Big danger if Vodacom, MTN, and Telkom are not stopped

Without fibre infrastructure sharing regulations in place in SA, there is a risk that large network operators will completely corner the market and investment will slow.

This is the warning from Sébastien Crozier, CEO of Orange Horizons.

South Africa can learn a lot from Europe when it comes to rolling out fibre-to-the-home, said Crozier, particularly when it comes to fibre regulation.

“There are many ways to do it, there isn’t just one type of regulation across Europe. But in the end the aim is the same – don’t build two sets of fibre infrastructure to the same location.”

Solid regulations also ensure monopolies do not prosper, he said.

Big networks will kill competition by out-investing them

The consequences of the Independent Communications Authority of South Africa not stepping in with adequate fibre deployment and infrastructure sharing regulations could be more dire than just roads being dug up multiple times to lay cable.

Crozier predicted that many fibre players are going to die in SA, and their investment will be lost unless regulations are put in place.

There is also the danger that “dominant players can invest more and more and more” in their networks, squashing smaller competitors who simply can’t maintain the same quality of network.

“The regulator has to step in before that happens,” said Crozier.

This is already evident in the amount of investment by telecommunications providers in South Africa.

For instance, Cell C has announced it will invest R8 billion to build its Long Term Evolution network over the next 3 years.

Telkom has already spent R2.3 billion in capital expenditure in the six months from 1 April to 30 September, and aims to provide a million South African homes with access to fibre by 2018.

Vodacom has spent R4 billion over the same six-month period, and said it plans to invest more in fibre in the coming year.

MTN said it expects to have invested around R10 billion in its South African network for the year ending 31 December 2015.

Healthy regulation, healthy broadband industry

Proper regulations will not only prevent wasteful, duplicate infrastructure from being rolled out, it helps protect investment and guard against an eventual monopoly or oligopoly.

According to Crozier, networks will be encouraged to roll out fibre to areas not yet covered while knowing that their return on investment will not be threatened by another player also rolling out fibre on the same route.

The trade-off is that operators must open up their networks, selling access on a reasonable wholesale basis.

This won’t be without conflict, said Crozier, but that is normal.

“In the beginning it’s always the same. If the companies can’t find a commercial agreement to share infrastructure, the regulatory authority steps in to make a ruling.”

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Big danger if Vodacom, MTN, and Telkom are not stopped