Fibre: an indispensable asset for tomorrow’s Asian networks

Arianna Neri

October 03, 2018 05:47 PM

TowerXchange’s first guide to towerco-led fibre projects in Asia

Fibre has become a necessity for modern telecom networks in a relatively short period of time. It went from a buzzword to a necessity as a function of the growing data demand and the giant leaps in network technologies. In this editorial, TowerXchange takes a look at the trends of internet usage, mobile penetration and data consumption across Asia and contextualises them with the opportunity to fiberise networks. Additionally, we offer our readers a first overview of key fibre projects from across the region.

In 2000, 5mn people utilised internet in India. As of 31 December 2017, the number of internet users in the country raised to 462,124,989, representing 34% of the entire Indian population and 23% of the whole of Asia. In Bangladesh, the users in 2000 were 100,000 versus 80,483,000 in 2017, or 48.4% of the country’s population. Over to Pakistan, internet adopters went from 133,900 to 44,608,065 (22% of the population).

To further contextualise, in China there were 772mn internet users in 2017, representing half of the country’ population, as opposed to 22.5mn in 2000. Finally, the statistics that impressed me the most relate to Thailand, where internet adoption reached a staggering 82.4% in 2017, with 57mn users, and Myanmar, which grew its internet penetration from 0 to 33.4% (18mn people) in a handful of years. And these numbers are even higher if we look at developed countries such as Japan, where 93.3% of the population has access to internet, Singapore (83.6%) and Taiwan (87.9%).

According to the International Telecommunications Union (ITU), over 72% of Asia’s Internet subscribers are prevalently young (15-24 years), meaning that the level of penetration across the continent can only grow as new generations tend to adopt internet at an increasingly young age.

Mobile broadband penetration is swiftly surpassing fixed line not only because smartphones are the preferred tool to communicate but also, and more importantly, because mobile broadband is considerably cheaper than fixed. The ITU reports that in Least Developed Countries (LDCs), a basic fixed broadband subscription is 2.6x more expensive than an equivalent mobile package.

With over 2bn internet users across Asia, the implications for mobile network infrastructure are obvious. The 2017 Cisco® Visual Networking Index (VNI) Global Mobile Data Traffic Forecast Update reported a 63% global growth in mobile data traffic in 2016 with MEA leading the way at 96% and Asia following at 71%. But by 2021, Asia Pacific will represent 47% of global mobile traffic, the highest proportion by a substantial margin (followed by North America with 13%).

According to the same report, in 2016, the mobile traffic in Asia amounted by 3mn TB per month. The monthly traffic in the region grew to 4.9mn TB in 2017, will reach 7.4mn TB in 2018, 11.04mn TB in 2019, 15.9mn TB in 2020 and a staggering 22.8mn TB by 2021.

So what are Asian MNOs (towercos, fibercos and infracos) doing to enable this exponential growth in mobile data traffic? And is there enough interaction between all the stakeholders involved in the infrastructure ecosystem to create rational and integrated network upgrades across Asian markets?

To date, many countries across Asia are still deploying 4G (or Super 4G, LTE) but in the coming years, 5G will pose a critical challenge as each base transceiver station will generate an immense volume of backhaul traffic. And this is one of the main reasons why virtually every player in Asia is currently looking at upgrading their traditional microwave-based backhaul with fibre. The threat of existing backhaul networks being an insurmountable bottleneck preventing true 5G network performance is approaching at an inevitably fast pace. And 2020 is not as far as it seemed just a few months ago, with more than one country across the globe now actively testing 5G.

The ITU expects the overall capex of fibre related projects to reach US$144.2bn for the five-year period 2014-2019. And I cannot help but wonder if there’s room for towercos to actively participate in this high volume deployment that will affect not only developed markets but also developing ones.

Adopting a tower+fibre model could give towercos a definitive edge against their competitors sooner than towercos think. In fact, as MNOs swiftly move towards 5G, they’ll increasingly seek space on fiberised towers, able to accommodate their unprecedented traffic requirements. Across Asia, various key players have demonstrated their ability to seize the opportunity, with both towercos and MNOs devoting extensive resources to fibre projects. In particular, MNOs across Asia have started to deploy fibre-fed microcells as a cost effective way to densify their networks.

The numbers though still speak of a substantial infrastructure gap between expectation and reality when it comes to fibre deployment. In fact, according to a presentation held by edotco at the 5G Asia 2018 event, only 10% of towers across Pakistan and Myanmar are connected to fibre. The numbers are slightly better in Malaysia, Sri Lanka and Cambodia, where 30% of sites are fiberised but still quite distant to what will be required in the very near future by this fast growing digital economies.

Over the next few pages, TowerXchange reports on some of the key projects involving towercos to fiberise networks and tower portfolios as well as some of the moves made by towercos to diversify their infrastructure business into fibre.

Mobile traffic in Asia 2016-2021 (TB/month)

Cambodia

Towerco and service provider OCK has been involved in dredging and laying works for 800km of fibre in Cambodia on behalf of Telecom Cambodia. The project though ended in 2017 and since then, the towerco has expressed no interest in entering the market and serving it with further infrastructure services.

India

In a recent editorial, TowerXchange has reviewed the opportunities for Indian towercos to get involved in the fibre rollout, and various entities seem to be gearing up to seize those opportunities.

It’s the case of American Tower, whose Asia President Amit Sharma was recently quoted by the Economic Times of India stating that “Towercos will have to invest in new growth areas amid exponential data growth and spectral scarcity, and ATC is currently testing fibre and small cells opportunities in India.”

Bharti Infratel is also eyeing fibre and in its Q2 2018 earnings call, its Managing Director DS Rawat highlighted that the firm is involved in several Smart City projects where fibre and small cells are playing a key role. And where the potential for new tenants of smart poles extends beyond traditional carriers into municipalities, security companies and more.

