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Fibre Economics: Cost considerations for OFC deployment

August 12, 2014

Optic fibre cable (OFC) technology offers a significant advantage over other communication mediums due to its unlimited capacity, high degree of security and long-term economical gains. OFCs have a life of 20-30 years and low signal attenuation, which eliminates the need for installing repeaters at short distances. Further, they are immune to electromagnetic interferences and signals cannot be intercepted without tapping into the fibre. These are best suited for transmission for triple- and quadruple-play services.

OFC scores better than copper cables on various counts. For instance, while terabit bandwidth can be provided through OFCs, the capacity is limited to 1.5-12 Mbps. Fibre has lower attenuation than copper cables, and therefore is not vulnerable to electromagnetic interference.

Further, with the launch of next-generation technologies in India, operators are facing a huge capacity crunch in their networks and the wireless medium is not sufficient to meet the growing bandwidth demand. As a result, OFC is emerging as a preferred choice for operators as it can offer almost unlimited bandwidth vis-à-vis wireless technology, which offers a capacity of up to 155 Mbps. Service quality in the case of the microwave medium is often subject to network traffic and spectrum availability and varies accordingly. However, the capex per subscriber is higher for OFC as compared to wireless. Also, the microwave medium does not face challenges in terms of installation and maintenance.

In India, almost 80 per cent of the cell sites are connected with TDM-based microwave backhaul networks that cannot handle high data volumes. Further, the allocation of spectrum for next-generation technologies remains inadequate. As a result, operators are exploring the OFC route to strengthen their backhaul networks. Also, the country is witnessing several fibre-to-the-home (FTTH) dep-loyments by private companies as well as through government initiatives such as the National Optical Fibre Network (NOFN) project.

Cost factors

Fibre deployment costs are governed by several parameters such as the region of deployment (urban, residential or rural), size of the network, capital expenditure (initial deployment costs), operational expenditure (network operation and maintenance costs), type of project (greenfield, brownfield, network architecture) and region-specific factors (local labour costs, regulations, etc.).

In terms of cost break-up, the deployment of physical infrastructure accounts for 60-70 per cent of the overall deployment cost. Service provisioning costs, which include expenses involved in connecting homes to the new FTTH network, account for 25-30 per cent of the total cost. The remaining 8-10 per cent can be attributed to maintenance-related expenses, which include upkeep costs and repair contracts, cable cut repairs, marketing, pricing and billing, and energy consumption.

Physical infrastructure deployment costs: Digging trenches accounts for about 80 per cent of the total physical infrastructure deployment costs. Inside-plant costs that are typically related to establishing connectivity between the central office and clients as well as the metro core network accounts for about 15 per cent of the physical infrastructure deployment costs. The remaining 5 per cent can be attributed to outside-plant costs, which include expenses on installing aggregation points in the topology through street cabinets and/or splitters. Significant cost savings are possible if a part of the network can be aerially deployed, thereby avoiding trenching works.

Service provisioning costs: These are costs incurred in connecting customers to the network and offering services to them. Customer premises equipment (CPE) accounts for the maximum share of the provisioning costs. CPE costs are directly linked to the number of customers and account for over 60 per cent of the total service migration costs. The remaining 40 per cent of the costs is more or less equally split among administrative, outdoor and indoor installations.

Maintenance and operations costs: These include expenses related to the maintenance of CPE, outside- and inside-plant requirements as well as other costs related to marketing and pricing/billing. The cost for a single repair action in a fibre network is much higher in a point-to-point network as compared to that in a point-to-multipoint network due to the higher number of fibres to be spliced in the former case. Further, in the case of a point-to-point network, where each customer has a dedicated port, energy consumption will also be much higher.

Deployment costs can be optimised by using conventional underground ducts and cables, direct buried cables and aerial cables. Other possible solutions could be reusing the existing ducts (after extracting the existing copper cables), reusing the sewarage system, attaching the cables to facades, and using gas pipelines, and drinking water pipes.

Based on a presentation by Benoy C.S., Director, Information and Communications Technology, Frost & Sullivan, at a tele.net conference on “OFC Networks in India”


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