Business Process & Strategy for Fibre Optics Nigeria

 

Business Pr Process ocess & Strategy Strategy for Fibre Optics in Nigeria

2010

 

Executive Summary The need to enhance information dissemination in this century has necessitated the introduction of the Fibre Optics Tec hnology in different parts of the world.

In Nigeria, the market is ever increasing with major players offering Fibre Optic backbone infrastructures to companies both in the Telecommunications and Internet Service Servic e Provision Provision markets. The Fibre Optic business process involves offering Fibre-to-the-home (FTTH) as against the Fibre-to-the-Node Tec hnology (FTTN).

In addition to offering fast broadband tec hnologies to customers, other additional services could be b e offered ranging from from Connectorization to Fibre Optic Lighting. The need to offer good returns on investment to customers necessitated this proposal.

 

Table

of Contents

Page (s) Executive Summary Introduction

4-7

Business Process

8 ² 12 13

- Busine Business ss P Proc rocess ess ² Mark Market et A Analy nalysis sis

Strategies Conclusion

15

  16 - 24 25

 

Introduction Nigeria is one of the biggest and fastest growing telecom markets in Africa, attracting hug uge e amoun am ounts ts of forei foreign gn invest investme ment nt,, an and d is yet stan standin ding g at rel relat ativ ively ely lo low w lev levels els of mark market et penetration. hing liberalizat has led to hundreds of companies providing virtually all kinds of Far reacand liberalization ion services telecom value-added in an independently regulated market. After failing three times in the past, the privatization of NITEL, the incum incumbent bent national TELCO, is sc heduled to be finally completed in 2010. The West African country has overtaken South Africa to become the continent·s largest mobile

market with in 75 million subscribers, and yet market penetration stands at only around 50% inow n early earover ly 2010. Howev owever er,, subscriber growth slowed significantly during 2009, partly as a result of t he global economic crisis. Muc h of the remaining addressable market is in the country·s rural areas where network rollouts and operations ope rations are expensive.

 

Introduction

cont·d

This in combination with declining ARPU levels whic h is forcing the networks to streamline their operations and to develop new revenue streams from services suc h as 3G mobile broadband, b roadband, mobile payments/banking, payments/banking, and others.

At the same time the operators are rolling out national Fibre backbone networks to support the ever increasing demand for bandwidth. Nigeria is also the most competitive fixed-line market in Africa, featuring a second national natio nal operator operator (SNO, (SNO, Globacom Globacom) and over 80 other com compa panie niess lice licens nsed ed to provide fixed telephony services. The alternative carriers combined now provide over 95% of all fixed connections, the majority of whic h has been implemented using wireless technologies. This gives the network operators the opportunity to also enter the lucrative mobile market

under licensingfrom regime as helped them to secure hundreds of millionsaofnew US$unified in investments localand andhforeign investors.

 

Introduction

cont·d

Nitel·s monopoly on international fibre bandwidth via the SAT-3/W -3/WASC ASC submarine sub marine cable system ended in 2009 when Globacom·s Glo-1 cable landed in the country. While in 2010, Main-one cable also landed in the country with promises of providing qual qu alit ity y servi service cess to clie client ntss acr across oss the co coun untr try y. Ad Addit ditio iona nall subm submari arine ne cable cabless are are sc heduled to go online in 2010 and 2011. revolutionize the country·s underdeveloped underdeveloped Internet and broadband sector This is set to revolutionize by reducing the cost of international bandwidth by up to 90%. New powerful players from the fixed-wireless and mobile network operator camps have entered this market with 3G mobile and advanced wireless broadband services such as WiMAX. IP-base ased d next next gene generratio ationn netw network orkss curr curren entl tly y bein being g rolle olled d out out are enab enabliling ng The IP-b converged voice, data/Internet and video services. VoIP is already carrying the bulk of Nigeria·s Nigeria·s international voice traffic. Applications such as e-commerce, online banking and e-payments, e-health, e-learning and e-government are rapidly evolving.

 

Introduction

cont·d

For the different entrants into the market, the need to have quality business process flow is key to the overall success of the business in view of the nature of the market in whic h they operate. It is in view on this, that this proposal initiative initia tive was was hatc hed to identify the following:  The

Fibre Optics Business Process

 The

Market Analysis - The key players and USPs (Unique (Uniqu e Selling Points)

 The

Strategy for Success

 

BUSINESS PROCESS How Does it work?

