Why multiple fibre networks are not built in the same neighbourhoods

While South Africans may want more than one fibre provider in their neighbourhood or estate, there are barriers preventing this from taking place.

In 2017, Cybersmart founder Laurie Fialkov stated that fibre users must beware of the evils of open-access fibre, of which a lack of competition on infrastructure was highlighted.

Fialkov said fibre network providers often sign exclusivity agreements with landlords or neighbourhoods, and this creates a scenario where the network is open-access and any ISP can offer services over it, but there is a monopoly on the infrastructure.

With no competition on infrastructure, there is no need for the fibre network provider to innovate, offer higher speeds, or improve service levels, said Fialkov.

Barrier to multiple providers

Exclusivity agreements are not the only reason why multiple fibre providers do not serve the same area, however.

A barrier to entry in an area with an existing fibre network is that more operators entering may result in “overbuild”.

Octotel MD Rob Gilmour told MyBroadband that the topic of multiple fibre providers operating in the same area is often discussed by the industry.

“Our view is that if there is an estate or complex within our coverage areas that has fibre from someone else – but not to the quality, speed, price point, and with the variety of ISPs we offer – it makes sense for the homeowners to want Octotel as a second operator,” said Gilmour.

“When you view it from the homeowners’ perspective, the more fibre networks the merrier. However, the rollout of a network is predicated on the expectation that a certain number of subscribers will be reached within a time frame.”

A fibre overbuild can diminish this user demand, and can negatively the business case for rolling out fibre.

“We strongly believe that we offer a better value proposition, however, and will over time come out on top in an overbuild scenario. So when invited in by complexes and estates, we always oblige.”

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Why multiple fibre networks are not built in the same neighbourhoods