With finance houses investing billions in fiber and governments committing to country-wide rollouts as part of the EY’s European Gigabit Society objectives on connectivity, you could be forgiven for thinking that we are in the middle of a simple transition to super-fast networks with the capacity to spare. But anyone who has been around telecoms for any length of time will know that next-generation networks always come with headaches. And the pain points are always different. The integral value of ubiquitous ‘full fiber’ access has had some very positive socioeconomic benefits across a great number of countries since COVID broke and lockdowns began, not only for those working remotely but for those living in and enjoying rural life and being able to remain living there because they are now having connectivity.
The upfront appeal to investors is clear – fiber is expensive to deploy but once in the ground the value quickly rises. Essentially it’s glass, which means it costs less to maintain than copper, ticks increasingly important ESG (Environmental, Social, and Governance) criteria, and promises a huge payback over an extended period of time. You could even call it future proof. Full fiber access as a strategic infrastructural investment and utility is forming and even strengthening public policy across Europe.
All good so far, but there are a couple of challenges that need to be factored in. To get the most value out of what has the potential to be a game-changing technology, investors and independent alternative network (AltNet) operators need to be aware of two things: a skills deficit when it comes to deploying fiber; and its nuanced relationship with 5G, another network technology that’s getting people very excited.
Growing a talent pipeline
Hiring people with the expertise to design and build fiber networks is hard. AltNet operators might be shocked to discover that higher education institutions are behind the curve, that the engineering talent pipeline is not there. Unlike other engineering disciplines, such as structural, mechanical or electrical, you can’t actually complete a degree course in fiber engineering in the UK or Ireland – which is astounding when you consider the amount of investment it’s attracting.
We recognized that the lack of fiber design and build courses created a need that we had to address. As a network infrastructure specialist, we are dependent on qualified engineers coming out of third level to grow our business, so when it became clear that the talent pool was near empty, we set about creating our own. In the last three years, we have put enormous resources into the development of in-house training.
I suspect that some areas of the market are either in denial or just haven’t realized the scale of the shortfall. At Indigo, we knew we would be busy as fiber rollout began and we were pleasantly surprised at how much work and how quickly it would come out way. Not only have we been scaling up our training to meet the demand, we have also been looking further afield for talent.
We are hiring in countries where the fiber rollout is more developed than the UK and Ireland, and skilled resources exist to support the high penetration of fiber to the premises and home.
Wireless and fiber considerations
The next iteration of mobile networks presents more than a skills challenge and AltNet operators need to understand the role 5G will play in meeting the bandwidth needs of consumers and businesses. The first thing to be clear about is that wireless and fiber are not in competition, they are complementary. We take this for granted at Indigo because we design both, but in the wider world it’s a point that still needs to be drilled home.
Where one wins over the other as the primary means of access should always depend on the business case and backhaul considerations. Finance houses and AltNet providers need to make themselves familiar with both technologies or risk a rollout based on a bad business case. You have to weigh up performance versus cost and capacity requirements and the part that design and engineering play in the network build. Investors are clambering across each other to obtain fiber assets across Europe. Most are infrastructure and pension funds given the non- precarious nature of these investments and their proven ROI.
There are pros and cons for each: customers get a level of comfort from fiber in a way that they don’t with wireless because it’s a tangible piece of technology that offers more network throughput. The downside is that it might also involve invasive digging and reinstatement works as well as complicated planning and council permissions. All of this ramps up the cost.
The long-term value of putting fiber in the ground might be lost if a mobile operator reaches the same rural destination with 5G for a fraction of the investment. Wireless technologies can be deployed much faster and next-generation mobile networks will be able to carry much larger data packets than they did in the past. So if the challenge is to deliver broadband to a rural village, a 5G or microwave deployment is likely to be easier and more cost-effective than fiber to the home.
Things become more nuanced when it makes sense to use them together. Ireland’s National Broadband Plan, for example, is not planning to use 5G but may consider the use of licensed microwave for access in particularly remote areas of the country. Conversely, 5G and other wireless technologies need fiber-based infrastructure for backhaul, which is why so many mobile operators are expanding their fiber footprints and offering full fiber services to their customers.
The point is that AltNet companies building businesses around fiber need to be aware that achieving a return on investment involves more than securing a contract with a local authority. Skills shortage and the role of 5G have to be factored into the plans. Then there is the challenge of turning a fiber network design into a well-executed build that comes in on budget. But that’s another story…
Ray O’Connor, Chief Revenue Officer, Indigo Telecom Group