Fibre to the Home (FTTH) has become the preferred form of home Internet wherever it is available in South Africa.
This is partially because it offers superior speed and latency, but it is also due to the fact that it is more affordable than ADSL.
For this reason, businesses have also made Fibre to the Business (FTTB) their broadband solution of choice. However, fibre has not always been so affordable.
When ISPs first started offering products on Vumatel’s network back in 2014, the price of a fibre connection was significantly higher than it is today.
A Cell C spokesperson told MyBroadband that fibre first started off as a costlier option due to limited network reach and high trenching costs.
“As the availability increased and unit cost of provision reduced, so too did input prices and this then translated into reduced end-user pricing,” said Cell C.
It added that as the market becomes saturated, pricing will likely go through peaks and troughs, but it expects that pricing should continue on a downward curve overall.
A Telkom spokesperson contended that the market has largely levelled out, although some newer ISPs are offering promotional pricing to acquire market share.
Obstacles to further fibre price decreases
Telkom said that ISPs are dependent on wholesale providers such as Vumatel and Openserve when it comes to reducing pricing.
WebAfrica’s Greg Wright agrees, claiming that while data is getting cheaper, many fibre infrastructure providers are increasing their line prices to ISPs – making it harder for ISPs to reduce their prices to customers.
Wright added that increased data use by customers also makes matters difficult for ISPs.
“Our average usage per fibre customer is now in the region of 300GB per month. Six months ago it was 250GB.”
Wright believes that the only way customers will see significant price reductions in the future is in one of the two following cases:
- Infrastructure providers lower their wholesale pricing to ISPs.
- There is a price war between the big ISPs.
“ISPs on the whole are caught between a rock and a hard place. Pass on the increasing costs, especially the fibre lines price increases, or swallow them and take a hit on margin.”
“To the surprise of many, margins in this game are thin, hence most ISPs pass on and only a few absorb,” Wright said.
How prices have decreased
While fibre providers may be split on whether prices will decrease substantially in the future, these prices have definitely become significantly cheaper over the past five years.
We took fibre ISP pricing from five years ago and compared this with equivalent packages today.
The table below shows how much fibre prices have decreased over the past five years.
|Fibre Prices – 2014 vs 2019|
|Cool Ideas Uncapped (Vumatel)||50Mbps||R3,298||R959|
|Cool Ideas Uncapped (Vumatel)||100Mbps||R6,599||R1,119|
|MTN Fibre 500GB/Uncapped||20Mbps||R2,719 (500GB)||R879 (Uncapped)|
|MTN Fibre 500GB/Uncapped||100Mbps||R3,729 (500GB)||R1,229 (Uncapped)|
|Cybersmart Lightspeed Business Uncapped||100Mbps/500Mbps||R11,999 (100Mbps)||R1,999 (500Mbps)|
|Vodacom Business Fibre Uncapped||10Mbps||R3,499||R1,199|
|Vodacom Business Fibre Uncapped||20Mbps||R5,899||R1,399|
|Vodacom Business Fibre Uncapped||50Mbps||R9,999||R1,799|
|Vodacom Business Fibre Uncapped||100Mbps||R16,999||R2,099|