High-speed fibre prices - Ultimate showdown

[Gunner182]

Laughs in Herotel. R599 for 75/75mb.

 

[Pak Fa Fui]

No. If you want a low usage solution go wireless. The civil works for fibre is expensive and needs to be amortized over a reasonable period.

The cost of fibre is determined mostly by the civil works required, and civil works cost is based on meters per subscriber. The reason why Vumatel can have cheaper services through Vuma Reach is because they can spend a lot less money per customer on the civil works - mostly because the population density in those areas are higher. And they deploy fibre in the air and multiplex like crazy.

The actual bandwidth of fibre is almost as cheap as chips. The higher tier packages have a higher profit margin than the lower tier ones.

The cost has reduced to almost nothing in the past two years, the whole cost per meter amortised is a thing of the past, almost all residential areas have fibre installed for free, even if not in use
The only cost is the router which they literally borrow to you

We are in agreement then, the actual cost of bandwidth is cheap as chips
If the hardware costs are not relevant anymore, why are the pricing models so high and based solely on speed
When do they have cheaper capped products

 

[Johand]

The cost has reduced to almost nothing in the past two years, the whole cost per meter amortised is a thing of the past, almost all residential areas have fibre installed for free, even if not in use
The only cost is the router which they literally borrow to you

We are in agreement then, the actual cost of bandwidth is cheap as chips
If the hardware costs are not relevant anymore, why are the pricing models so high and based solely on speed
When do they have cheaper capped products

What are you smoking? The cost is still a major major component!

The figures for most sururbs are roughly as follows:
1) Price per meter = ~R600
2) avg House front in meters = ~ 30m
3) Connection rate = ~ 33%
4) Cost of civil works per paying connection = 600*30*(1/0.33) = ~ R54 000
5) Assuming their debt is cheap at 7% interest rate
6) Amortizing civil works over 7 years = ~ R840 per month.


So their cost of installation did come down. But only later. And even if their cost is half now - that is still a big chunk of change.

You can have a look at the debt load of these companies. They have a massive amount of debt that need to be repaid.

 

[BCR]

What are you smoking? The cost is still a major major component!

The figures for most sururbs are roughly as follows:
1) Price per meter = ~R600
2) avg House front in meters = ~ 30m
3) Connection rate = ~ 33%
4) Cost of civil works per paying connection = 600*30*(1/0.33) = ~ R54 000
5) Assuming their debt is cheap at 7% interest rate
6) Amortizing civil works over 7 years = ~ R840 per month.


So their cost of installation did come down. But only later. And even if their cost is half now - that is still a big chunk of change.

You can have a look at the debt load of these companies. They have a massive amount of debt that need to be repaid.

Have I seen correctly in the past that these FNO's only have approx 30 to 40 or 50 % of their fibre installs active ?

I have one installed into the house, but won't have it setup at even
R490+ for a 30 / 3 F'foot line, because I get much better value out of Telkom LTE.

Use only around 100 GB / month, costs R249 pm and get up to / even over 100 Mbps down, on my downloads.

If the FNO's are still keeping the cheapest speeds relatively expensive (like I feel they are, as I won't pull the trigger yet), then another aspect to consider is they don't want greater percentages even signing up & activating as it's a strain on their networks they're having problems coping with already ?

Especially in the case of Frogfoot, with all the complaints.

 

[cueball]

If the FNO's are still keeping the cheapest speeds relatively expensive (like I feel they are, as I won't pull the trigger yet), then another aspect to consider is they don't want greater percentages even signing up & activating as it's a strain on their networks they're having problems coping with already ?

Not sure there's any network strain issues on Vumatel's side. When they went live in my area in 2018 the entry level package was 4/1. In January 2019 it changed to 10/2. In March 2021 this changed to 10/10, with a slight price increase. On 1 July 2021 10/10 was dropped and 20/10 became the entry level, including a price cut. In June 2022 they announced a limited time speed doubling promo which would last until the end of August. 2 weeks later the end date was extended to 31 January 2023. In October they announced that the speed changes would be made permanent. So today the entry level Vuma package is 50/50, up from 4/1 about 5 years ago, and at pretty much the same price.

