Fibre optic African utilities telecommunication
Utilities can generate substantial revenue from leasing telecommunication networks within transmission and distribution infrastructure to cellular operators.

This was the message from the African Utilities Telecom Council (AUTC) at African Utility Week held in Cape Town last week.

Speaking at the event, Alan Driver, owner of South African consultancy AED Consulting, said: “It makes no sense not to utilise telecommunication assets that have the potential to generate revenue for a utility.”

Driver said utilities “must invest in fibre optics as they are crucial for smart grid requirements, provide high quality transmission lines that aren’t affected by weather and supply guaranteed network security. And microwave radio in most utility environments has really reached its sell-by date.”

Telecommunication network planning

Driver explained that a cost-effective cable capacity of OPGW (the preferred choice), WRAP and ADSS, is somewhere between 24 and 48 fibre cores.

He said: “It doesn’t make any economic sense to install any less than that and the typical standard is around 48 cores. Considering that the utility uses maybe a maximum of eight, it leaves many cores underutilised and represents a potential revenue stream for the utility.”

Corrie Vermeulen,  director of AUTC, who was also at the event, said: “Vodacom, MTN, and CellC are ready to take on extra fibre but the utilities aren’t ready.”

He added: “What is important however if they [utilities] roll out a network is to understand what commercial operators potentially need and make sure they cover that as well.”

Revenue generation

Other potential customers for leasing fibre optic cables include fixed line operators, internet service providers, banks, and government institutions.

Driver explains that utilities “shouldn’t be going into this market to compete in any shape, way or form, with the existing telecommunication operators” but equally can charge high leasing fees.

He said: “By renting a line from a utility, customers are saving ZAR400,000 [$25,741] per km to install buried cables so the recommendation is to go in with a higher rental price and negotiate down.”

Pricing is typically per core, per meter, per month for a set term excluding customer’s responsibility to connect into the network. Driver said: “The utility will provide the fibre end to end but the customer will be responsible for the last mile section.”

At a tariff of ZAR.65 per metre, per month, Driver estimates that leasing a 950km line from Cape Town to East London could generate annual revenue of ZAR7.8 million ($514,809) from one customer.

‘Unlimited’ opportunity

Vermeulen of AUTC said “opportunities are unlimited but it’s going to take time to develop this non-existent market and somebody needs to get the message through to the relevant governmental departments and CEOs of companies.

“AUTC will stimulate the thinking of utilities and then they must take it further.”