Vodafone Warns Against Excessive Fibre Investment

Mobile operator Vodafone claims that many emerging economies are investing unnecessarily in fibre optic broadband networks, when they should be focusing instead on extending the reach and capability of mobile networks.

In its 2011 Social Impact of Mobiles (SIM) report, Vodafone warns that the current level of investment in fibre optic networks in emerging markets is unsustainable, due to the cost of deployment in rural areas. It also points out that, given the ubiquity of low-cost phones in these countries, mobile is likely to remain the primary way for people to access the Internet.

“We believe that our findings show that the current emphasis on delivering fibre optic cable everywhere overlooks other effective means of extending the use of broadband in an affordable way,” said Diane Coyle, chair of the Vodafone SIM Panel and editor of the report.

Fibre vs. mobile

Vodafone used the Indian states of Maharashtra, Karnataka and Rajasthan as an example, to compare the feasibility of extending fibre access networks against mobile networks. The company concludes that the deployment of a fibre access network would only be commercially viable in 3 percent of the districts, while wireless broadband coverage could be provided in 98 percent of the districts.

In reality, the solution to the problem of broadband provision in remote areas is likely to be a combination of different technologies, including ADSL, fibre, mobile 3G and satellite. While Vodafone makes a valid point about the widespread use of mobile technologies in developing countries, it should be noted that the company is itself a mobile network provider, and therefore prone to bias.

The report goes on to state that social networking sites such as Facebook are helping to build demand for data usage to the point where economies of scale accelerate.Vodafone recommends that governments in developing countries make an effort to provide mobile-enabled services free of charge, in order to increase broadband take-up and reduce the digital divide.

The importance of mobile spectrum

The report also highlights that the availability of spectrum will drive technology innovations and better coverage for the growing demand for mobile broadband services in emerging economies.

“It is tempting to see the spectrum challenge as being the same in developed and emerging markets. That would be fundamentally wrong,” the report states. “The reason is that the widespread fixed networks offer the possibility in developed markets of carrying a sizeable proportion of the data traffic (e.g., via Wi-Fi). But those possibilities just do not exist in the emerging markets and therefore all that traffic will fall on the mobile networks.

“Absent plentiful spectrum, the traffic will suffocate service quality. Emerging markets are going to need large and appropriate spectrum assignments to deliver their data applications.”

Meanwhile, in Britain, the communications regulator Ofcom is currently preparing for the long-awaited auction of 4G spectrum around 800MHz and 2.6GHz, which is due to take place in the first quarter of 2012. Ofcom recently released research, stating that 4G mobile technology will deliver more than three times the capacity of existing 3G technologies, using the same amount of spectrum.

This increased spectrum capacity is essential in meeting the UK’s rapid increase in mobile traffic, fuelled by the growth of smartphones and mobile broadband data services. Only this week, a group of MPs opened a debate in the House of Commons, in an attempt to pressurise both Ofcom and the government to expand the provision of 4G technologies to more isolated rural communities.