ADSL’s last stand

Less than 4% of fixed broadband users in South Africa are still using digital subscriber line (DSL) connections, a dramatic decline from the technology’s overwhelming dominance less than a decade ago.

The reason for this rapid drop is simple — a big surge in fibre-to-the-home (FTTH) broadband adoption — which offers faster speeds, lower latency, and more stable connections.

ADSL penetration peaked in South Africa around early 2016, when Telkom reported 1,011,120 subscribers using the service.

Thanks to what was effectively a legalised monopoly on fixed communications infrastructure, Telkom was the only company that could install and operate the copper networks supporting DSL and telephony services in South Africa.

Although people who wanted a fixed Internet connection could use third-party Internet service providers (ISPs) rather than Telkom itself, they were ultimately dependent on Telkom when it came to maintaining the network.

In addition, Telkom exploited its monopoly to make it difficult for other ISPs to compete on pricing with its own retail business.

The Competition Tribunal forced a functional separation of Telkom’s wholesale network business from its retail arm. However, ISPs still complained that Telkom allowed its own retail businesses to sell products that were unavailable to them.

Fortunately, Telkom’s failures left an opportunity for bold upstarts to connect households and businesses with alternatives.

Its ADSL infrastructure began to buckle in places under the load that affordable uncapped products pioneered by Mweb were starting to cause.

A pivotal moment in breaking Telkom’s stranglehold on fixed connectivity was Vumatel’s 2014 rollout in Parkhurst, which proved the business case for FTTH.

Telkom stopped reporting its ADSL figure at this point for several years, leaving the industry to estimate and speculate about the technology’s decline.

From then, Telkom started feeling the pressure of DSL customers flooding to FTTH services, a technology it had only begun exploring.

While FTTH prices with providers like Vumatel were initially high, the technology’s vastly superior performance and reliability quickly convinced households to adopt it and cancel their Telkom lines.

Among them were many who were fed up with years of data caps, speed throttling on certain protocols, lengthy downtime, and poor customer service under Telkom.

Over the next four years, Telkom’s DSL connections plummeted by more than 500,000 while it only increased fibre customers by roughly 220,000.

By June 2021, just a year and three months later, DSL connections had nearly halved again to 264,186 and had fallen below Openserve FTTH connections.

The last official number of DSL customers was 82,000 at the end of December 2023, a decline of about 92% from March 2016.

Telkom’s annual results presentation for the year ended March 2024 showed that only about 10% of its fixed broadband lines are still DSL, working out to 71,800 of these customers.

The graph below shows how Telkom’s fixed-line count changed from March 2012 to March 2024 and how its FTTH growth was not enough to offset DSL losses.

FTTH penetration among South Africa’s top nine FNOs is currently estimated to be at around two million households, over double ADSL’s peak penetration in 2016.

The last-confirmed 82,000 DSL connections in December 2023 make up just 3.9% of the total across FTTH and DSL. When including the plethora of smaller operators in the FTTH market, its market share will likely shrink much lower.

Despite the total number of households using fixed Internet products increasing drastically, Telkom failed to retain just its previous copper customers as it was caught napping by more agile FNOs like Vumatel, MetroFibre, Frogfoot, Ocotel, and Herotel.

Its latest fixed broadband connections figure of 718,000 is around 300,000 — or 30% — less than its peak in March 2016.

Telkom was very slow in adopting fibre, and where it did, it priced its offering to try and protect its DSL business. This ended up costing it dearly.

A major part of this misfire was its leadership choosing to instead invest heavily into launching a mobile network, which telecoms experts say was an exercise in futility given Vodacom and MTN’s significant headstarts.

MyBroadband recently asked the company why it continued to have tens of thousands of DSL connections while its FTTH coverage had exceeded its peak DSL connections. It did not respond by the time of publication.

It is possible that the areas in which these customers are located are less susceptible to copper theft, and the networks still function relatively well there.

Alternatively, the areas might previously have been affluent and supported economically feasible ADSL rollouts but no longer justify the same for FTTH.

Another scenario is that many of these customers already have access to fibre but have not been motivated to move from DSL.