Vahta challenges FTTH rural reluctance

26 Apr 2013

Slovenian fibre network operator Vahta made a bold argument for rolling out fibre-to-the-home (FTTH) broadband access in rural communities at the Telecoms IQ FTTx Summit Europe in Berlin this week, with the small wholesale provider laying down a challenge to the assembled European incumbent telcos to extend fibre all the way to users’ premises in underserved areas. Vahta’s managing director Goran Zivec gave a presentation at the conference in collaboration with Slovenian FTTx technology vendor Iskratel urging the larger operators to think in terms of planning 30 years ahead ‘instead of five’. Mr Zivec – backed up by Iskratel manager Gregor Sebela – claimed that in the large swathes of Slovenia classed as ‘deep rural’ – with less than 50 people per square kilometre – FTTH is ‘the best solution as it makes economic sense’ to both the operators and communities, with a marked knock-on effect on local business development. In comparison, Zivec said that if looking at the long-term picture, a less-deep deployment of fibre in the network such as fibre-to-the-node (FTTN) is a ‘cost prohibitive approach’ as it will cost more in the long run.

Vahta operates as a wholesale rural fibre network operator offering bitstream broadband connections and open network access for multi-play service providers, enabling users to have a choice of competing services over their high speed line. It currently offers 1Gbps bitstream wholesale fibre access to operators including T-2, Telekom Slovenije and Amis Telekom for EUR16.60 (USD21.60) a month, and these wholesale customers bring their own ‘home gateway’. There is no traffic shaping in the network, with upstream capacity equal to downstream capacity. The rural customer is offered simply the fibre connection, with no services involved initially; then the retail providers can offer their multi-play services to the new user. ‘The real motivation to sign up is the promise of advanced multi-play services, not just the faster fibre speed,’ Vahta noted. The company claims that in the areas it has targeted so far, it has ‘at least’ 65% service take-up, with ‘95% take-up in certain areas’ and is ‘aiming for 100% fibre coverage in targeted areas’.

Vahta and Iskratel previously upgraded existing ADSL2+/VDSL infrastructure to point-to-point (PtP) fibre and subsequently to FTTH/GPON. Speeds of up to 2.5Gbps are possible on the GPON network (faster than the 1Gbps limit previously on the PtP fibre based network), while another specific benefit is less energy usage, including cheaper power/battery backup.

Vahta stated that the cost per-home passed in its network is around EUR1,200 while in comparison citing other companies as estimating the typical or average cost figure much higher, varying up to around EUR4,000. The initial cost factor has led most telcos to the decision that rural FTTH is not viable. Telekom Slovenije’s head of fixed access network development, Rok Cotic, pointed out at the conference that Vahta’s initial rollout was only financially possible because of the European Union (EU) funding the project received for rural area coverage. The Vahta/Iskratel partnership has so far resulted in a relatively small footprint of 13,500 homes passed, with approximately 60% of funding coming from the EU rural grants and the remainder self-funded. However, Vahta is looking for additional investment for major expansion, and is currently in talks with three pension funds.

Irish incumbent Eircom’s representative at the conference – Michael Brown, head of NGA technology – echoed Telekom Slovenije by stating that the Vahta/Iskratel rural FTTH model ‘just does not work’ for a large incumbent’s business model. Eircom, which also faces the challenge of covering large swathes of rural districts with high speed broadband, stated at the FTTx Summit that such a lengthy period before getting a return on investment from FTTH means that the model is not feasible in the short-medium term.

Slovenia, Amis (A1 Slovenia), eir, Iskratel, T-2, Telekom Slovenije (incl. Mobitel), Vahta