Algerie Telecom becomes first operator to pioneer Fibre-To-The-Home strategy

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Algérie Télécom is the first African telecoms operator to put together a business strategy that includes Fibre-To-The-Home. Although the price of connecting households to fibre has dropped considerably elsewhere, it still remains an expensive way to provide a local connection. However, the prize it is seeking to create is a large user base for its forthcoming triple play offer. Russell Southwood looks at what it’s up to.

The operator is deploying an FTTH network from French vendor Sagem Communication and on15 December it will be launching a triple play offer with voice, broadband Internet and television. The triple play service will initially be offered in Oran, Alger, Sétif and Constantine before being rolled nationally in 2008.

According to Malik Hachelef, the Manager overseeing the FTTH roll-out:”The service will consist of a modem that can connect to the fibre network that will give very high capacities allowing either triple or quadruple play.”

Algérie Télécom has 500,000 ADSL lines in place and is on its way to 3 million lines by the end of 2009. According to CEO Slimane Kheiredine, a WiMAX service will fill in gaps in the company's service where it does not offer ADSL and allow it to consider new services such as IP-TV. The Algerian national operator is working with foreign partners like BT and Korea Telecom on developing new services and is also planning to launch digital terrestrial TV trials.

The drive to offer triple-play was triggered earlier in the year by a change in the French satellite Pay-TV market. Previously TPS and Canal Satellite could be received in Algeria using smart cards purchased in France by friends or relatives. But the merger between the two French platforms has created problems for Algerian viewers, as the unified platform uses a more secure encryption technology, eliminating the foreign smartcard option.

This turn of events has helped Saudi-owned ART, the only digital pay-TV operator that officially sells subscriptions in Algeria, which offers 3, 6 and 12 month subscriptions for DZD 3,000 (Algerian Dinars, approximately US$ 42.00), DZD 5,000 (US$69) and DZD 9,000 (US$125). The only other option is satellite reception of the unencrypted French TV channels such as TF1, M6, France 2, France 5 and France 3.

FTTH is considered the most expensive way to connect users at the local loop but it does offer extremely high speeds, both up and down unlike DSL. The average price per household connected in the USA varies between an estimated US$750-1,000. Actual turn-out figures for one US scheme were between $809-3682, with an average of US$1171. What is extremely hard to estimate is how much lower these figures can be taken in a developing world context.

Algérie Télécom recently saw off SNO Lacom which retired hurt, saying that the incumbent had been given undue advantageous in the competition between the two companies. If Algérie Télécom succeeds with its current business strategy, it will have built itself an almost impregnable position in the market.