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Fibre land grab accelerates

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 21 May 2015
Telkom will have to step up its game as the fibre sector becomes more competitive.
Telkom will have to step up its game as the fibre sector becomes more competitive.

The rapid momentum towards fibre rollout in SA is set to gain speed this year, as the Competition Commission forces Telkom to discount access to its fast-speed network.

The past few months have already seen fibre deployment speed up, with MTN rolling out in Lonehill, Vumatel adding more neighbourhoods to its network, and Vodacom entering the fray, with the promise of being a serious fixed-line competitor.

BMI-TechKnowledge director Brian Neilson notes there is already a fibre land grab, and this is set to accelerate because of the conditions the Competition Commission has imposed on Telkom.

Material move

The commission has approved Telkom's R2.67 billion buyout of Business Connexion, but says Telkom will have to discount its fibre network when on-selling access, and has extended punitive pricing measures for another two years.

These conditions extend a 2013 settlement between Telkom and the commission under which Telkom agreed to pay a penalty of R200 million and institute a functional separation of its retail and wholesale divisions. It also included retail pricing commitments for five years, estimated to yield R875 million in savings to customers.

Neilson says the extension of this deal is material as it will further benefit Internet service providers, which have previously lamented Telkom's wholesale pricing regime. He notes adding fibre to the mix accelerates the fibre rush, although this is still early in the process, and there is a long way to go. "We are starting to catch up with the developed economies of the world."

Increasing network

The Internet Service Providers' Association adds the 2013 settlement has already "provided a degree of pricing relief to consumers and competitors in the specified markets". Adding in fibre "recognises the increasing amount of fibre deployed in local access networks".

However, the organisation says the condition, by itself, will not lead to a substantial increase in fibre penetration.

Neilson notes the initial benefit will be felt by businesses, as residential areas will take longer to get hooked up because it will be a while before fibre is universally affordable. He adds, in the meantime, there will be a balance between the fibre gold rush and extending the life of the current copper network.

ICT commentator Adrian Schofield adds the extension of the settlement will result in a level playing field when it comes to wholesale pricing, and Telkom's retail arm will not be able to manipulate the wholesale price in its favour.

Neilson notes Telkom will now have to step up its game because an extra dimension of competition will be introduced into the sector.

Telkom did not respond to a request for comment.

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