this game for a while, their mantra remains, "raise the ARPU (Average Revenue Per User)". There's no rocket science here - they just want you to pay more per month. What they are really hoping is that you feel better about it, because you'll be getting so much more (bandwidth / download / service / whatever).

DFA is like any other infrastructure-based company. They have massive amounts of debt and equity to pay off - the faster the better. Hence, there's no earthly reason why they should charge anything below their basic cost of recovery per user. Since this is fibre, that cost is not insignificant, probably in the order of R500 per metre of fibre rolled out (mostly the cost of the trench, with no relationship whatsoever to the bandwidth). Just like SEACOM, they will make their money back if they sell backbone fibre to a few large players for millions, but they're not going to be sell to small users at a loss.

At anything much below the prices that we are currently paying for broadband per month, there's no simple way that they could ever hope to recover the investment on new fibre to everyone's home, for example. Incumbent operators generally get away with lowering prices since they have mostly written off the original cable assets. This is not an option for a new player, no matter what they put in the trench.

The good news is that the cheapest fibre around (anywhere) is the result of bankruptcies. Our best hope is that DFA goes bankrupt (after they have laid some fibre), and that it's bought by really competitive operators at a significant discount to its original value. That's what happened in Europe and other markets in the early 2000s that ensured that they have lots of cheap fibre around. Let's hope they do go bust.

 

[LazyLion]

DFA is jumping on our favourite bandwagon, promising lower prices. I'm sure they actually mean it. From their point of view, they intend lowering the (per unit) price of bandwidth significantly. But there's a catch...

There is no sound economic reason why the monthly price per user (per connection) should go down by much at all. In fact, if you listen to the mobile operators, who have been in this game for a while, their mantra remains, "raise the ARPU (Average Revenue Per User)". There's no rocket science here - they just want you to pay more per month. What they are really hoping is that you feel better about it, because you'll be getting so much more (bandwidth / download / service / whatever).

DFA is like any other infrastructure-based company. They have massive amounts of debt and equity to pay off - the faster the better. Hence, there's no earthly reason why they should charge anything below their basic cost of recovery per user. Since this is fibre, that cost is not insignificant, probably in the order of R500 per metre of fibre rolled out (mostly the cost of the trench, with no relationship whatsoever to the bandwidth). Just like SEACOM, they will make their money back if they sell backbone fibre to a few large players for millions, but they're not going to be sell to small users at a loss.

At anything much below the prices that we are currently paying for broadband per month, there's no simple way that they could ever hope to recover the investment on new fibre to everyone's home, for example. Incumbent operators generally get away with lowering prices since they have mostly written off the original cable assets. This is not an option for a new player, no matter what they put in the trench.

The good news is that the cheapest fibre around (anywhere) is the result of bankruptcies. Our best hope is that DFA goes bankrupt (after they have laid some fibre), and that it's bought by really competitive operators at a significant discount to its original value. That's what happened in Europe and other markets in the early 2000s that ensured that they have lots of cheap fibre around. Let's hope they do go bust.

Very interesting! Good points. Thanks.

 

[Netguy]

We sure need a lot more entrepreneurial action like that taken by DFA.

 

[MidnightWizard]

NO Trenches

this is fibre, that cost is not insignificant, probably in the order of R500 per metre of fibre rolled out (mostly the cost of the trench, with no relationship whatsoever to the bandwidth). Just like SEACOM, they will make their money back if they sell backbone fibre to a few large players for millions.

NO trenches -- cable runs on special pylons along the railway tracks.

Not sure what the cost is -- couple of concrete pylons and some stringing

SEACOM is going that way from Mtunzini to EMPANGENI -- then I guess the same way all along the Richards Bay -- Witbank COAL line courtesy of INFRACO

Probably going the same way down to DBN

Logic tells me this is the only way to get it done on time

Seen it in action got the foties

In the USA their "Dark-Fibre" guys had a special train with a big ripper / subsoiler and all the coiled fibre on a special wagon.

