Herotel says blocking Vodacom-Maziv deal delays critical investment

[Jan]

Bad news for fibre Internet in South Africa

The Competition Tribunal's blocking of a merger of Vodacom and Remgro-owned CIVH's fibre businesses will continue to delay critical investment in the sector, which is needed to expand the fast broadband technology.

That is according to South Africa's third-biggest fibre network operator (FNO) — Herotel.

 

[quovadis]

Doesn’t CIVH also own a big chunk of Herotel? Never mind missed that part in the article.

 

[Swa]

No matter who said it I agree with Herotel here. Lots of smaller ISPs like Zoom that have made internet cheaper may be hesitant to invest. Competition commissions are supposed to enhance competition and not disable it.

 

[quovadis]

No matter who said it I agree with Herotel here. Lots of smaller ISPs like Zoom that have made internet cheaper may be hesitant to invest. Competition commissions are supposed to enhance competition and not disable it.

DFA has allowed smaller ISPs to compete without the awful cost of trenching. I’d guess there isn’t an isp out there that isn’t a customer of DFA directly or indirectly. If you’re advocating for cheaper fibre you might want to consider this. Heck, some of the cheapest fibre options available use DFA connections from major PoPs like teraco/napafrica to estates, office buildings etc.

 

[Swa]

DFA has allowed smaller ISPs to compete without the awful cost of trenching. I’d guess there isn’t an isp out there that isn’t a customer of DFA directly or indirectly. If you’re advocating for cheaper fibre you might want to consider this. Heck, some of the cheapest fibre options available use DFA connections from major PoPs like teraco/napafrica to estates, office buildings etc.

That may be the case and I've never denied it but it's a double edged sword and it can also be argued that everyone is at their mercy. It may well be a case of short term gain long term pain now 15 years down the line. The CC is being shortsighted here by trying to "protect" the status quo. Ask yourself, why is it that ISPs are still struggling to break ground almost 20 years after the fact? Perhaps SA should try less regulation for once and not more.

 

[quovadis]

That may be the case and I've never denied it but it's a double edged sword and it can also be argued that everyone is at their mercy. It may well be a case of short term gain long term pain now 15 years down the line. The CC is being shortsighted here by trying to "protect" the status quo. Ask yourself, why is it that ISPs are still struggling to break ground almost 20 years after the fact? Perhaps SA should try less regulation for once and not more.

Disagree. ISPs would struggle even more. Imho this is one thing they actually got right as far as DFA is concerned.

 

[freematrix]

Doesn’t CIVH also own a big chunk of Herotel? Never mind missed that part in the article.

This is the answer. MyBB so kindly failed to tell the public for some odd reason.
Oh yes and Herotel the third largest non open access provider.

 

[quovadis]

This is the answer. MyBB so kindly failed to tell the public for some odd reason.
Oh yes and Herotel the third largest non open access provider.

In their defense, it is mentioned, but at the bottom. HOWEVER AND IMHO, it's extremely problematic as it's burying the context that results in readers forming opinions without a full understanding of the interests at play. By the time readers reach the disclosure, they've likely already accepted the framing that the merger block is damaging influenced by a seemingly neutral third-party opinion that is, in fact, partial.

@Jan ?

 

[r00igev@@r]

A difference of opinion?

Vodacom-Maziv: A Contrarian View

Ever since the news broke last week that Vodacom, South Africa’s largest cellular network operator, had its bid to buy fibre network operator Maziv blocked by the Competition Commission, we’ve been inundated by sob-stories of how this “setback” will “widen digital exclusion” in the country’s...

techfinancials.co.za

 

[Bad Ballie]

Wheeling and dealing behind the scenes with the government being the biggest criminal involved.

 

[quovadis]

A difference of opinion?

A slightly different argument to what I put forward but it is quite interesting.

 

[quovadis]

Wheeling and dealing behind the scenes with the government being the biggest criminal involved.

There's way more nuance here.

 

[freematrix]

A difference of opinion?

Vodacom-Maziv: A Contrarian View

Ever since the news broke last week that Vodacom, South Africa’s largest cellular network operator, had its bid to buy fibre network operator Maziv blocked by the Competition Commission, we’ve been inundated by sob-stories of how this “setback” will “widen digital exclusion” in the country’s...

techfinancials.co.za

Agreed, this was a monopoly in the making. Vodacom would have access to every ISP on their networks details and could control mobile and fixed connections nations wide not just for consumers but for business as well.

 

[lordnokon]

And here I thought it's because we won't be getting 10Gb/s home connection due to aging infrastructure... dammit...

 

[Swa]

Disagree. ISPs would struggle even more. Imho this is one thing they actually got right as far as DFA is concerned.

As I said DFA might be a great option for a small ISP just starting out but you have to ask yourself, at what point does it make more sense to cut the cord? I'd say after about 5 years paying another operator it will start to hamper your ability to lower prices as we can see.