 

[BCR]

Not sure there's any network strain issues on Vumatel's side. When they went live in my area in 2018 the entry level package was 4/1. In January 2019 it changed to 10/2. In March 2021 this changed to 10/10, with a slight price increase. On 1 July 2021 10/10 was dropped and 20/10 became the entry level, including a price cut. In June 2022 they announced a limited time speed doubling promo which would last until the end of August. 2 weeks later the end date was extended to 31 January 2023. In October they announced that the speed changes would be made permanent. So today the entry level Vuma package is 50/50, up from 4/1 about 5 years ago, and at pretty much the same price.

Thanks, my main point about it all is I get the impression, generally, that FNO's don't want too many customers - a ridiculous notion, I'll admit.

All or primarily because of the
relatively high entry cost to consumers (IMO, others of you can disagree).

If and when consumers stop signing up, presumably FNO's will be forced into dropping prices even more for base packages.

Maybe they won't even do that - just offer 50 or 100 Mbps for R500 - R600 ?

Apart from Herotel, of course, which is an exception right now & already doing so on 50 Mbps.

 

[cueball]

Thanks, my main point about it all is I get the impression, generally, that FNO's don't want too many customers - a ridiculous notion, I'll admit.

All or primarily because of the
relatively high entry cost to consumers (IMO, others of you can disagree).

If and when consumers stop signing up, presumably FNO's will be forced into dropping prices even more for base packages.

Maybe they won't even do that - just offer 50 or 100 Mbps for R500 - R600 ?

Apart from Herotel, of course, which is an exception right now & already doing so on 50 Mbps.

Vumatel is currently one of the most expensive options and you can get 50/50 for under R500pm. Not sure how much more you expect the price to drop, but I think your expectations need an adjustment more than the prices do.

 

[BCR]

Vumatel is currently one of the most expensive options and you can get 50/50 for under R500pm. Not sure how much more you expect the price to drop, but I think your expectations need an adjustment more than the prices do.

Firstly, I don't have Vuma as an option.

The article uses their 50/50 through Afrihost at R727, so who offers it at below R500 ?

I'd personally consider a 30 / 3 line (slowest Frogfoot have) at around R350 pm.

 

[cueball]

Firstly, I don't have Vuma as an option.

The article uses their 50/50 through Afrihost at R727, so who offers it at below R500 ?

I'd personally consider a 30 / 3 line (slowest Frogfoot have) at around R350 pm.

Ah, my bad..... there are a few listed on Vumatel's Shop page, but I see they are reduced subs for the first 1-3 months, pretty misleading. The lowest "normal" price without any fine print starts at R649. Still not bad IMHO vs the 4/1 service you got 5 years ago at the same price.

 

[BCR]

Ah, my bad..... there are a few listed on Vumatel's Shop page, but I see they are reduced subs for the first 1-3 months, pretty misleading. The lowest "normal" price without any fine print starts at R649. Still not bad IMHO vs the 4/1 service you got 5 years ago at the same price.

No problem - it's all theoretical in my case, anyway, because Vuma's unavailable to me, and for now LTE's a perfect solution ; much better value for money.

Something I failed to mention before is that on FF there's a R995 once-off installation cost.

I wonder if they'd drop that as I have the point already installed ; somehow doubt it as they'd probably state they still need to do the ONT etc.

Will see maybe one day if prices drop (wishful thinking on my part ?) and I go for it ....

 

[cueball]

Yeah Vuma's installation is almost double that. It's definitely another obstacle. Its somewhat understandable for a brand new install because there's an ONT box to install, a significant length of fibre, conduit, labour, etc. What is really infuriating about Vuma is that the exact same fee is charged as "connection fee" when changing ISP, which is just a software change. Most ISPs have some sort of waiver for the fee on condition that you stay with them for a minimum period, but in principle its still a poor practice on Vumatel's part.

