If there’s anything 2021 has taught us, it’s that you can’t take anything for granted, says Shane Chorley, Sales and Marketing Manager at ISP, Frogfoot.
The local fiber landscape is rapidly changing: pandemic-driven changes in home and workplace behavior mean demand for reliable, quality connectivity continues to grow, while consolidation has recently been seen among Fiber Network Operators (FNOs) and Internet Service Providers (ISPs). ) brings a new dynamic to the industry.
For Frogfoot’s part, we’ve continually upgraded our network to keep up with the volume of capacity – we’ve seen almost double the data usage on the network in the last two years – because there’s a change supported online for work, educational and entertainment purposes.
Looking ahead, here are some developments that may appear in 2022:
1. Continuation of the deployment of the fiber network
As demand for reliable and cost-effective Internet connectivity continues to grow, fiber network operators will continue to invest in expanding their networks. What is likely to change, however, is the reduction in overbuilding we are seeing in many parts of the country.
The challenge here is not that there are one or two operators in one area, but rather up to five operators laying their network in the same area. In such cases, laggards are unlikely to gain the necessary buy-in to make their investments worthwhile.
More competition is good for the customer: it gives them more choice and better pricing options, but the danger is that a race to the bottom will ultimately have a negative impact on these companies and their customers in the long run, with future investments in network expansion being reduced or postponed due to unsustainable prices being held up in a war of attrition.
Finally, Icasa’s spectrum allocation could spur an expansion of fiber networks as operators seek to provide backhaul capacity for 5G towers to be built at the edge.
2. Consolidation between FNOs
In addition to going out and laying the fiber themselves, South African FNOs are now looking to grow their networks through mergers and acquisitions. Frogfoot itself has grown its network with the acquisition of LinkAfrica’s fibre-to-the-home (FTTH) assets in the Western Cape, which has helped solidify our presence in the Western Cape and cement the position of company as the third largest fiber optic provider in South Africa.
We have seen several other moves in the industry involving other players, the most recent of which saw Vodacom Group acquire a strategic stake in owner Vumatel and Dark Fiber Africa.
Again, carriers looking to expand their operations through acquisitions will have to tackle the problem of overbuilding as they seek to find suitable partners with the least amount of network duplication with their own.
3. Consolidation between ISPs
Similarly, we have seen consolidation among ISPs – a recent example being Afrihost (which already owns a majority stake in Axxess) buying a majority stake in Cool Ideas – and this trend is likely to continue.
Increasingly, what we’re seeing is that smaller ISPs lack the volume, scale, and network capacity to compete effectively with larger players. Additionally, larger ISPs have the financial wherewithal to maintain the highly competitive prices of their connectivity packages for a longer period of time, which puts pressure on the ability of smaller ISPs to respond in the same way.
This pricing pressure means that ISPs will have to cut costs, automate their operations more to make their business more efficient, and consider what the next sales opportunity is. In the future, ISPs will simply no longer be able to sell only fiber, but will have to add value above the connectivity layer, whether that means becoming IT consultants and offering more of products and solutions.
4. Innovative solutions to deal with load shedding
South Africans need no explanation of the havoc that offloading is causing to businesses (including fiber network operators) and individuals. Conventional redundancy solutions are increasingly strained by the high load shedding steps that have recently been implemented across the country.
With more frequent power cuts, the batteries used in UPS systems do not have enough time to recharge before the next load shedding cycle. This means that FNOs (and businesses and individuals) must turn to alternative solutions, such as renewable energy, which are abundantly available in South Africa.
Despite this, Frogfoot is investing heavily in implementing power redundancy across the multiple layers of its fiber network, starting at the very top (the core) and moving closer to the end customer.
5. New products to improve fiber absorption
FNOs are also exploring other ways to improve fiber adoption in areas already covered by their network, providing connectivity solutions aimed at a more cost-conscious market, such as residents of small homes, renters and students.
A pilot project, Frogfoot air, is underway on parts of the company’s network to install a WiFi-enabled subscriber gateway, meaning users don’t need to purchase and install extra gear to get started.
Unlike some FNO options, Frogfoot sticks to its existing model where it provides wholesale access without dictating price or end-user terms – and leaves that up to individual ISPs to decide. If successful, Frogfoot is looking to scale the concept across its network nationwide.
Finally, as efforts to combat the pandemic show progress and vaccination rates increase, we see more businesses reopening their offices and staff returning. However, with these organizations having invested heavily in ensuring their employees can work remotely, many are highly unlikely to return to full-time on-site work and instead adopt a hybrid approach.
While employees may need to return to the office, the demand for high-speed, high-quality, and stable home connectivity is here to stay. Having experienced the benefits, people are unlikely to seek to reduce their internet packages: they have now become accustomed to a certain level of experience and will not want it to be reduced in any way.
- Through Shane Chorley, Sales and Marketing Manager at Frogfoot
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