Fiber optics use light as a method of encoding a transmitted signal. A standard fiber optic link ligh ghtt so sour urce ce, op opti tica call fibe fiberr as the primary transmission consists of three parts, which includes a li medium, and a transdu transducer cer (receiver/de (receiver/detecto tectorr). The light source is a Light Emitting Diode (LED) or laser. The LED modulates an incoming electrical signal into an optical signal. The optical fiber consists of two layers of different types

of glass surrounded by a protective acrylate coating. The light is guided through the core region where it is detected at the receiving point. At the

receiving end, the transducer converts the optical signal back into an electrical signal. Fiber optics tec hnology transmits information by c hanging electronic signals into light signals. Fiber optics are used in three distinct communication environments, namely, lon long-c g-carri arriage age int intererexchange telephone communicat atiions, in combinati ation with coaxial cable to serve rve as the backbone for modern cable television systems in a configuration re refferre red d to as ´hybrid fi fibe ber/ r/co coax ax,,µ an and d fibe fiberr op opti tics cs used used in lo loca call are area a ne netw twor orks ks for dat data a dist distri rib butio ution n.

 

Business Process

cont·d

In relation to types of fiber optics, t here are two types, namely, multi and single mode. The multi mode has a larger core than that of the single mode. The multi mode allows hundreds of modes (rays) of light to go through the fiber at the same time. It is worth noting that multi mode fibers are ideal for short distance applications or local

area netw area network orkss where the links nks ar are e usu usual ally ly les esss than thre ree e mile miless in dist distan ance ce and and can accommodate many connectors. A single-mode fiber has a smaller core that allows only one mode of light at a time to propagate through the core. Single mode fibers are designed for a long distance application suc h as long carriage telephone trunk line applications that require high bandwidths. F

T

Advan Ad vantage tagess of iber iber Op Opti ticc Sy Syst stem emss over ot othe herr rans ransmiss missio ion n Med Media ia The use of Fiber optic tec hnology has cert certain ain dis disti tinct nctiv ive e fea featur tures es over over other means of communication. In terms of broad bandwidth capability, fiber optic systems offer users more potential band bandwidt width than any other type of transmission medium. ´An actual fiber strand is a few microns wide in diameter, or t he equivalent of 6/1,000s of inc h thick.

When bundled together in a duct or passageway, the combined bandwidth provides more than sufficient capacity for most voice, voice, data and video applications.

 

Business Process

cont·d

This means that fiber optic cables are capable of transmitting very large volumes of data, audio and other multi media applications when compared with copper wire with dial-up connection.

In addition, the fiber optics cables offer room for future expansion at minimal extra cost and without the need for excav excavation ation or construction and laying of new cables. This is also an advantage for telep hone communications companies looking for continued steady growth in the types of services they offer and demand for more subscribers.

Fiber optic systems are not prone to electromagnetic interference as are telep hone twisted pair wires, coaxial cables and satellite. satellite. This is because the transmitting medium is non-magnetic. Thus, the fibers cannot pick up electromagnetic interference from generating plants, electric cables,

and other sources of high electricity voltage lines. Fiber optic cables are robust and durable. They are also resistant to extremes in weather and temperature. Due to their flexibility, they are ideal for installation in places like subway routes, culverts, elevator shafts or any aerial conditions. Furthermore, fiber optics cables can ac hieve higher speeds for voice data and video transmission than any other transmission medium. Modern multimode fiberon. cables can transmit at speeds between 100Mbits/s and 622 Mbits/s depending on the transmission. transmissi

 

Business Process

cont·d

Fiber optics cables do not emit radiation; t herefore they do not interfere with other media.9 Unlike the satellite, telephone or cable connection, a broken broken connection which are wire tap can be detected within a few inc hes. Thus, if there is any damage on the system it could easily be found and repaired. In terms of cost of production, fiber cables are inexpensive. One of t he reasons for this is that the primary source of raw material is sand. Furthermore, fiber optic cables tend to be lighter than other telecommunication cables. In addit add ition ion,, fiber fiber optic optic cable cabless allo allow w trans transmis missio sionn of signal signalss over over lon long g dis distan tances ces with few amplifiers. Within this medium attenuation is very low.

