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Frogfoot changes focus amid fibre overbuild in affluent areas

Read time 4min 30sec

Fibre network operator (FNO) Frogfoot says there is now pressure for the industry to cater for underserviced areas, as there has been an overbuild of infrastructure in the more affluent areas of SA.

So says David Coleman, chief product officer of Frogfoot, in an e-mail interview with ITWeb.

This, as competition in the local fibre market continues to intensify, with FNOs jostling for what has now been dubbed the “fibre land grab”.

With the more affluent areas now virtually blanketed by fibre, FNOs are seeing a business case in townships as well as rural areas which have largely been shunned previously.

Amid this competition, Frogfoot, which recently bought Link Africa’s fibre assets in the Western Cape, has revealed it is looking to establish a national fibre network.

Earlier this month, Frogfoot – which is part of Vivica Holdings, formerly known as Vox – announced its Century Promotion. Participating internet service providers (ISPs) will be able to offer discounted rates on four line speeds, in an effort to provide more consumers in underserviced areas around the country with access to faster and more reliable connectivity.

The promo will see end-customers being able to get the top tier 1Gbps connection for less than R1 000, which the FNO says is a first in the South African market.

According to the company, initially, the promotional offering is being made available to consumers in Despatch, Caledon, Idasvallei, Oudtshoorn, Swellendam and Tzaneen, and is available on four symmetrical line speeds, namely 50Mbps, 100Mbps, 200Mbps and 1Gpbs.

Stiff competition

As the fibre land grab heats up, other FNOs such as MetroFibre recently introduced a pay-as-you-go solution targeting underserviced areas.

Telkom’s fibre unit Openserve also recently introduced prepaid fibre offerings to give customers the option to make flexible payments on fibre connectivity packages.

Vumatel this week reportedly said it will double line speeds for its customers.

“The South African fibre market is experiencing healthy competition across all segments. Evidence of this can be seen in the overbuild observed in living standards measure (LSM) 8-10 areas, downward pricing pressure observed on wholesale and retail entry-level price points, consolidation of providers, as well as investment by international players in infrastructure,” Coleman tells ITWeb.

LSM is a marketing and research tool used in SA to classify standard of living and disposable income. It segments the population into 10 deciles based on their relative means, with LSM 1 being the decile with the least means and 10 being the decile with the greatest means.

“The fibre-to-the-home (FTTH) market areas where high concentrations of LSM 8-10 consumer segment are available have now become the subject of overbuild, thus applying pressure to consider LSM 6-7 areas,” Coleman says.

“This, together with strained macro-economic conditions, has fuelled downward pressure on the price of entry-level offerings from FNOs and ISPs alike. There is still an opportunity for more value in the form of higher speeds being accessed by a consumer base reliant on faster and more reliable connectivity, be it due to the number of smart devices in the home or due to working remotely from home.”

According to Coleman, similar downward pressure is being seen within the fibre-to-the-business (FTTB) space.

He points out that Frogfoot will continue to invest in economically-viable network infrastructure expansion and upgrades to existing infrastructure to ensure reliability and quality of service.

“There is also a significant opportunity within the existing built infrastructure to continue to fuel market penetration by activating more of the homes and businesses already passed.”

Targeted offerings

In regards to the underserviced areas, Coleman says Frogfoot’s WiFi-only product called Air is aimed at addressing affordability and access issues experienced by lower LSM groups.

He says Air is available in Caledon, Despatch, Franschhoek, Idas Valley, Kimberley, King Williams Town, Lephalale, Makhanda, Mossel Bay, Oudtshoorn, Polokwane, Protea Glen (Soweto), Scottsville (Pietermaritzburg), Shelly Beach, Swellendam, Tzaneen, Uitenhage, Waverley (Pretoria), Ermelo and some complexes in Bloemfontein.

“We have been steadily increasing the coverage area, which now passes more than 88 000 homes. With LSM 8-10 areas the focus of overbuild, learning and adjusting the product offering within LSM 6-7 areas remains potential for growth in the future. Frogfoot will continue to expand the coverage area and features of this offering in coming months.”

Coleman points out that Frogfoot has laid more than 6 666km of network infrastructure used for last-mile connectivity, or access across metropolitan, town and small-town areas and has access to more than 9 200km of fibre nationally.

The FNO’s fibre network has passed 336 000 homes, connected 128 600 homes and 12 500 businesses.

Since the outbreak of the pandemic, he says the company’s active FTTH links have grown by 773% (CAGR 106%), while active FTTB links have grown by 176% (CAGR 40%) over the last three years (since June 2019).

“A significant investment has also been made to establish the Frogfoot national fibre network,” he concludes.

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