Lack of bandwidth hurts cellular groups
SA’s cellular operators would be raking in even more millions of rand than they already are if they had sufficient bandwidth to cover more users across the country.
The shortage of physical links to connect rural base stations to their national networks and to meet demand in densely populated areas was costing them business, says Richard Came, a director and co founder of cable-laying company Dark Fibre Africa.
“The mobile operators are losing millions every year in lost profits because of the lack of bandwidth to provide the services they’d like to. Capacity is a major crisis at the moment,” he said.
Dark Fibre lays fibre-optic cables that it monitors and maintains, then sells their capacity to any operator. But it will not be cash flow positive until next year or even 2011, even though SA’s lack of bandwidth is holding back businesses and consumers.
Came partly blames that on the paranoia that operators have for sharing their facilities, and partly because businesses are not demanding as much bandwidth as their foreign counterparts require.
MTN and Vodacom built parallel mobile networks years ago as they found it unpalatable to work with each other. Now MTN, Vodacom and Neotel are co-operating on a R2bn project to lay 5000km of national lines to end their reliance on leasing capacity from Telkom, but Dark Fibre is not involved. Nor has it been commissioned to help Neotel link the long awaited Seacom cable from Mtunzini to Johannesburg and Durban.
It is a frustrating business, but thankfully Dark Fibre’s investors do not seem to expect any quick returns for their cash. The company can draw on R2bn supplied by its backers Community Investment Ventures, Venfin and Absa Capital. But the operators often prefer to lay their own cables rather than commission a third party to do it for them.
Even a landmark legal ruling giving several hundred private telecoms companies the right to build their own networks is unlikely to bring much business to Dark Fibre, as perhaps only 10 companies can afford to expand that much, Came said.
So far dark Fibre has laid 700km of cable for seven customers, including some of the fixed and mobile operators in urban areas. It was not upset at being excluded from their national roll outs, Came said, as its R2bn would be more profitably spent in linking metropolitan suburbs together in the hope of selling network capacity to 10 or 20 clients.
“In the metro areas we will build loss-making links as there’s a hell of a good chance that people are going to use it,” Came said.
Decisions to share networking facilities will become more common as operators around the world realise that digging holes is not their core competence, and does not present a competitive advantage.
Other business could come from data storage companies that transfer heavy loads of data between sites, and from bandwidth-hungry businesses such as high-definition TV broadcasts.
Cellular backaul bandwidth discussion
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