The rapid expansion of fibre-to-the-home (FTTH) networks in South Africa has transformed internet access. Ten years ago South Africa was at the cutting edge. But now we have fallen far behind the rest of the world in internet service quality. Companies have grown sclerotic and complacent, struggling to outperform the sluggish state-owned dinosaur Telkom.

The problem: No forces from the state or the market holding the fibre companies accountable. They are, like much of our economy, settling into a stable oligarchy with a captive market, capable of fending off new entrants, but not of improving quality.

In a capital-intensive industry where competition is limited at the infrastructure level, service levels often fall short. With no oversight, consumers and internet service providers (ISPs) have little recourse. Who’s job is it to keep fibre internet services levels in check?

The Regulators

ICASA, South Africa’s telecommunications regulator, is perfectly capable of whipping the mobile network operators (MNOs), for example, requiring them to report all call drops and compensate all such inconveniences customers.

However, similar frameworks for fibre networks are nonexistent. Short outages or packet loss—common frustrations for end users—are neither regulated nor typically covered in FNO service level agreements (SLAs).

The Department of Communications and Digital Technologies, which oversees ICASA, appears reluctant to intervene. Officials seem to defer responsibility, leaving fibre regulation in limbo.

Even industry bodies like the Digital Council Africa (DCA), formerly the FTTH Council, offer little relief. The DCA, which advocates for its members—FNOs and equipment vendors—has no mandate for industry regulation from its members. While it once played a role in setting technical definitions for FTTH, its influence has waned, and its scope has grown unfocused.

The safety of local monopoly

Hopes that competition would keep fibre networks honest have largely dissipated. A recent GIS study of Western Cape metropolitan areas suggests that 80% of households have access to only one fibre network, meaning the system has created a mosaic of non-competing local monopolies.

To illustrate this, take this map of the coverage of the fibre networks around Cape Town. You will note there is almost no overlap between the various FNOs:

This is not necessarily because of cartel-like behaviour, though over time it may encourage it. Rather it is because the capital costs of entering a neighbourhood or area already covered by your competitors outweighs the potential benefits of customers switching over.

While ISPs theoretically provide competition, they are entirely reliant on FNOs for infrastructure, with little leverage to demand improvements.

Consumers, too, are powerless. Options for switching providers are limited, and the alternative—mobile data via GSM or LTE—is often less reliable and more expensive. Social media platforms, like a Frogfoot-specific Facebook group, have become makeshift complaint channels but rarely lead to meaningful change.

Worse, with the mushrooming of private estates (effectively now entire private towns) pulling single blanket contracts for their residents, there is little reason for any company to offer any quality of service above what can be legally mandated by a service contract (and even that can be tricky to enforce).

Captive Industry Bodies

The Internet Service Providers’ Association (ISPA), once a thorn in Telkom’s monopolistic side, now faces conflicts of interest. By including fibre networks as members since 2016, ISPA risks alienating ISPs, who form its original constituency. As a result, its advocacy has softened, producing only vague guidelines on service standards.

Similarly, the Competition Commission (CompCom), while vocal about estate fibre monopolies, has yet to undertake a comprehensive study of the sector’s structural issues. Past successes, like the 1990s case that forced Telkom to separate its wholesale and retail divisions, offer hope, but such interventions remain the exception rather than the rule.

The incentive for industries to vertically integrate remains, and many FNOs give preferential service to the ISPs they own, over other ISPs which also rent their infrastructure.

Solutions?

There are a few small slivers of opportunity for industry reformers. An official GIS monopoly study by ICASA or the Competition Commission could shine light on the problems, while stricter service level agreements could compel FNOs to offer meaningful service credits for outages and packet loss.

Some propose creating a dedicated “FNO Association” to enforce industry-wide codes of conduct. Others suggest consumer-focused advocacy groups to amplify end-user concerns.

Self-regulation, however, seems unlikely. Many FNOs operate on public land rent-free, benefitting from wayleaves without obligations to maintain high service standards. ICASA could mandate transparency, such as requiring FNOs to publish data on network redundancies and outages. Another approach could be cost-based regulation of interconnect fees, ensuring smaller ISPs can compete effectively.

The fibre industry could also look abroad for inspiration. In Switzerland, municipalities lease fibre infrastructure to operators, fostering competition and accountability. At home, there is also the distant possibility of using municipal bylaws to compel reasonable standards of service, though only Cape Town would have the capacity to enforce something like that. The trouble is, the City of Cape Town’s municipal fibre network is completely dilapidated, demonstrating that, even in the shining beacon to which all point as an example of governing excellence, fibre is just too dull and difficult for most managerial staff.

Ultimately, South Africa’s fibre industry operates with little accountability. Without market forces or effective regulation, consumers and ISPs bear the brunt of poor service. CompCom, ICASA, or a new entity must step in to enforce higher standards, or the nation risks stagnation in a sector vital for economic growth. Unless consumers magically find a way to organise, things are unlikely to change.

From the latest ISPA survey:

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