Fibre operators muscling out internet service providers
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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 ...
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 ...
