Thanks to the availability of international content at local peering locations like NAPAfrica, Internet service providers are able to offer cheap, fast uncapped fibre services in South Africa.
This is according to Simon Swanepoel, managing director of Directel, which operates fibre-only ISP RocketNet.
Essentially, bandwidth has become free, and service providers need only recover their capital costs – such as links to peering points, and ports on switches.
“NAPAfrica has done a great job in canvassing content providers and bringing international peers like Facebook, Google, Cloudflare, and Akamai in,” said Swanepoel.
Netflix, YouTube, and other high-bandwidth services also have local content nodes in South Africa.
It is thanks to this explosion of content providers on NAPAfrica’s local network that “new kids on the block” like RocketNet can offer uncapped and unshaped services with no fair usage policy.
Swanepoel said around 80% of their total traffic is “free” – locally peered traffic through NAPAfrica.
“It effectively drops our cost on expensive international links into London, where the traditional ISPs used to peer.”
The arrival of international content in South African data centres was just one component for prices to come down like they have, said Swanepoel.
Fibre network operators like Vumatel, SADV, Octotel, and Frogfoot have created the demand.
“By building large-scale networks into high-density areas, they have contributed to the reduction in price of last-mile connectivity.”
Shift from wholesale
Liquid Telecom chief business development officer Willem Marais told MyBroadband they too have seen a shift in the wholesale market.
Customers like Internet service providers are procuring less international private leased circuit (IPLC) capacity and more IP transit.
“Most of the ISPs no longer require their own international capacity to peer and to reach content services,” said Marais.
They are also seeing a further shift in revenues to metro and last-mile services, away from IPLC.
“That said, you still have the big content providers who need international capacity,” said Marais.
“What you will find is that revenues will remain flat or grow marginally on international capacity. What we will see is an increase in ISPs and businesses taking direct connectivity services into data centres and Internet exchange points.”
Marais predicted that we will continue to see a significant increase in the amount of capacity businesses and ISPs take up, allowing the price per Mbps to decline.
This will allow price elasticity to continue, and for users to enjoy higher speeds at the same price, said Marais.