Fibre reaches into SA townships

The tin shacks of Kayamandi township are in walking distance from the heart of South Africa’s most vibrant high-tech hub, Stellenbosch, but could be on the other side of the planet in access to resources.

Yet, it is providing a case study in what is possible in bringing broadband connectivity to the lowest-income communities of South Africa, and still making a profit.

Between the tin shacks of Kayamandi, sheaves of cables hang from poles and roofs, snaking through the township. They have been installed by Isizwe, a company dedicated to delivering fast fibre connectivity to densely populated communities like Kayamandi. It offers unlimited, uncapped Internet at speeds of more than 100mbps, at a cost of R5 a day.

“Since going live in Kayamandi, we’ve successfully connected 891 homes and shacks with fibre into the home,” says Isizwe CEO Steve Briggs. “That means a router in every dwelling.”

Each of those dwellings in turns provides access to those living in closest proximity.

“The total cost was R4,964 per home and we are averaging R6.70 revenue per home per day. What that means is our pay-as-you-go fibre for townships is profitable, but only if we reach scale.

“There are 17-million homes in South Africa, of which 4-million could be classified as in leafy suburbs and have arguably been serviced by the existing fibre industry, in the process creating value of R50-billion in less than 10 years. The remaining 13-million homes are in townships and are not serviced.

“Our goal is to prove that pay-as-you-go fibre presents a profitable business case for fibre in townships and can spur the next wave of value creation for the fibre industry. This is the best way to attract investment to township fibre and bring the freedom of the internet to those who benefit it the most.”

Internet service providers (ISPs) and mobile network operators alike have recognised the opportunity.

The country’s biggest operator, Vodacom, is awaiting approval from the competition commission for a merger of its networking assets with those of Community Investment Ventures Holdings (CIVH), holding company of Vumatel, which started the fibre-to-the-home revolution in South Africa in 2014. The joint venture will be a fibre company called Maziv.

Vodacom Group spokesperson Byron Kennedy said that the proposed purchase of the joint venture stake “is set to assist in narrowing the digital divide by enabling affordable access to connectivity in some of the most vulnerable parts of the country through an ambitious fibre rollout programme”.

The joint venture received approval from the communications regulator, ICASA, in October 2022, but the transaction remains subject to a green light from the Competition Commission.

“Pursuant to the approval of the transaction, all fibre deployment will be executed by Maziv,” said Kennedy. “Vodacom will then remain an ISP and will access the Maziv fibre network on the same basis as other ISPs.

“Our potential tie up with CIVH in South Africa is transformational and will enhance our fibre footprint and accelerate the provision of high-speed connectivity solutions to businesses and SMEs in secondary towns and rural areas. It will also support our strategy to accelerate fibre-to-the-home-and-business (FTTx) in all our markets, leveraging the power of scale and shared costs to reduce the cost to communicate for our customers.”

Kennedy said that, through the proposed strategic holding in CIVH, Vodacom would take a significant step in diversifying its connectivity offering and “optimising our assets to benefit and connect customers, including those in rural areas”.

During the fifth South Africa Investment Conference earlier in April, Vodacom pledged to invest R60-billion in South Africa over the next five years, to enhance “network resilience to keep customers connected, further accelerating Vodacom’s deep rural coverage programme to help bridge the digital divide and deepening financial inclusion”. However, Kennedy confirmed that the CIVH deal was not included in this number, and “the proposed Maziv transaction is incremental to the R60-billion pledge”.

Shane Chorley, who became CEO of Vox Telecommunications fibre subsidiary Frogfoot Network, at the beginning of April, said on taking on the new role that his plans included “expanding our network into townships to try and get fibre to all”.

Last week he told us: “Frogfoot Networks’ goal is to extend our fibre services to high-density environments, as this is a large market with potentially between 11- and 12-million homes.”

A key element of this expansion, he said, was community engagement, which included “working with people to understand their requirements as well as contracting local teams where possible to deploy fibre in specific communities”.

“Bringing fibre to local communities not only gives them a financially sustainable service, but can also uplift them by enabling a more reliable working from home environment – as opposed to being reliant on mobile networks.

“We believe that everyone should have access to fibre where it is financially feasible and that it should be seen as a utility. In most cases, fibre will become as widespread as the satellite dishes we see on houses. The only difference is that fibre is still a physical installation that has to link back to a network.”

Other ISPs are also preparing to leap into the township and rural fray.

Simon Swanepoel, CEO of RocketNet, said that deploying high speed fibre in rural areas and achieving economies of scale would require “a three-way effort, involving Government, fibre network operators and ISPs”.

“RocketNet has always carried the dream to connect the entire country to fibre stimulating economic growth,” he said. “Imagine how beautifully this country will thrive when every South African has access to high-speed fibre internet. It is critical for government and the regulator to get involved so red tape doesn’t prohibit the fast tracking of these much-needed technologies.”

Swanepoel said he envisaged fibre-to-light pole for rural communities, with a Wi-Fi access point.

“The light pole can double up storing renewable energy, which could power 20 to 30 homes in proximity to the light pole and provide much needed light for the security of the community. Although the major vendors and mobile networks cite 5G as the primary player to deliver connectivity, the reality is that most 5G-enabled devices will be out of reach for rural South Africans budgets, making Wi-Fi the most cost-effective technology.”

As another small ISP has shown in Kayamandi, such visions are no longer pipe dreams.