 

Business Process

cont·d

The Fiber Optic initiatives in Nigeria have the prospects of providing viable and sustainable broadband networks, networks, especially in cities along the coast. The fibre optic initiatives will also provide opportunity to businesses and other multinational corporation to have reliable broadband connectivity in the event of service interruptions or any adverse weather effects that can cause damage to satellite dishes or terrestrial antennae.

Furthermore, the linkage will also go a long way in safeguarding Nigeria·s telecommunication infrastructure by catc hing up with developed world. The following business strategies are proposed in addition to the present avail available able Fibre Optic

services presently offered.

 

Business Busine ss Proce Process ss ² Marke Markett Ana Analysis lysis Significant consolidat consolidation ion has occurred in Nigeria's Internet and broadband sector in the past year,, from over 400 ISPs to around 150. New powerfu year powerfull players from the fixed-wi fixed-wireless reless and mobi mo bile le netw network ork oper operat ator or cam amps ps hav ave e enter ntered ed the mar arkket wi witth adv advanc anced ed wireless wireless broadband High-speed wireless transmission transmission of data. Nigeria is the most competitive fixed-line market in Africa, featuring a second national operator oper ator (SNO (SNO, Glob Globacom acom) and ov over er 80 other co comp mpani anies es lilicen censed sed to provi provide de fi fixe xed d telephony services. The alternative carriers combined now provide over 95% of all fixed connections while the ailing incumbent, NITEL, is looking for a new strategic investor and new business models to turn the company around. The majority of fixed lines has been implement implemented ed using wireless tec hnologies, which gives the network operators the opportunity to also enter the lucrative mobile market under a new unified licensing regime and has helped them to secure hundreds of millions of US$ in

investments

from

local

and

foreign

investors.

 

Business Busine ss Proce Process ss ² Marke Markett Ana Analysis lysis Several microwave and fibre-based national backbone infrastructures are being rolled out by various var ious com compani panies. es. NITEL·s monop monopoly oly on internatio international nal fibre bandwi bandwidt dth via the SAT-3/WASC submarine cable system ended in 2009 when Globacom·s Glo-1 cable landed in the country, which will also deliver a boost to t he country·s underdeveloped Internet and broadband sector sector.. Early in 2009, Ericsson signed the deal with Nigerian telecom company 21st Century Tec hnologies was signed in the end of 2008 and deployment to the fi firs rstt 10,0 10,000 00 home omess st starte arted. d. The cont ontra ract ct cover overss the en enti tire re spec spectru trum m of su suppl pplyi ying ng,, bu builildi ding ng an and d sy syst stem emss inte integr grat atin ing g a nation nat ionwi wide de res reside ident ntial ial fiber fiber-op -opti ticc br broad oadba band nd net netwo work rk in Ni Nig geria. eria. It als also o inc includ ludes es the latest latest Giga Gi gabit bit-c -capa apable ble Passiv assive e Opt Optic ical al Net Netwo work rk (GPON (GPON) Fiber-To-The-Home (FTTH) technology,

enabling

advanced

high-speed

broadband

services.

The FTTH network will provide high-quality broadband connectivity and services suc h as IPTV, high-speed internet access and voice-over-IP.

In the second quarter of 2010, Main-One Cable also came on stream. The submarine fibre optic cable is 7000 kilometres long and a 1,920Gbps capacity that connects West Africa to Europe..

 

Business Busine ss Proce Process ss ² Marke Markett Ana Analysis lysis With landing stations in Nigeria and Ghana and branc hing units in Morocco, Canary Islands, Senegal and Ivory Coast, the cable is expected to deliver broadband capacity to West Africa, more than 10 times what is currently available. With its cable system now turned on, Main One is poised to c hampion a communications revolution in Africa, impacting businesses, governments and individuals by providing higher bandwidth and exceptional speeds at a lower lower cost. The ramifications ramifications of Main One·s cable is expected to be felt in all sectors: from education, to health, to entertainment, helping to drive economic e conomic growt growth and creating job opportunities oppor tunities all

over Africa. Most Telecommunication companies companies are presently subscribing to these fibre-optic backbones to offer services to their teeming subscribers.

