Vumatel will not use profits from clients in affluent suburbs to subsidise its 100Mbps fibre offer in Alexandra township, CEO Niel Schoeman told MyBroadband.
“There will be no cross-subsidisation, contrary to popular belief,” said Schoeman.
“I’m doing this as a capitalist. The only way to make this work is if this makes sense for me and my shareholders. It must be a business, not charity.”
To achieve this, Vumatel’s service in townships will not be the same as in the suburbs.
No lines are contended when it comes to downloads in the suburbs. In the underlying gigabit passive optical networking layer, connections are statistically uncontended, said Schoeman.
To make the township business model work, lines will run at a ratio of 1:20 – with 20 homes effectively sharing the same main line to the Internet.
Vumatel will also roll out fibre by hanging cables overhead from poles, which is faster and cheaper than trenching.
Schoeman said they are unsure if their fibre system will be gamed in townships – in terms of multiple homes sharing a single connection – and this is part of the reason for the pilot project in Alexandra.
“Obviously if one person signs up for R89 and shares it with everyone, the business model breaks,” he said.
Its fibre price is so compelling, however, Vumatel believes this will be minimal.
“Clearly we want to make a commercial success of this. There is a huge market for this type of deployment, not just in South Africa, but outside the country as well.”
Vumatel hopes to have its pilot township fibre project working in Alexandra by March, with Diepsloot the next area for deployment.
If these projects are successful, Vumatel aims to connect 2.5 million homes to fibre in the next two years.