South African broadband rollout is a myth of epic proportions

9 Sep, 2015
Anthony Laing, chief strategy officer of XON

Proper broadband is still a myth in this country. At the end of last year there was a surge of interest and companies began to offer fibre services. While they offered 100Mbps fibre, both capped and uncapped, prices are high, but comparable to ADSL and you get better service – but only if you can get it in the first place. The price is not the main issue although it’s still an issue. The biggest problem is that most people can’t get fibre even if they’re willing to pay the crazy prices (including me). I have contacted several companies, firstly saying I want to buy fibre (but it’s not available yet), and then saying I live in a building with over 300 apartments and I’m willing to help them with their business case. Zero response.

The Telcos in South Africa have let the consumers down so badly that private companies have set up websites recruiting consumers to help them build the business case. There are examples of this, such as Fibrehoods and VUMA’s Fibrehood service. The VUMA service has a handy map and graphical overlay like an infographic depicting interest in the area. In my area it’s 1% so far. VUMA requires 30% interest for the suburb to qualify.

Telkom’s CEO, Sipho Maseko, recently stated that Telkom plans to connect 1 million homes to fibre in the next three years. The goal is laudable but Telkom’s track record with ADSL suggests that it won’t achieve the goal. It took Telkom 13 years to roll ADSL out to 1 million homes. That’s in a country with a population of 50 million and existing copper infrastructure. Fibre requires new infrastructure from the ground up so I can’t believe that Telkom’s fibre installations will exceed ADSL in the next three years.

For comparison, in the UK, where ADSL local loop unbundling was enforced by the regulator (Ofcom) in 2006, currently over 85% of UK adults have access to fixed broadband at a competitive price. The UK had a total population just over 64 million in 2013.

In South Africa there has been no local loop unbundling and that means private companies have not had the opportunity to compete by offering last mile services to consumers. That’s ironically pushed this state of fibre into existence.

With a few service providers rolling out fibre to the home, they’re essentially cherry-picking because the state of broadband in this country is so dismal. Cherry-picking means they don’t run the business based on traditional capital investment risks with extended business plans to recover investments. The model I’ve seen is that a small provider erects a website offering to provide fibre if interest is strong enough in a given suburb. If it isn’t they simply wrap up the offering and walk away. If it is they roll it out and generate income from day one.

One provider today offers fibre in 43 suburbs in Gauteng, 36 in Western Cape, 12 in KwaZulu-Natal, and also Kimberley. Those are capped offerings, 20Mbps capped at 50GB for R799 per month, 40Mbps capped at 100GB for R999 per month, and 100Mbps capped at 100GB per month for R1 199. The data caps on those bundles are inadequate. You can whizz through 100GB of data on a fibre line delivering an actual 100Mbps. Even a 20Mbps line can suck a 50GB data cap dry in less than a day.

Compare those offerings with what you get abroad: the entry level being 20Mbps, then 100Mbps, and 1Gbps – no data caps. While many of our service providers require a two-year or one-year contract those in London are 6-month contracts and clearly state there are no-contract options too. The 1Gbps offering costs a whopping great £22 – which equates to roughly R460.

It’s not like other capital cities have an advantage over ours. According to Census 2011 the City of Johannesburg population density was 2 696 people per km2 while the population density of City of London is 2 691 per km2.

The problem with fibre in South Africa is that it’s expensive because it’s not subsidised so you need a high density of wealthy people to make it a reality.

And foreign capitals are not selectively rolling out broadband to high density populated areas either. In the UK there’s a drive to bring broadband to 100% of rural populations. We’re not even close to that here. In fact, most rural communities struggle to get a 3G connection and have to make-do with Edge or 2G.

Recent Post

NEC XON helps Africa’s MNOs develop new 5G models

Open RAN frees customers from vendor lock-in and provides cost-effective roadmaps to 5G adoption for Africa’s first and second-tier mobile network operators (MNOs) and communications service providers (CSPs). 5G Open RAN enables new network and business models by...

Africa’s top MNOs and SPs gather for 5G and ORAN conference

Select South African mobile network operators (MNO) and Internet and telecommunications service providers (SP) will on 7 July explore a rapidly growing movement to break the shackles of vendor lock-in using OpenRAN (ORAN) solutions as they transition to 5G. NEC XON is...

Digital price tags a massive hit with Kalahari SPAR and TOPS

Kalahari SPAR and TOPS in Upington has been using digital price tags from NEC XON Retail since November 2021 to eliminate price discrepancies, manage prices, stock, inventories, and improve customer experiences. “I don’t know why I waited so long to do it,” says...