Fibre providers make a play for Soweto
Soweto, considered one of SA’s most advanced townships, has in recent months witnessed increased activity in fibre rollout, as fibre providers lay infrastructure in the township’s neighbourhoods.
In May, Telkom went live with its fibre connectivity at Orlando West High School in Soweto, giving learners Internet access. This move, said the JSE-listed group, is in line with plans to bridge the digital divide in township communities.
Speaking to SABC news, Telkom CEO Sipho Maseko said his company has been deploying fibre in parts of Soweto, such as Diepkloof, Orlando West and Pimville, for a while; noting this is being done in a commercially viable way.
Last week, Frogfoot Networks, a licensed open access fibre network provider, said it will connect homes in Soweto’s Protea Glen suburb to fibre (fibre-to-the-home, FTTH). This will be done in a phased approach.
Frogfoot says up to 20 000 homes and businesses in that area stand to benefit as a result of its fibre infrastructure rollout.
Although this is the company’s first fibre rollout to a township, Frogfoot will look into other townships if it achieves success in Soweto, says Shane Chorley, head of sales.
“Soweto is at the heart of the country and it is our goal to start bringing lightning-fast connectivity to even more suburbs that haven’t had access before.
“As with other areas covered by Frogfoot fibre, schools within the coverage area can apply for a fibre link as part of the company’s schools promotion campaign, which gives these institutions access to a free FTTH connection of up to 1Gpbs, with their preferred Internet service provider, and we urge schools in the area to take advantage of this opportunity by engaging with ISPs.”
Ofentse Dazela, director for pricing research at Africa Analysis, says it’s no surprise that fibre network providers are looking to Soweto to assess whether it makes business sense to provide fibre infrastructure in low income-earning communities across the country.
Soweto is the biggest township in SA, and most of its residents work in Johannesburg, the most industrious city in SA, Dazela points out.
“The inference is that a fair number of households in this township could be able to afford fibre broadband packages. If this new focus on low income-earning communities is going to work and be replicated elsewhere in the country, this model must pass the test projects that are now being commissioned in this township.
“Importantly, it is not only fibre that is been trialled in Soweto at the moment as part of the high-speed next-generation networks; there are also 5G trials currently under way in this township.”
Independent analyst Dr Charley Lewis says it’s natural that companies would seek to test the waters, and look for viable and profitable rollout models in other demographics.
One hopes there is more to this than the ribbon-cutting razzmatazz that left so many a township telecentre abandoned and unused once the ministers and bigwigs had retreated, he comments.
Lewis highlights the current forays by Telkom and Frogfoot are by no means the first to deploy fibre in a township.
“Vumatel announced a similar initiative in Alexandra in late 2017, promising household fibre for a mere R89 a month. But that project appears to have foundered over problems with rights of way and amidst infighting between the project role-players.
“A similar initiative by Vumatel in Mitchells Plain promises FTTH for R400 a month by August 2019, with no subsequent updates on the progress in meeting that deadline, a month away. So a certain amount of scepticism on Soweto is advisable.
“To demonstrate that they are serious, Telkom and Frogfoot need to ensure their ventures are based on and guided by evidence. Pilot projects like these need to be accompanied by proper, independent research to pinpoint problems and pitfalls, to determine the criteria for success and failure, and account for their causes, and thus to delineate good practice models for rollout going forward.”
As to why Soweto is the next top pick for fibre providers, Lewis says one can only speculate.
Certainly, there’s enormous PR leverage to be gained and one needs to select an area that is relatively close to the core network, where the cost of rollout will be matched by revenue from uptake and usage, and where deployment obstacles are manageable.
“One looks forward to the proof of the township FTTH pudding, but we must recognise this is still a long way off broadband for all – available, affordable and accessible.
“It is essential that policymakers and regulators identify, design and implement interventions that cater for the needs of townships and rural communities far removed from the relative affluence of Soweto, Alex and Mitchells Plain.
“There are whole new sets of universal access and service measures, both on the demand and the supply side that will be required before we can even begin to talk meaningfully about universal access to broadband in this country.”
For Dazela, Soweto ticks all the boxes as a potential addressable market for fibre network providers, as they seek to unlock new investment opportunities away from the traditional affluent market.
“Considering that fibre infrastructure providers and service providers alike have previously mainly targeted affluent areas that are generating high revenues for them, however, the expectation has always been there that the focus will gradually shift to the lower LSM segments, once considerable fibre infrastructure has been deployed and in some instances duplicated in these affluent areas.”
With the current strong push by network providers to lay fibre across the country, one assumes more South African households are able to connect to fibre but uptake is still concentrated in affluent neighbourhoods.
Dazela indicates fibre will likely remain a premium service and is a broadband offering that will mostly appeal to high income earners.
“I do not foresee a high adoption of fibre solutions in the low-income earning communities, considering that fibre will be unaffordable to these communities, especially if the expectation is that these communities will need to buy fibre solutions at current price points.”
Lewis believes it would be wonderful if market forces can conquer the fibre divide.
“Certainly, rolling out to high-density urban areas reduces the cost of deployment. And the explosion of mobile shows that low-volume GSM customers can nonetheless be profitable under the right circumstances and with the appropriate business model.
“But the question is whether the same economic equations apply in respect of broadband, whether the uptake will justify the outlay. I’m personally a little sceptical.