In 2017, Bharti Infratel won a smart city project to deploy 400 smart poles across the city of Bhopal. The poles are being designed and equipped with charging points, environmental sensors, cameras and Wi-Fi access points and are backed by 200km of fibre optic cable, also being deployed by Bharti Infratel. The fibre network will connect government buildings, schools and bus stops among others.

The article from the Economic Times of India quoted telecom analyst from HSBC Rajiv Sharma saying that Indian towercos will invest at least US$8bn in fiberising Indian networks and an additional US$2bn in small cells over the next five years to “get into new businesses like fibre leasing.”

Indonesia

The synergies between towers and fibre are well known to many Indonesian towercos.

In 2015, Protelindo acquired iForte, a leading BTS Hotel and fibre provider with more than 900km of fibre optic network across Jakarta and Subaraya. And that is only a small portion of Sarana Menara Nusantara’s (SMN) - Protelindo’s holding company - overall fibre portfolio.

In fact, SMN owns a portfolio of 6,000km of fibre optic network and is heavily involved in fiberising towers across Indonesia. Overall, SMN has more than 2,000km of fibre optic cable in the pipeline while it has already built over 1,500km for XL (Axiata).

In its Q2 2018 results presentation, SMN announced that its non-tower business grew 49% YoY thanks to the expansion of its fibre optic portfolio and VSAT businesses; a clear sign that fiberising towers is not only a necessity to remain competitive in Indonesia but also - and foremost - an opportunity for growth and expansion.

On the other hand, STP stepped into the fibre business back in 2013, with the acquisition of PT Bit Teknologi Nusantara (Bit), a fibre / microcell / BTS Hotel firm. Bit owns and operates a fibre optic backbone which runs for approximately 2,900km across Jakarta, Bogor, Bandung, Surabaya and Medan. Indonesian MNO Hutchison is among the companies currently leasing fibre by Bit. As of December 2017, in addition to over 6,000 towers, STP owns 562 microcell poles, 38 indoor DAS sites and a total of 2,847km of fiber optic network.

According to our research, Tower Bersama isn’t as active as its rivals in the fibre industry but it has been fiberising its towers in and around greater Jakarta since 2015.

Malaysia

In 2016, edotco launched its High Speed Mobility Solution in Cyberjaya and Sabah. The project integrates the benefits of fibre, antennas and towers as part of edotco’s efforts to improve the quality of shared infrastructure across Malaysia. edotco has since sealed further partnerships with the likes of Telekom Malaysia to work on high quality connectivity projects that involve fibre.

Myanmar

Chinese company Myanmar Fiber Optic Communication Network (MFOCN) is currently deploying 4,500km of fibre optic cable across the country. The backbone network project sees the involved of the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). Additionally, the Mandalay City Development Committee (MCDC) is working with EAGER Communication Group to launch a metro fibre network across the city.

Mobile network operators are currently leasing fibre as well as deploying their own networks but as previously mentioned, only 10% of towers are actually connected to fibre.

So far, 90 local companies and 40 foreign firms have been granted communication servicing licenses (as of October 2017) and we can expect plenty of new projects to be launched in the future.

Pakistan

The only towerco in the country, edotco, owns and operates 12,000km of fibre across Pakistan while MNOs are heavily involved in fiberising their networks.

Jazz is currently involved in the deployment of fibre for its LTE sites. The goal is to ensure high capacity and bandwidth to corporate customers and the first target is to fiberise 294 sites nationwide by year end and to connect the rest of its LTE sites by 2019. On the other hand, Telenor is currently utilising PTCL infrastructure via a fibre leasing agreement to fiberise its network. Telenor has been leasing fibre on PTCL nationwide network since 2016.

During the agreement ceremony, Irfan Wahab Khan, CEO Telenor Pakistan stated: “As we are on the fast-track to materialising our digitisation goals in Pakistan, our partnership for fibre backhaul and infrastructure sharing with PTCL will supplement our efforts to digitally include more people and provide them access to Telenor Pakistan’s best-in-class data services. As we intend to significantly strengthen our data network footprint nationwide, and we are pleased to be working with PTCL as our strategic partner for the third consecutive year. PTCL’s extensive infrastructure outreach has helped us reach out to the underserved areas in Pakistan and extend the benefits of communication technology to the masses. To further our mission of empowering the Pakistani society.”

Zong sealed a deal back in 2016 to utilise PTCL’s nationwide fibre optic network which also required PTCL to deploy, operate and maintain 789km of fibre network. The agreement between the two firms named PTCL as Zong’s partner of choice for infrastructure and technical expertise.

Conclusions

This is the first of many articles I expect to write on fibre. My research led me to believe that the synergies between fibre and towers must be exploited in order for mobile networks to sustain the growth in traffic that Asia is poised to witness in the imminent future.

Beside the operational challenges related to fibre deployment (Right of Way, landlords, civil works, community acceptance et cetera), I believe that towercos are approaching fibre with less enthusiasm than one might expect because its economics don’t necessarily match those of towers. And the investment is a leap of faith at a time when many towercos are still heavily involved in crucial build-to-suit projects and acquisitions.

At the same time, the business case to diversify into fibre is quite evident and TowerXchange expects towerco participation in fibre rollouts in Asia to accelerate in the coming months. I would personally welcome any input from our readers sharing interesting case studies we should be reporting on.

In the meantime, we remind our readers that many of the aforementioned players will join us in Singapore, this coming 4-5 December, at the fifth annual TowerXchange Meetup Asia for extensive discussions on fibre deployment best practices from operational and strategic perspectives (more information at www.towerxchange.com/meetups/meetup-asia).