SEACOM cutting off ISPs – “Nothing other than corporate greed”

SEACOM’s decision to change its peering policy in South Africa from free and open peering to selective peering is “nothing other than corporate greed”.

This is the view of an ISP executive who said SEACOM’s decision is commercial and incongruous with its previous statements.

As part of its recent peering policy change, SEACOM de-peered many local Internet service providers (ISPs) shortly after it announced its new policy.

This decision was widely criticized by industry players, who said it takes South Africa back a decade to when large telecoms operators charged ISPs for transit instead of free and open peering.

This transit cost was a big hurdle in launching fast and affordable broadband access in South Africa – something which free and open peering changed.

Today South Africans enjoy fast and affordable uncapped broadband thanks to free and open peering, which MWEB pioneered in 2010.

Change of heart

What makes SEACOM’s decision perplexing is that the company was promoting its free and open peering policy in Africa not too long ago.

SEACOM changed from selective peering to open peering in Africa, saying it wanted to do its part in improving the Internet experience on the continent.

It said it would peer for free without any expectations of minimum traffic volumes or ratios.

This has now changed, with SEACOM CEO Byron Clatterbuck explaining that smaller ISPs “don’t have as much traffic, content, or customers”.

He said 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 is the same argument which large companies like Telkom and Internet Solutions used a decade ago to justify charging ISPs for IP transit instead of freely peering with them.

All about the money

Many ISP executives told MyBroadband that SEACOM’s decision is likely an attempt to try to make more money.

“When asking them why we were de-peered, we were told it was for commercial reasons,” Cool Ideas founder Paul Butschi told MyBroadband.

“We were then told they had a paid-for service for SEACOM and SEACOM customer prefixes.”

Another ISP executive told MyBroadband that “it is nothing other than corporate greed”.

“To do such an about-turn for what they believe will be a significant commercial gain is nothing short of disgusting,” he said.

SEACOM losing money

Remgro’s financial results for the year ended 30 June 2019 showed that SEACOM went from a profit to a loss over the past year.

Remgro, which is the largest shareholder (30%) in SEACOM, said the “portion of SEACOM’s losses for the full year [2019] amounted to R31 million” from a profit of R15 million in 2018.

While it is not clear whether SEACOM’s peering decision is related to its financial losses, the company may well be under pressure to turn its financial fortunes around.

The decision to cut off many South African ISPs and ask them to pay for peering may therefore be an attempt to increase revenue and customers.

Impact will be limited

Many ISPs told MyBroadband that the impact of SEACOM’s decision is unlikely to cause major issues or gain them many customers.

Butschi said almost all content providers like Netflix, Google, Showmax, and Facebook peer locally which means being cut off from SEACOM will have a minimal impact.

“It may affect smaller players that would need to purchase additional transit, but in our case the traffic between our networks is so low there is no real impact,” Butschi said.

Cybersmart founder Laurie Fialkov shared this view, saying while content providers peer for free locally ISPs they will not have to worry too much about SEACOM’s decision.

Free and open peering best for South Africa

Afrihost told MyBroadband that it understands SEACOM’s perspective, but it believes that an open peering model is best for the advancement of broadband in SA.

“Free and open peering creates value for all telecoms operators in the country,” Afrihost said.

“Open Access has stimulated the industry and created healthy competition – especially for smaller operators,” Afrihost said.

“Ultimately that’s what’s best for broadband consumers, and by extension service providers.”

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”.

Now read: SEACOM cuts off ISPs in new peering policy

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SEACOM cutting off ISPs – “Nothing other than corporate greed”