You say "advocating for cheaper fibre you might want to consider this", but the reality is with DFA we simply replaced one monopoly with another. It doesn't make them any more benevolent than Telkom. We have a telecoms industry that is 15 years behind the rest of the world and internet that costs twice what it should exactly because of regulatory interference. Start there perhaps and don't add even more regulatory interference to try to fix it.

You claim that this will form a monopoly and that the DFA status quo is good for the sector but there's one thing that countries with internet that's 50-80% cheaper have in common, they don't have this model so that notion is proven incorrect by the reality.

 

[quovadis]

As I said DFA might be a great option for a small ISP just starting out but you have to ask yourself, at what point does it make more sense to cut the cord? I'd say after about 5 years paying another operator it will start to hamper your ability to lower prices as we can see.

That's the thing that's being missed. Unlike anything I'm aware of in terms of their impact from the beginning for connectivity - they are actually one of the few examples enabling competition as they're a great leveler since it's across the entire spectrum including the largest operators. I've never come across an ISP that hasn't directly or indirectly made use of their services.

If anything it's massively lowering the barrier of entry and an accelerator. The cost of trenching, way leave applications, approvals, engineers, civil work, agency liaisons etc is all removed.

You say "advocating for cheaper fibre you might want to consider this", but the reality is with DFA we simply replaced one monopoly with another. It doesn't make them any more benevolent than Telkom. We have a telecoms industry that is 15 years behind the rest of the world and internet that costs twice what it should exactly because of regulatory interference. Start there perhaps and don't add even more regulatory interference to try to fix it.

I'd have the same argument if it were Open Serve. Too much consolidation is very bad for competition.

You claim that this will form a monopoly and that the DFA status quo is good for the sector but there's one thing that countries with internet that's 50-80% cheaper have in common, they don't have this model so that notion is proven incorrect by the reality.

Plenty of countries have open infrastructure providers. I think you're perhaps conflating DFA to be the typical FNO - they are quite different.

 

[Koos9999]

This is the answer. MyBB so kindly failed to tell the public for some odd reason.
Oh yes and Herotel the third largest non open access provider.

Correct, Herotel would benefit so much, increasing their closed access network (forcing WISPs to close, that have been in the rural areas, for many years), limiting competition. This was a great result for open access, where all WISPs/ISPs can compete, well done!!!

 

[Swa]

I'd have the same argument if it were Open Serve. Too much consolidation is very bad for competition.

Yes, and by overreaching you prevent new investment thereby ensuring that it never changes from the status quo of the one or two established players. Europe and some other countries are finding that out now after very heavy handed regulation. Consolidation will happen regardless whether it's through mergers or going bankrupt and selling assets at next to nothing, the only question is will it happen under strict regulation hampering the sector or an environment that rather encourages new investment.

Plenty of countries have open infrastructure providers. I think you're perhaps conflating DFA to be the typical FNO - they are quite different.

I'm not conflating anything here. DFA is quite different to how it usually works with your open access network as the last mile and your user oblivious to the network operator. Apart from inter-country cables it's quite unique to have a provider that only provides backhaul rather than selling just unused portions of it.

 

[quovadis]

Yes, and by overreaching you prevent new investment thereby ensuring that it never changes from the status quo of the one or two established players. Europe and some other countries are finding that out now after very heavy handed regulation. Consolidation will happen regardless whether it's through mergers or going bankrupt and selling assets at next to nothing, the only question is will it happen under strict regulation hampering the sector or an environment that rather encourages new investment.


I'm not conflating anything here. DFA is quite different to how it usually works with your open access network as the last mile and your user oblivious to the network operator. Apart from inter-country cables it's quite unique to have a provider that only provides backhaul rather than selling just unused portions of it.

Once again, the DFA component of this is not an overreach.

If this goes ahead I look forward to your mystery investor who's going to invest billions and 2 decades of their time building an open infrastructure provider to compete with what's left of the FNOs which might be 2 or 3 players.

Pricing stagnated mostly once these FNOs started consolidating.

 

[Swa]

Once again, the DFA component of this is not an overreach.

If this goes ahead I look forward to your mystery investor who's going to invest billions and 2 decades of their time building an open infrastructure provider to compete with what's left of the FNOs which might be 2 or 3 players.

Pricing stagnated mostly once these FNOs started consolidating.

You're placing too much emphasis on DFA. This is about regulatory overreach in general which our European counterparts are now realising have pushed investors away. By blocking the deal it doesn't prevent consolidation in any case as the companies operate in different segments and both will still perform their core functions. You might want to reexamine why the CC blocked it as it wasn't because of consolidation per se.

Pricing stagnated? So no new players like Zoom with sub R300 fibre? That was after consolidation and it's exactly the kind of investment this discourages. We're seeing the exact opposite of what you claim.