The Broadband Delivery UK (BDUK) initiative has been widely covered in the media in recent months. BT was chosen by the government to deliver UK-wide superfast connectivity via fibre optic cables, but it has transpired that the initiative will leave 10% of the country completely without superfast Internet access.
One of the reasons for this is that fibre isn’t always a commercially viable solution for Internet connectivity in rural areas because of the complexity and cost involved in fibre deployments.
Radio as a cost-effective complement to fibre
Radio technology has been used as an alternative means of providing connectivity between points in a network to the more traditional fibre circuits for over two decades now. Although radio is not expected to fully replace fibre circuits as a means of network connectivity, it does provide a commercially viable complement to fibre, which could change the way connectivity is deployed in remote, hard to reach areas. In some rural areas it is just not possible to dig ducts for fibre cabling due to geographical barriers.
Radio technology eliminates the need for wiring and can be set up in a matter of months, delivering high bandwidth connectivity to hard to reach areas more easily and cost effectively. But how can operators compare fibre with radio when it comes to the many variables that impact on deployment costs and network performance?
Fibre vs. radio: comparison challenges
The choice of radio over fibre is often driven by the need for a quick installation or lower provisioning costs. Still, it can be quite difficult to calculate the total cost of radio and fibre, due to the many factors involved – namely the length of main links and bandwidth, points of presence (PoP), excess construction charges (ECCs), site-acquisition costs and margins.
First, the charge for an Ethernet fibre circuit depends on the circuit bandwidth and the length of the main link, while the charge for a radio link depends on the circuit bandwidth and the point-to-point distance between the two sites. To make a meaningful comparison between the two technologies it is necessary to calculate the impact of different main link lengths and bandwidths. For example, on average a radio link is 11% longer than the equivalent main link length. There are also a greater variety of bandwidths available for radio than for fibre, which also needs to be factored into the equation.
Moreover, to compare the cost of an Ethernet local access with the cost of using a radio link, it is necessary to assess the cost of the PoP and allocate at least part of this cost to the fibre circuit. The cost of securing a POP is approximately £17k-£23k CAPEX and £3-4k OPEX. The impact of spreading this POP cost across one or more Ethernet local access circuits can be very significant and therefore usually restricts cost comparisons to Ethernet fibre circuits.
Additionally, there is always the question of the ‘unknowns’. At the time of ordering a circuit, it is not known whether excess construction charges (ECCs) will be required (i.e. charges to provide local access from the exchange to the site). Typical ECCs can range widely, with 12% of chargeable ECCs being over £10,000 and with ECCs being applied in 10% of cases. Similarly, for radio, any site acquisition costs are unknown at the point of ordering a link. Typical site acquisition costs can usually range from £3,000 to £5,000. Given these large variances, and the fact that the charges might not apply at all in some circumstances, ECCs and site acquisition costs are often excluded from cost comparison analysis.
Lastly, there is the impact of margins. Ethernet access circuits are typically bought by a reseller or managed network operator at wholesale rates, to which a margin is added. Thus, it is important to note if retail costs of fibre circuits are being compared with retail costs of equivalent managed radio solutions.
Radio pricing: busting the myth
These many variables aside, there is a widespread perception in the industry that radio networks are more expensive than fibre to deploy. However, we’ve done extensive research into the costs of both technologies, taking into account the above factors. Our calculations show that the price of radio is actually lower than that of fibre in most cases, excluding unknown quantities such as ECCs and site acquisition costs.
Figure 1. For a 10Mb/s service price comparison. Across all circuit lengths over 2km, the price of Radio is cheaper than that of Fibre.
Figure 2. For a c1000Mb/s level price comparison. Across all circuit lengths over 2km, the price of Radio is cheaper than that of Fibre.
Radio pricing is also expected to remain cheaper than fibre in the future because Ofcom has mandated an RPI- 11% per annum price reduction for Ethernet products at bandwidths at or below 1Gb/s for regulated operators. This ruling applies to regulated Ethernet products but would likely also impact the pricing strategy of unregulated competitors. Therefore, it would not be unreasonable to assume that the base price of the 10Mb/s, 100M/s and 1Gb/s Ethernet products (both connection and rental) will be reduced by cRPI-11% per annum.
Other considerations apart from price that makes radio a strong contender include decreased latency times (0.15 ms2 versus fibre’s 5 ms), round trip speeds (1.1 ms versus 1.7 ms) and maximum distance performance, which can be up to 70km, while fibre’s is approximately 35-45km. For both technologies, repair times will sometimes require physical intervention by a field engineer, although in many cases faults can be fixed remotely.
Figure 3. Comparison of Radio and Fibre (non-price elements)
Fibre isn’t always the answer
It is essential for operators to evaluate their current network demands, future bandwidth requirements and think outside the box. UK-wide superfast broadband coverage is possible only when the right combination of technologies is used, including – but not exclusively – fibre, alongside other technologies such as radio. By combining the latest connectivity technologies available in the market, operators are able to meet the public’s ever increasing hunger for more bandwidth, while keeping deployment costs in check.