FTTH or FWA? Airtel, Jio take opposing views on which service to offer

Unlike Jio, Airtel won't go for FWA unless the cost of 5G routers dips below $50

The country’s two top telcos, Airtel and Reliance Jio, have taken opposing views on whether to go for 5G fixed wireless access (FWA) broadband or stick to fibre-to-the-home (FTTH) to provide high-speed broadband to millions of Indian households. 

While Airtel believes that FTTH is still the best bet in terms of cost economics, Reliance Jio yesterday not only announced its decision to offer FWA, but also set an ambitious target of reaching 100 million homes through it. Two years after its FTTH rollout, Jio has managed to get only 7 million households in its kitty.

Sources in the know say that Jio has its reasons for going for FWA.The cost of a home pass, or the potential number of homes that one can connect in an area through the FTTH infrastructure in that area, is around Rs 12,000 per connected home. This includes right of way, equipment, digging costs, the cost of fibre, amongst others.  

But it has found that not more than 50 per of the homes actually buy the FTTH service or connection. So effectively, the cost per connected home doubles to Rs 24,000. However, in FWA, fibre is replaced with wireless in the last mile and there is no digging or right of way needed. The main cost for a connection is the customer premise equipment, or the router, which is currently priced at $200. This is still cheaper than the effective cost of per home connection through FTTH. 

Besides, with the use of FWA 5G routers going up, their prices too are expected to fall dramatically. What’s more, Jio is of the opinion that FWA broadband is easier to roll out and scale up and will probably help in getting the big numbers that have been eluding telcos through FTTH. (The total number of households connected through FTTH is only 17 million). 

For Jio, which wants to bring India into the top 10 countries with FWA, raising it from its current rank of 138, fixed wireless access broadband is obviously a big opportunity.

However Airtel has a contrarian view on the matter. Gopal Vittal, CEO of Bharti Airtel, in an analyst call,explained why it is not the right time to go for FWA. He agreed that it is an interesting option, and one which has been deployed in some markets like Germany and the US. But he also felt that one must see whether its costs are as competitive as that of the connection per home through FTTH.

Vittal said that Airtel has been able to bring down the cost of a home connection  to around $30-35, and in cities it is even less. Hence, the blended cost is much less than $30, he says. 

However, if one rolls out, say, 100 home passes, the utilisation is only about 30 per cent over the next 18 to 24 months, Vittal said. So if the blended cost is $18, the cost per connected home goes up to $50. As against this, the cost of an FWA router is $200. Hence, until this price crashes to below $50, switching to FWA does not make sense, Vittal said. 

He added that in the US deploying FWA made sense for Verizon because their cost of a home pass connection is a staggering $400. 

It remains to be seen which telco makes the winning choice in the contest between FTTH and FWA broadband service. 

Pointers

1. FWA is easy to roll out and scale up. Jio has an ambitious target of reaching 100 million homes through FWA.
2. With only 50 per cent of FFTH home passes taking a connection, estimates are that the cost per connection is as high as Rs 24,000. But 5G router FWA cost is $200.
3. The price of 5G routers is expected to go down with more volumes. According to some estimates, it will fall below $100.
4. Also, FWA is quicker to roll out and scale.
5. Airtel says that currently, its per home connection cost through FTTH is below $30.
6. Even if 30 per cent of home passes are converted to subscribers, the cost per home connection is $50. That is one fourth the cost of a 5G FWA router.
7. Airtel feels that it makes sense to shift to FWA if the cost of the router goes below $50.