 

Strategies In ac hieving the required margin in this business, the following strategies could be adopted to provide the required ROI. As the global demand for broadband access continues to rise, service providers around the world are accelerating their deployment of fiber networks, from fiber-to-the-node all the way fiber-to-the-ho e-home me (FTTH) installati to fiber-to-th installations. ons. In Nigeria, subscribers' appetite app etite for bandwidth is just as voracious as that of people in other nations. A. Co Con nne nect cto orizat izatiion - Offer fferin ing g serv servic ices es to oth ther er Fibreibre-Opt Optic ic Serv Service icess Service providers want to install flexible and reliable F TTH arc hitectures at the lowest possible cost, and they must make several important decisions, among those decisions is how to connect

the various segments--feeder , distribution and drop--which carry the signal from the central officfiber office e to tsegments--feeder, he subscriber premises. The choice is to use splicing or a connectorized (plug-and-play) approach for the optical splitters in distribution frames, fiber distribution hubs (FDHs) and distribution boxes. For many service providers, it has been easier, at least initially, to build a business case for splicing. houg h that h is more Alt labor-intensi labor-intensive veare thanextremely the use oflow connectorized terminations, , labor rates in approac many nations, nations , including Nigeria, relative to otterminations her countries.

 

Strategies Further bolstering the early arguments for splicing was t he fact that network arc hitects who designed desig ned some of the early FTTH deployment deploymentss discovered that connectors experienced more loss than occurred with straight splicing. To minimize their loss budgets, they decided that splicing inputs to the splitters was preferable. Unfortunately, splicing fiber to the splitters has created its own set of problems, starting wit h the amount of time required to install eac h splitter. In addition to taking considerably longer than mating two connectors, splicing affects the work force: the addition addition of each new splitter requires the dispatc h of trained trained,, highly-skilled tec hnicians who need specialized splicing equipment. If one or the other is not readily available, the time required to perform the task increases and thus slows down the overall deployment. The initial turn-up of the cabinet gives rise to another splicing-related problem. To test all the fibers, a tec hnician must splice pigtails to connect eac h input to the test equipment. Splicing on pigtails and cutting t hem off again after testing consumes a great

deal of time during initial turn-up, w hich could prompt some tec hnicians to test the fibers through the splitter or to not test them at all.

 

Strategies

Both practi practices ces can reduce the network's performance and reliabil reliability ity.. In addition, because testing the splitter requires a tec hnician to splice a connector to t he splitter's input, testing both the fiber and the splitter requires a tec hnician to break a splice; splice connectors to both the fiber and the splitter; run the tests; cut off the connectors; and re-splice the fiber to the splitter input. Clearly, this multistep m ultistep pr process ocess costs a great deal of time and money money.. Although mone money y is obviously a major concern for cost-consci cost-conscious ous ser service vice providers providers,, time to market is a big factor, too. Subscribers in Nigeria, like subscribers in most areas of t he world, are pushin ing g for high-spe -speed ed ac acce cess ss an and d the addition additional al ban bandwi dwidt dth they ne need ed to sup support port their applications.

 

Strategies

Benefits of Connectorization ‡

Delivers lowest lowest cost of network ownership

‡ Allows for flexibility to meet future network requirements ² Electronics/Tec hnology upgrades ‡ Delivers faster return on capital  ² Connectorized arc hitectures allow faster network construction, positively positively impacting internal return on capital metrics. ‡ Enables carriers to avoid unnecessary capital costs  ² New FTTP markets may not have to purc hase capital equipment (splice mac hines) to ‡ Aligns deploy. expenses to revenue  ² Drop placement can be deferred until customer turn up.

 

Strategies

B. 1.

Characterization - Fiber optics for telecommunications have been in wide use since the mid- 1980's through NITEL. Lots of fibers in the ground need to be certified cer tified for higher

Fiber

speed transmission (OC-192, OC-768). - Measure Chromatic Dispersion - Polar Polarization ization Mode Dispersion - Link Loss - Return Loss. - Provide full test documentation tto o fiber users. Monitoring - Many fiber optics users would like to monitor their systems but don't want tto o purc hase the monitoring equipment (RFTS). Some contractors have begun monitoring optical fibers for others (banks, hospitals, airlines, etc.) They bundle this service with rapid repair in the event of a system or fiber outage. 2.

