Cheaply connecting South A

Fibre-to-the-home revolution that has swept suburbia is about to arrive in the country’s less affordable areas. NEW SERVICE WILL COME IN AT R89 A MONTH AND WILL INITIALLY ROLL OUT I

Fibre to the home (FTTH) is this decade’s magic ingredient for high-speed, painless and unlimited internet access. But until now, it has been the province of the privileged. Only the more affluent suburbs of South Africa’s cities have been afforded the luxury of the dedicated optical fibre cables that run in trenches along leafy sidewalks. That is about to change. Vumatel, the company that sparked the FTTH revolution when it won a contract to supply fibre to the suburb of Parkhurst, is at it again. This time, it plans to connect the townships of South Africa and has come up with a low-cost alternative to wiring dense suburbs. It intends to offer uncapped high-speed broadband for a mere R89 a month.

To put that in context, the average spend on a cellphone in lower socioeconomic segments is typically about R100. Fibre, coupled with in-home Wi-Fi, can replace a large chunk of cellular spend by moving voice traffic from the mobile networks to voice over WhatsApp and Facebook Messenger, among others. All data use in the home would move off the expensive services provided by the mobile operators.

With wide-scale roll-out, this could prove immensely damaging to the operators. More significantly and to the point, however, it could prove immensely beneficial to those who have previously been kept away from the largesse of high-speed, unlimited access.

The Vumatel service will offer a 100Mbps download and 10Mbps upload speed, which typically costs more than a R1 000 a month in more affluent suburbs. How is it possible, then, to offer it at a mere R89 a month?

Only with a great deal of commitment to finding an affordable broadband solution for the mass-market. “We think that the FTTH deployments as we and other operators are doing them are great for the country, because we are moving connectivity forward at a macro level,” says Vumatel CEO Niel Schoeman. “But it is clearly not addressing the information divide between the less fortunate and the leafy suburbs, and potentially exacerbates inequality in terms of information access.

“We’ve been trying to come up with a solution to address townships, to provide that abundance of information to residents of townships. We think we can do it by providing it at R89 a month for a 100Mbps uncapped service. We think that is fundamentally different to a 500MB data allocation on a prepaid service, which has been the only kind of option for connectivity.”

Vumatel will initially roll out the service in the Johannesburg township of Alexandra, with an estimated 400 000 residents in the target area.

“That is our township equivalent of the announcement that we were connecting Parkhurst. We’re going to give it a go between now and March.”

The question remains: how is such low cost possible on a business level?

On the surface, the answer lies in Vumatel’s October 2016 acquisition of Fibrehoods, a provider of aerial fibre similar to overhead telephone lines. However, that in itself would not cut the costs so radically. Until recently, Fibrehoods had also been serving wealthier suburbs.

“Clearly, to make that price point work, we need to work hard at the capital cost of deployment,” says Schoeman. “The topography