 

[j4ck455]

Vumatel is the largest residential fibre operator in the country, with 1.6 million homes passed and 450,000 connected.

Openserve, although having passed only 890,000 homes, has a better connection rate than Vumatel and isn’t far behind the leader in terms of homes connected.

Should I care how many unconnected homes have pass over fibre and whether or not lamb's blood was painted on the doors to these homes?

My understanding is that the 1.6 million and 890000 figures are the current maximum number of homes that could potentially be connected to each of the respective FNO's fibre optic networks without rolling out additional fibre, the connected figures relate to the current number of homes actively being serviced by the fibre that has been rolled out already.

Vumatel has made a point of going after compexes and estates and locking the body corporates into exclusive contracts, OpenServe used to do that before Vumatel existed (and likely still tries to).

The number of connected homes for each network only tells me that OpenServe has had more time to lock in densely populated clusters of homes.

 

[Johand]

Vumatel has made a point of going after compexes and estates and locking the body corporates into exclusive contracts, OpenServe used to do that before Vumatel existed (and likely still tries to).

Uh? I would really like to understand these "exclusive contracts". I am a trustee in a complex, Vumatel approached us and asked us to install fibre and we agreed on dates, routes through the complex and reinstatement. There was no exclusive contract.

OpenServe mapped our complex a year before Vumatel approached us and told us they will install fibre - but that didn't happen. About 6 months after Vumatel installed OpenServe removed us from the area that will be covered in future.

The simple truth is that there isn't these massive "exclusivity contracts". It just doesnt make sense to build in an area where fibre was already deployed because your connectivity rate will suffer. So "first to the post" almost wins by default in an area.

P. S. Exclusivity contracts will also in all likelyhood be illegal. Body Corporates don't like lots of digging (I can tell you stories about why ) so a lot of them won't make it easy for a second entrant even if they don't have an exclusivity contract.

 

[cueball]

I don't think such contracts are really a thing. As you say, once an FNO has covered an area, the odds of getting a second one interested are exceedingly low. This also rings true for normal suburbs, not just complexes. In my area there was a grassroots effort to get Vumatel interested starting in 2017. After several months of campaigning for people to complete the "show my interest" process on Vumatel's site, they began the planning and rollout and we were live by mid-2018, and nobody else is likely to install their own fibre now, it just isn't worth it.

 

[j4ck455]

Uh? I would really like to understand these "exclusive contracts". I am a trustee in a complex, Vumatel approached us and asked us to install fibre and we agreed on dates, routes through the complex and reinstatement. There was no exclusive contract.

OpenServe mapped our complex a year before Vumatel approached us and told us they will install fibre - but that didn't happen. About 6 months after Vumatel installed OpenServe removed us from the area that will be covered in future.

The simple truth is that there isn't these massive "exclusivity contracts". It just doesnt make sense to build in an area where fibre was already deployed because your connectivity rate will suffer. So "first to the post" almost wins by default in an area.

P. S. Exclusivity contracts will also in all likelyhood be illegal. Body Corporates don't like lots of digging (I can tell you stories about why ) so a lot of them won't make it easy for a second entrant even if they don't have an exclusivity contract.

My understanding is that it comes down to the trunking where the first company to dig within a complex and put in trunking will not allow shared access to that trunking when/if another FNO wants to service the same complex.

The end result is complexes that are serviced by only one FNO and there is no scope for any other FNOs to put their own fibre optic into the same trunking.

 

[cueball]

My understanding is that it comes down to the trunking where the first company to dig within a complex and put in trunking will not allow shared access to that trunking when/if another FNO wants to service the same complex.

The end result is complexes that are serviced by only one FNO and there is no scope for any other FNOs to put their own fibre optic into the same trunking.

Pretty much. Nobody wants to share their trunking, and while there's nothing stopping others from trenching and laying their own (except maybe body corporates saying no, in the case of complexes), it typically isn't financially viable unless you can somehow guarantee the number of signups you would get.