The Parkhurst Residents and Business Owners Association awarded a bid to install fibre in their neighbourhood to a little-known company called Vumatel in 2014.
This unassuming move radically changed South Africa’s broadband market.
For years, telecommunications infrastructure providers in South Africa had slowly been rolling out fibre-to-the-home, where they said it made financial sense to do so.
Parkhurst showed that the models being used to determine this financial feasibility were flawed, and proved there was demand in their neighbourhood by running a survey and putting together their own tender.
The next standout move was when the residents of Parkhurst didn’t award this tender to one of the big players.
They went with Vumatel, which promised them a minimum of a 4Mbps connections to every home with no line rental fee.
Faster connections would have a monthly rental, but these were much cheaper than the going rate.
Juanita Clark, the head of the FTTx Council Africa, said since this watershed moment, the entire industry has seen strong growth and Vumatel has become a household name.
There has subsequently been a “land grab” as fibre infrastructure providers rush to roll out coverage to the most lucrative areas as quickly as possible. From there, coverage continued to roll out to lower-income areas.
Vumatel has since announced that it is expanding into townships.
“Before Parkhurst, fibre deployments mainly focused on LTE tower backhaul for mobile network operators struggling to keep up with the continuing demand from data-hungry consumers,” Clark told MyBroadband.
“In those early days, many operators still disputed the viability of FTTH simply because of the costs associated with deploying that portion of the network.”
She said even though rolling out fibre remains the most expensive part of network deployment, consumer demand has allowed for a strong business case, pushing fibre deeper into suburbs.
“Most operators have a strong order book, and the exceptional growth is likely to continue for a while.”
Massive industry growth
Clark stated that the way they measure industry growth is to track “homes passed” within a certain period of time. However, their “homes passed” statistic does not differentiate between business and residential units.
According to Africa Analysis, the industry passed approximately 30,000 units in 2014. By 2018, it will pass 1.1 million units.
“Anyone will agree that these numbers show staggering growth. Operators are under tremendous pressure to constantly deliver new routes,” said Clark.
She said even though the growth has been tremendous, it is still only scratching the surface.
“As more applications become available and demand grows for high-speed connectivity, it will drive adoption and push fibre even further beyond urban areas into the outlying suburbs and small towns.”
Combined with the drive to deliver 5G mobile networks, Clark said the industry is going to see unprecedented growth.
“The past five years have been unbelievable, and I foresee that the next five are going to be even more so.”