Fiber Cheaper Than 5G for Broadband – XL Axiata

Robert Clark
News Analysis
Robert Clark
9/30/2019

XL Axiata, Indonesia's second-biggest telco, is betting on fiber for home broadband because it's more cost-effective than 5G.

Rob Langton, group head, XL home at XL Indonesia, says the company has explored the possibility of 5G for fixed wireless access (FWA) but concluded fiber is more affordable and can meet customers' expectations.

It's a slightly counter-intuitive message for a mostly rural, developing country market spread across 17,000 islands.

XL is now rolling out its FTTH network, and Langton says high-speed wireless may help the company sidestep the long-winded permitting process.

Approvals may be required from central, regional or local governments, each of which operates differently.

"So we see 5G is an opportunity when we want to extend the coverage to get around some permitting issues," said Langton.

But it's difficult to see a 5G business case for consumers in Indonesia, he added.

"Indonesia is a very low ARPU [average revenue per user] market, so trying to get customers to spend more on a technology like 5G is very challenging."

This was the lesson from the introduction of 4G.

"There were a lot of operators who jumped on the bandwagon with 4G and said 'you've got to have this, it has fantastic performance,' but the reality is customers didn't have 4G devices.

"We were giving promotions, offering gazillions of free gigabytes that the customers didn't need at the time.

"We should not make the same mistake with 5G," he said. "If you can't add that extra value, then let's not do it."

He said XL was already serving some FWA customers with LTE, but it couldn't deliver the level of service they were expecting.

"The biggest opportunity in Indonesia right now is the home market," he said.


For more fixed broadband market coverage and insights, check out our dedicated broadband content channel here on Light Reading.


Currently, just 10% of the country's 60 million households have a broadband connection, and the market looks ready to grow.

In a customer survey, two-thirds of those without home broadband said they intended to buy the service in the next 12 months.

"It has huge growth potential," Langton said, but customers were also saying they expected a faster and more stable experience from home broadband.

"One of the challenges in FWA, particularly 4G, is delivering that experience. So we started with fiber because it's a more reliable technology."

As well as offering a better experience, the cost of fiber is coming down sharply, and the cost of CPE (customer premises equipment) is well below that of 5G terminals.

"We see fiber as a more cost-effective technology for Indonesia at the moment. So it makes sense to use fiber, and 5G as an extension of that."

He says for telcos the demand for home broadband offers a chance to go beyond selling data and offer convergence services.

XL is also working with gaming providers to provide good gaming experience, leveraging the better speed and latency of fiber.

"My prediction is in three years will cloud gaming will be massive in Indonesia," Langton said.

— Robert Clark, contributing editor, special to Light Reading

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Woma92
Woma92
10/4/2019 | 7:52:50 AM
Re: Labor Cost
More of the same is happening in other emerging markets. In Latin America cost per home passed for HFC are around $100. Low labour costs and high density are the key drivers for such low build costs.
sandy01
sandy01
10/2/2019 | 3:07:26 AM
Fiber
wow, great news I am also thinking of install Fiber in my house. Even I have contacted best buy to install Fiber network in my house. You can also contact them by visiting their support team which is known as geek squad
brooks7
brooks7
9/30/2019 | 4:37:22 PM
Labor Cost
One of the factors that greatly drives the cost of FTTH networks is the construction cost of the physical plant.  In countries with relatively low labor cost, this is a much lower concern than in the large economies.  Indonesia is a large country, but still has much lower labor costs than say the UK or Japan.  This alone changes the relative cost structures of different networks.  I have seen rural Fiber Networks in the US in the range of$3 - 5K per home passed.  That does not pass the ROI smell test in the US.

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