FIXED-LINE FIGHT-BACK

Fixed-line telecommunications is not dying. Far from it, in fact, says Telkom, which is ramping up its investment in new infrastructure in an effort to fend off new rivals and take back some of the market share it has lost to the mobile operators.

“It would be foolhardy for anyone to think we are sitting here waiting to die,” says chief technical officer Thami Msimango “The fight is on.”

Telkom will award a number of big tenders in the next few weeks as it accelerates its infrastructure spend. The company plans to fork out more than R30bn in the coming five years, with much of that being spent in the next 24 months, as it prepares to meet the second network operator head-on and deal with competition from the cellular companies, especially in broadband.

“Telkom is significant enough to have a big impact on broadband,” Msimango says. “If we don’t . history will judge us [to have done poorly].”

Telkom wants more than 1m broadband customers by 2010. To do this, it is adopting a multipronged technology strategy. At the heart of it is the development of what Msimango terms Telkom’s “next-generation network”, or NGN, a multiservice network built using the same packet-based architecture that underpins the Internet. This Internet Protocol (IP) network, which is already partially built, will allow Telkom to offer the entire gamut of fixed-line telecom services — old and new — using the same basic infrastructure.

Some of the most important investments will take place in Telkom’s access network — the part of the company’s infrastructure that connects consumers to its core network.

Getting fibre-optic infrastructure, which is capable of delivering data at very high speeds, closer to consumers is crucial. Telkom is already digging up roads and pavements in some city suburbs as it extends its fibre network.

To supplement this, the company is also about to begin building a wireless broadband network using a new technology known as mobile WiMax, the standard for which was recently ratified by the Institute of Electrical & Electronics Engineers (IEEE).

Sometimes referred to as IEEE 802.16e, mobile WiMax will complement Telkom’s fixed-line infrastructure, providing access to consumers where its cable network is either nonexistent or poorly developed and therefore inadequate to deliver the high-speed (multi megabit per second) connections needed to provide services such as IP television into people’s homes.

Telkom will initially use WiMax to provide consumers with a portable broadband offering — much like products from Sentech, iBurst and the cellular operators that allow users to get an Internet connection on their notebook PCs wherever they go. Within the next few years, once WiMax handsets become readily and cheaply available, however, the technology will give consumers cellphone-like mobility. This could eventually put Telkom and the mobile operators on a direct collision course. The very fact that Telkom has chosen 802.16e, and not the more established 802.16d fixed-wireless alternative, suggests it wants to compete.

“I call WiMax the revenge of the fixed-line operator,” Msimango says, referring to the fact that the technology will allow companies such as Telkom to provide mobile broadband and telephony products that compete with the cellular operators.

Telkom has already been granted access to radio frequency spectrum — it has two 28MHz channels in the 3,5GHz band — to provide commercial WiMax services. It hopes to award a tender for network equipment in the next few weeks. Three companies have been short-listed. Alvarion, which provided the test equipment Telkom used to run a WiMax trial, is one of the contenders. Siemens is also on the short list.

Consumers may have to wait a while, though, before WiMax services are launched. Msimango says Telkom won’t be hurried. “I’m not going to rush my team to go to market if I’m not convinced it works properly,” he says.

Wireless access is not Telkom’s only priority, though. The company is also making significant investments in its cable network. One focus area is ensuring that the average length of the company’s local loop of copper cables, which connects consumers to its core network, is shortened. Loop lengths — the distance between consumers’ premises and Telkom’s telephone exchanges — are longer in SA than the norm in other countries. Delivering even elementary broadband over copper is difficult if loop lengths exceed 5km. To deliver higher-speed, media-rich content, these lengths must be shortened.

To solve the problem, Telkom is deploying fibre to “nodes” in some city suburbs. At these nodes — typically the green and blue junction boxes found on street corners — Telkom will install equipment that will allow it to provide a range of telecom services to consumers. The new equipment will replace the broadband switches, known as access multiplexors, that direct ADSL network traffic onto Telkom’s core network at present. The new technology will be able to provide a range of telecom services, not just ADSL.

The technology will be made available only where there is demand. Areas that will be served first include business districts and up-market residential areas, such as Pretoria East and Sandton, where there will be demand for media rich content.

Once Telkom has shortened its loop lengths, it will be able to use newer copper-based broadband technologies — specifically ADSL2+ and VDSL — to provide much faster access. ADSL2+ is theoretically capable of speeds of up to 24Mbit/s; VDSL can reach 52Mbit/s. Compare that to Telkom’s fastest current offering of just 1Mbit/s using ADSL.

As Telkom slowly replaces the copper in its network with fibre — an expensive and time-consuming process — and as it moves gradually to an all-IP-based network, it will begin deploying technologies that will deliver even higher-speed services. One of these is metro Ethernet. Similar to the local-area networks that connect a company’s desktop PCs to its central servers, metro Ethernet is used to build a high-speed computer network. In this case, though, it can cover an entire city, not just one building. Its advantage is that it is an IP-based technology and significantly cheaper than traditional fibre-optic communication technologies.

With metro Ethernet, consumers will be able to connect directly into Telkom’s high-speed fibre infrastructure. It will be years before this becomes commonplace, though, as replacing the copper infrastructure in the local loop would be prohibitively expensive. Metro Ethernet will therefore find a niche among Telkom’s big corporate clients first. Later, it will probably be provided to new housing estates where it makes financial sense to use fibre instead of copper.

While consumers in the cities demand ever faster access, Telkom still has to meet the challenge of wiring up SA’s more rural areas. Here, the company has adopted a very different technology strategy. In the late 1990s, to meet its licence conditions, it built a digital enhanced cordless telecom (Dect) network. The strategy didn’t prove particularly successful, with many of its clients switching to cellphones and others simply disconnecting because they couldn’t afford to pay for the service.

Dect is also a technology that has reached the end of its life. To meet demand in rural areas, where it exists, Telkom is replacing Dect with a system called enhanced multigain wireless, developed by Israeli company InnoWave Multigain wireless provides voice telephony and entry-level broadband.

WiMax is unlikely to feature in rural areas in the short term. When it does, it’s more likely to be used for providing access to game lodges and the like, because it’s unlikely to be affordable to the mass market — at least initially.

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FIXED-LINE FIGHT-BACK