The rise in data consumption and growing data speeds are driving the large-scale deployment of fibre for the last mile. The optical fibre cable (OFC) network in India is expected to expand with the emergence of new players, policies and technologies in the telecom and internet space. Fibre has the least downtime and the lowest cost per GB, making it the most preferred medium for connectivity. Thus, it is used to provide services to very high data usage customers.

Types of last-mile OFC

FTTH

In fibre-to-the-home (FTTH) deployment, fibre reaches the customers’ living space. Passive optical networks and point-to-point Ethernet are architectures that are capable of delivering triple-play services over FTTH networks directly from the operator’s central office.

Currently, FTTH is at a nascent stage in India with only 1.25 million connections and an FTTH penetration of 0.5 per cent in 2017-18, which, in the case of Singapore, is as high as 95 per cent. Of late, major telcos have been introducing low-cost FTTH plans, which are expected to create incremental demand going forward. Further, with the growing penetration of cloud computing, smart grids, e-learning, e-health and e-governance services in the country, the FTTH market is expec­ted to grow multifold by 2025.

FTTT

A fibre-to-the-tower (FTTT) deployment entails the use of fibre to connect telecom towers to public telephone networks. OFC may be underground, directly buried or aerial. It is connected to the tower using hardware.

In India, less than 25 per cent of the towers are fiberised as compared to 70-80 per cent in China, the US and Korea. How­ever, leading telcos have begun investing in fibre deployments with significant non-spectrum capex towards backhaul and last-mile OFC for towers as well as next-generation radio access networks. With this, the level of fiberisation of towers is expected to reach 70 per cent, and the number of fibe­rised towers is expected to increase from 90,000 to around 333,000 by 2020.

Challenges and the way forward

Although the FTTH segment offers several opportunities, the roll-out of these networks has been slow owing to several regulatory, finance and demand-related challenges. While the government has released the right-of-way (RoW) rules, getting approvals and permissions continues to remain a cumbersome process owing to the multilayered structure of local governments. In most cases, RoW charges are very high, ranging from Rs 100,000 to Rs 5 million per km for laying fibre.

Further, the financial burden of install­ing customer premises equipment (CPE) and optical network terminals will add to the existing debt burden of telcos. The lack of service-level agreements for making time-bound RoW decisions and the un­availability of a skilled workforce are other major hurdles. On the demand side, the provision of high speed wireless connectivity contributes to the declining value of FTTH. The lack of relevant applications and content, and low dem­and for broadband and lack of awareness in the rural segment dilute the business case for FTTH.

Going forward, the effective implementation of the RoW rules and rationalisation of RoW charges is needed to facilitate the growth of last-mile OFC in the country. Further, a single-window clearance mechanism and time-bound decision-ma­king, the lack of which has stymied OFC deployment, need to be implemented. Emerging technologies such as 5G, internet of things, machine-to-machine communications also require high speed and reliable connectivity, ­ can be met by increasing the last-mile OFC outlay. s

Based on a presentation by Abhishek V., Partner, Strategy and Operations Practice, Deloitte