The best and worst of 2014: ISP CEOs

South Africa’s broadband market experienced many developments in 2014, including the launch of 1Gbps fibre-to-the-home services and LTE Advanced.

On 28 October 2014 Vumatel announced that the first homes in Parkhurst had received access to a Gigabit per second (Gbps) Vumatel fibre connection.

Not to be outdone, Telkom launched its commercial fibre-to-the-home products on 1 December 2014.

Telkom also launched South Africa’s first commercial LTE Advanced service in November 2014, offering speeds of up to 150Mbps.

The best of 2014

MyBroadband asked some of South Africa’s top ISP CEOs for their views on the best and worst in the local broadband market in 2014.

MWEB CEO Derek Hershaw said that the speed at which they moved from there being ‘no viable commercial models’ for FTTH, to having their first customers up and running in Parkhurst was great.

“Hats off to the community and to Vumatel for making it happen, hopefully it’s the first of many,” said Hershaw.

Cybersmart CEO Laurie Fialkov said that the launch of its Lightspeed fibre products was a highlight for the company.

“To be able to finally bring a product to market which is comparable to products available overseas made us feel like we had arrived,” said Fialkov.

“There has been talk for years about unbundling the local loop. I am not sure the industry realises that ISPs are now rebuilding the local loop with fibre and what a huge thing this is for us,” he added.

Vox Telecom CEO Jacques du Toit said the success of their broadband product Fatpipe was a highlight for them.

He added that it was great to see the choice on offer to the end user had exploded with regards to bandwidth speeds and quality.

“This is giving customers the ability to use broadband for business applications and has opened up a whole new market for us,” said du Toit.

Web Africa CEO Tim Wyatt-Gunning said FTTH was becoming a reality, where “finally we can offer our customers world-class Internet speeds at a reasonable price”.

“The cherry on the top is that finally we can offer a service which doesn’t rely on Telkom’s over-contended IPC infrastructure, which allows us to offer a much simpler and easily understandable service to our customers,” he said.

Wyatt-Gunning added that the highlight of 2014 for Web Africa was the strong take-up of its high-end capped packages – which were introduced in February.

“This started a gradual shift away from customers’ reliance on uncapped products.” Products which led to customer unhappiness due to necessary throttling, he added.

The worst of 2014

2014 was, however, not all sunshine and roses. Government failed to hand out valuable broadband spectrum and digital TV migration is still stuck in a bureaucratic mess.

Hershaw said that the lack of progress in terms of licensing high-demand spectrum was bad news for the local broadband market.

“Telkom also continues to shed fixed-lines at a significant rate – it’s a terrible waste of infrastructure that could be used to provide broadband,” said Hershaw.

Fialkov said that the need to constantly innovate was one of the biggest challenges any ISP faced.

“It is easy to take a break, especially when one of your products is successful, but this industry requires constant innovation,” he explained.

Another challenge, said Fialkov, was the deflationary nature of the ISP business, along with the false perception that ISPs are money-generating machines with large margins.

Openweb CEO Keoma Wright said that the high cost of Telkom’s IPC service was the biggest threat to ADSL and broadband in South Africa.

“With higher speeds being offered we are still limited by Telkom’s insane IPC costs. The industry needs an immediate 50% reduction to align the product with international standards,” said Wright.

Vox’s du Toit said the need to educate customers that not all broadband was the same was a big challenge for them in 2014.

He added that the need to consistently innovate to differentiate was another challenge faced by service providers.

Web Africa’s Wyatt-Gunning said that their biggest challenge was dealing with customers who were unhappy with their Internet speeds – an issue the company could do little about because the problem often lay with Telkom’s network or exchanges.

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The best and worst of 2014: ISP CEOs