Industry players have accused SEACOM of breaking its promises to its partners and turning its back on its initial goal of liberating the South African telecommunications market.
These accusations follow SEACOM’s decision to implement a new peering policy which prevents many South African ISPs from peering directly with the company.
The company changed its open peering policy to selective peering, which prevents many local ISPs from freely and openly sharing traffic directly with SEACOM.
This decision drew sharp criticism from many ISPs, who said SEACOM is taking the industry back to the days of paying for IP transit and high data prices.
Free and open peering, which was pioneered by MWEB in 2010, has revolutionised broadband access in South Africa.
Before widespread open peering, smaller ISPs had to pay companies like Telkom and Internet Solutions for transit to interconnect with other networks.
This additional transit cost, which was typically charged on a per-Mbps basis, was a big hurdle in launching fast and affordable broadband access in South Africa.
The battle was ultimately won by the ISPs, but there are now concerns that SEACOM’s recent decision will move the industry in the opposite direction.
SEACOM reversing its open peering policy
SEACOM previously promoted the fact that it moved from selective peering to open peering in Africa.
At the time, SEACOM said its decision was based on many factors, including that peering in Europe was bad for Africa and that it wanted to do its part to improve the Internet in Africa.
“We will peer openly at any mutual location in the world,” SEACOM said, adding that there would be no minimum traffic volumes or traffic ratios expectations from peers.
Many ISPs acted on SEACOM’s call to “please, come and peer with us”, but the company has now backtracked on some of its previous statements.
SEACOM CEO Byron Clatterbuck explained that its selective peering policy is partly based on the fact that smaller ISPs “don’t have as much traffic, content or customers”.
He explained that these smaller ISPs are not ‘peers’ which are at the same level as SEACOM, which is why they are now asked to pay for peering.
This about-turn by SEACOM has been described as “bait and switch”, by first getting people to peer with it for free, and then cutting them off unless they start to pay.
An ISP owner told MyBroadband it is “standard two-faced SEACOM”. “Not sure how they are going to explain their way out of this one. It is nothing other than corporate greed,” he said.
“To do such an about-turn for what they believe will be a significant commercial gain is nothing short of disgusting,” he said.
Competing against its own clients
This is not the first time SEACOM has been criticized by its partners for acting in a way which may hurt the industry.
A prominent ISP executive told MyBroadband that when SEACOM launched services in South Africa, the company told them they were going to “disrupt the wholesale market and not touch retail”.
However, in 2011, SEACOM launched a suite of retail products, including IP VPN, Internet, IP transit, ethernet and IPL (International Private Line) offerings, which competed against its own wholesale clients.
This move was widely criticized at the time, with some industry players highlighting that it opened the door for anti-competitive behaviour.
“It is my belief that SEACOM is cutting its own throat and that of its larger carrier customers,” former Neology CTO Roelf Diedericks said at the time.
Former ATC CEO Wayne De Nobrega agreed with Diedericks, saying it is not desirable for SEACOM to compete against its own wholesale customers.
The ISP executive told MyBroadband this week that he would have never signed a multi-million-rand wholesale deal back in 2009 if there was a hint that SEACOM would be competing with them in the retail market in future.
“They come to South Africa on their high horse about how they are going to disrupt the wholesale market, and then they go into retail competing against their loyal customers,” he said.
“And now that they are not dependant on wholesale clients any longer, they cut off [de-peer] everyone who is competing with them.”
He added that SEACOM is becoming consistent in breaking its industry promises – first by its about-turn on retail offerings and now with its change in peering policies.
No comment from SEACOM
MyBroadband asked SEACOM for comment regarding these issues, but the company said it “would like to decline to comment on these questions and any others on this topic”.