Fibre operators muscling out internet service providers
Supplying both services means the companies hamper healthy competition, which affects pricing and delivery, writes Simon Swanepoel
For most city dwellers living in a Covid-19 world, waking hours are increasingly spent online for activities related to work, school, shopping, leisure or life in general. More consumers need good internet connectivity at home, and for more reasons than before.
We have a long way to go to ensure internet access for all South Africans, and many have been disconnected from educational and vocational opportunities during Covid-19 because of this. Before Covid, about 56% of SA’s population were internet users, yet according to Stats SA’s general household survey of 2019, only about 10% of South Africans have internet access at home.
The past few months were particularly busy for internet service providers (ISPs), with consumers investing in equipment and technology at home to boost productivity, keep them connected and enhance digital experiences. With this notable increase in demand for internet services, the growth prospects for ISPs remains strong for the foreseeable future.
However, over the years we have seen fibre-network operators (FNOs) launching their own ISPs as part of complicated shareholding structures. This has created direct competition with their current ISP customers. It seems this trend is now increasing, and there are also other nontraditional players, such as DStv, launching live-streaming services (without the use of satellite) by getting ISPs on board and creating on-demand streaming-only bouquet services.
Competition is good for consumers, but the entry of more FNOs competing as ISPs (with others on the way) makes them both suppliers and competitors to the majority of ISPs. While an FNO selling access to its fibre cables and providing the internet directly to customers is not illegal, in the long term it will hamper healthy competition and reduce the number of players, which always affects service delivery and pricing.
One FNO in particular competes with its ISPs as a matter of course. When it approaches a body corporate or homeowners’ association, it wins exclusive rights from those customers by first claiming that it is an open-access network with an array of ISP options available to the customer. In reality, once the contract is awarded to that FNO, which owns the only unregulated cable available within that estate or neighbourhood, it closes orders and sales for up to three months, during which only the ISP that is part of its complicated shareholding structure and its own reseller network is permitted to place orders.
This approach means the FNO-owned ISPs can decide pricing and service-level agreement conditions to suit their pockets and not their customers’ experience. In the long run, it is the customer who will suffer due to higher prices and poor service.
As the head of an ISP, I can vouch that many of us are passionate about enhancing the lives of our customers by providing them with the best possible online experience. We have, however, experienced first-hand the effects of FNOs favouring only the customers that have signed up with their own ISPs, jeopardising the internet access and experience of other customers who are dependent on their fibre but use independent ISPs.
The recent high court ruling that Telkom must enter into negotiations to lease its fibre ducts (in support of a decision by the Independent Communications Authority of SA regulator) will hopefully go some way in encouraging more open access in the information and communications technology (ICT) sector. The dispute began in August 2015, when Vodacom wrote to Telkom asking it to lease it space in the ducts in 15 estates so it could run fibre cabling through them and connect residents to the internet. Telkom refused.
Not only do we need to ensure a bigger choice of fibre operators and more competition among them, we need to ensure that FNOs are regulated to protect the consumers, particularly for the long haul. The government needs to play a role in that regulation and not just leave it to the courts. Where one FNO has laid fibre, any other FNO should be allowed to use those ducts to lay fibre too.
As independent ISPs, we should champion the call for fair competition within the sector, so that in decades to come we will look back at an ICT landscape that achieved a truly inclusive digital economy. Without the proper planning and regulation that puts the consumer front and centre, accessibility to a truly inclusive digital economy in SA will remain a pipe dream.
• Swanepoel is CEO of RocketNet.
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