Ripped , laid , and covered all automatic and all done in motion from the special train.

Do yourself a favour and look it up if you think I am talking gibberish.

HHhhmm Wonder why they never did that here AAaahh TFR ( TransNet Freight Rail )


MW

 

[Toby]

I have seen the first step

We have just had our neotel Fibre pulled into our office, so yes things ARE happening. Next Stop in a couple of years, neotel Fibre into our complex and the the Body Corporate does the rest.

By the way the Telkom diginet has been relegated to a backup link.

 

[Toby]

Please publish the Photo's

NO trenches -- cable runs on special pylons along the railway tracks.

Not sure what the cost is -- couple of concrete pylons and some stringing

SEACOM is going that way from Mtunzini to EMPANGENI -- then I guess the same way all along the Richards Bay -- Witbank COAL line courtesy of INFRACO

Probably going the same way down to DBN

Logic tells me this is the only way to get it done on time

Seen it in action got the foties

In the USA their "Dark-Fibre" guys had a special train with a big ripper / subsoiler and all the coiled fibre on a special wagon.

Ripped , laid , and covered all automatic and all done in motion from the special train.

Do yourself a favour and look it up if you think I am talking gibberish.

HHhhmm Wonder why they never did that here AAaahh TFR ( TransNet Freight Rail )


MW

Please publish the Photo's

 

[tjunyat]

The only pity with DFA imho is that they don't offer an outright purchase option, i.e. IRU's like SEACOM does.
DFA's only offering is a lease option which, while it means your cash comes out of OPEX rather than CAPEX, also means you don't own the cable and you're paying it off at their rates for the foreseeable future.
This means that prices will remain relatively constant unless DFA drop their pricing as the ISPs have to cover the cost of the fibre rental every month, instead of paying it off over a certain period of time and then dropping the costs while making the same/more profit.

 

[tibtib123]

In the Uk We are also a fair way behind 10 mbps most companies will plug it but its a rarity

 

[ponder]

NO trenches -- cable runs on special pylons along the railway tracks.

SEACOM is going that way from Mtunzini to EMPANGENI -- then I guess the same way all along the Richards Bay -- Witbank COAL line courtesy of INFRACO

Probably going the same way down to DBN

HHhhmm Wonder why they never did that here AAaahh TFR ( TransNet Freight Rail )

Hmm, you do realised that the telecoms devision of Transnet which was Transtel was absorbed into Neotel? Transtel had a extensive FO network along it's railway lines. They actually had a diagram of their FO network on their website before that was also integrated into Neotel. Transtel was the only company allowed back in the day to run it's own telecoms network exclusively for Transnet or whatever it was called back in the day and it was pretty big. Only problem with going along railway lines is that it is not always the shortest path although it will be cheaper.

Yeah, other countries have easy/cheap ways of digging trenches and laying fiber. Dunno why we dont do it here.

They use the very same tecnique to trench for undersea gas pipelines. They have this big sled ploug dragged by a boat. The pipe segments are mechanically welded on the boat and xray inspected, then fed at a certain angle over the bow of the boat down to the sled plough that has a feeder for the pipe. The gps guided boat drags the plolugh at a certain speed. The plough digs a deep&wide hole in the seabed, lays the pipe and then covers it up. Amazing stuff to see.

 

[MidnightWizard]

INFRACO

Hmm, you do realised that the telecoms devision of Transnet which was Transtel was absorbed into Neotel?

My understanding is that the Telecommunications sections of Transnet and Eskom were originally promised to NEOTEL

BUT -- were instead given to INFRACO -- the wholly owned Gov company that were meant to compete with Telkom
and thereby bring cheap bandwidth to the underserviced sections of the community.

WHY NEOTEL never made a BIG fuss about this -

So , as things stand at the moment all the infrstructure you speak of actually belongs to INFRACO -- to whom SEACOM / TATA / NEOTEL will be paying a LOT of money for the use thereof.

MW