Upside of 10 Gbps fibre network upgrade for telcos difficult to quantify: analysts

IT REMAINS to be seen if telcos will be able to see any immediate financial impact from the planned fibre network upgrade to provide 10 gigabit per second (Gbps) service to households, said analysts.

On Wednesday (Feb 21), the Infocomm Media Development Authority (IMDA) announced that it would invest up to S$100 million to fund back-end network and front-end user equipment from mid-2024 to 2026.

DBS analyst Sachin Mittal said that he does not expect the cost of the upgrade to cost as nearly as much as what OpenNet – a consortium of Axia NetMedia, SingTel, SP Telecommunications and Singapore Press Holdings – spent in 2008 to roll out the fibre network.

At the time, the consortium planned to spend S$1 billion on initial construction costs and up to S$2 billion to lease infrastructure such as ducts, manholes and exchange buildings from Singtel.

Lower costs

In the case of the current upgrade, Mittal noted that the costs to support 10 Gbps will be cheaper in comparison, as the most expensive part of the initial roll-out of the Nationwide Broadband Network was in digging up the ground to lay fibre cables.

He added that the electronic equipment required to support 10 Gbps speeds could still be costly, although the cost of upgrading such equipment has not been made public yet. “That’s where the government might subsidise the equipment so that (10 Gbps speeds) become islandwide, and something which telcos can afford to roll out,” he said.

While it is difficult to say if the network upgrade would be lucrative for telcos, he noted that adoption of 10 Gbps speeds would be slower without government support.

Meanwhile, an RHB research analyst said that the upgrade is still a very hypothetical development as the industry is engaging IMDA and the government.

Even so, the analyst noted that StarHub is already upselling customers on its 10 Gbps network.

The telco has said that it has seen a “steady increase” in adoption of such plans, though it has not revealed any subscription figures.

“While this funding may not represent an immediate game changer for telcos, it holds promise for the future,” RHB said, adding that potential use cases are still being identified.

Andrew Bond-Webster, Commscope vice-president of connectivity and cable solutions, noted that aside from costs that telcos will incur in the upgrade, consumers will also have to be prepared to upgrade their hardware to see the benefits of the full 10 Gbps speed.

“More costly offerings from network operators could bundle in advanced routers that can support 10 Gbps networks at the home,” he said.

However, he added that most devices, such as smartphones or laptops, would not be able to take advantage of such speeds.

More to networks than speed

Meanwhile, network analytics company Opensignal’s principal analyst Sam Fenwick said that while the IMDA’s announcement is ambitious, speeds are only one part of the broadband experience.

Reliability and latency are also areas that home users will care about, especially if multiple users are working from home, playing games online and streaming video at the same time, he said. “It would be great to see additional goals for the Nationwide Broadband Network that are similarly ambitious in these areas,” he said.

For networks, speed refers to the maximum amount of data that can be sent at a time, while latency refers to the amount of time it takes for a data packet to go between both points. Higher latency can result in delays in data transfer, which lead to choppiness in video calls or perceived lag in online games.

Fenwick added that other factors that influence a user’s end-to-end experience include the connection between Internet service providers and content delivery networks.

“Developers typically work to produce applications that require technical parameters that are fairly easy to achieve with technology that’s currently in widespread use.

“This means that Singaporeans may have to wait for much of the rest of the world to catch up before new applications that require 10 Gbps connections come along,” he said. He added that a similar parallel would be with the lack of use cases for millimetre-wave (mmWave) 5G networks, which can provide much faster speeds than typical 4G and 5G networks. “From a user’s perspective, I’m not aware of any application that checks to see if you have a mmWave connection and then makes use of this information to do something novel that couldn’t be done on a non-mmWave connection,” he said.

As for potential use cases that could emerge, Fenwick said that it depends on whether the processing for heavy applications, such as mixed reality services, will be done on the device or the cloud.

“Cloud services are typically far more reliant on the quality of a connection, and it’s worth noting the setbacks that the cloud gaming industry has suffered, such as the shutdown of Google Stadia in January 2023,” he added.