 

Strategies

cont·d

OSP OSP Co Con nstru struct ctio ion n - many telecommunication (Telcos) companies have reduced headcount to the point that they are having difficulty repairing damaged fiber optic routes in a timely

3.

manner. The NCC has strict reporting requirement requirementss for major outag o utages es and t he Telcos are sensitive to the adverse publicity from suc h eve events nts.. In addit addition ion to monitor monitoring ing and repai repairr services new buil builds ds

may be contracted out. 4. Pla lan nt Upgrad grades es - significant upgrades will be needed before some fiber routes can carry higher bitbit-rrat ate e sign signal alss suc suc h as OC OC-1 -192. 92. Thes ese e upgr gra ade dess mus must be pr prec ece eded ded by

c haracterization tests.

 

Strategies

cont·d

C. Fibre Optic Lighting

Fibre optic lighting covers a wide range of things. It can be divided into two distinct sub-sections, one is home/commerc ome/commercial ial lighting, this is for general purpose lighting. The second is for decorative lighting. Fibre optic lighting is an interesting and relatively new tec hnology. It uses less energy than most other light sources, making it greener. They also tend to last far longer t han traditional lighting fixtures. However, it does tend to cost more money upfront. Fiber Optic lighting is the tec hnology of transmitting light from a universal element (illuminator) via an acrylic cable solid or standard core) to a fixture or feature. Fibre optic lighting does not heat up like most other light sources. It consistently stays cool. Because of this, fibre optic lighting is great for things like commercial freezers or museums, where the items being lit cannot get too hot or they will be damaged. This light also does not fade objects at all. Most other lighting sources use an ultraviolet light w hich emits harmful rays. Fibre optic lighting uses a bright white source, making it safer to use in the home and in a business.

 

Strategies

cont·d

This lighting also works well outside or in wet/damp places. It will not shock or electrocute you like electric lighting.

It is important not to confuse fiber optic lighting with services like Verizon FIOS, which uses a different type of fiber optics, optics, in a cable form. Utilitaria Utilita rian n fibe fiberr op optic tic ligh lightin ting: g: Re Reside sidenti ntial al Fiber iber Op Optic tic Lig Light htin ing g There are many uses for fiber optic lig hting within the home. It gives a very unique look for interior spaces. The light given off from fiber optic lighting is generally described as a ¶glow·. It is not harsh, but soft, white light, whic h allows you to see comfortably. These also will save time and money as they last forever and need little maintenance. iber er Fib

Optic Optic Ch Chan ande delie liers rs

These are a great combination of both utility and decoration. Although these can easily light up a room, they are generally used to en hance a space. This is due to the color c hanging abilities these have. It is very eye-catc hing to have a c handelier whic h c hanges colors nice and slowly. This will make a home or business something to remember.

 

Strategies

cont·d

Deco De corati rative ve fib fiber er op optic tic lig light htin ing g so sour urce ces: s: Fib iber er Opti Opticc Lamp Lamp This is probably the form of fibre optic lighting which most people are familiar with. These can be found at many specialty stores and many people keep them in their homes as a decoration. The fiber optic lamp usually has the ability to c hange colors slowly, which can give a room a great feel. These lamps come in a range of colors (or multi ), and the lighting implements are usually LED (light emitting diode). Fib iber er

Optic Optic Tab able le La Lamp mp

The fun of a fiber optic lamp lamp,, on the table! These are available in many different colors, plus Th the color c hbot anging ones. are available in bothMost battery plug-in of models, sometimes h. These are ey generally inexpensive. of thoperated em featureand hundreds optic fibers which extend out from a base, creating a fan-like shape which lights up and c hanges colors. Some of the bases also include clear crystals w hic h react to the light and add to the show ow..

 

Conclusion The need for fast internet service to en hance information dissemination and other basic human activities activiti es necessitated the development of the Fibre Optic tec hnology in the early 1980s.

In Nigeria, the introduction of the Fibre Optic business by Telecommunication companies to provide broadband access as against the dial-up system has made Nigerian companies to imbibe this tec hnology to satisfy the ever-increasing need of its subscribers for information dissemination. This Strategy document has examined three different business categories that a Fibre Optic com co mpa panny ca cann tap tap int into to pr prov ovid ide e the re requ quir ired ed Retur eturns ns on Inv Inves estm tmen entt (RO ROII), nam namely ely,, Connectorization, Connectorizati on, Fibre Optic Repairs and Fibre Optic Lighting. These services are relatively new in Nigeria and will basically improve t he earnings of an existing Fibre Fibre Optic company and also of new entrants into the business. These services are in addition to the general broadband access options presently offered by these companies.