For the reason that information broke final week that Vodacom, South Africa’s largest mobile community operator, had its bid to purchase fibre community operator Maziv blocked by the Competitors Fee, we’ve been inundated by sob tales of how this “setback” will “widen digital exclusion” within the nation’s rural and underserviced areas.
To be direct: digital exclusion isn’t a difficulty in rural areas. A few of these communities are nicely served by smaller wi-fi information operators – it’s simply that the massive mobile suppliers with in depth protection and with excessive pricing fashions aren’t one in every of them, and have created that exclusion.
Wapa – the Wi-fi Entry Suppliers’ Affiliation – applauds the latest resolution by the Competitors Fee, which we imagine is in the very best pursuits of customers getting a good value for his or her broadband web connection. The concept that blocking the Vodacom-Maziv deal is a setback for your complete business is nonsense; it is just a setback for the businesses concerned within the deal.
To know why considerations about “underserved communities” could also be extra about advertising and marketing than substance, let’s take a more in-depth take a look at latest historical past.
Vodacom, launched in 1994, rose to the highest of the telecommunications business in South Africa, constructing a behemoth community primarily fuelled by voice site visitors income. As information overtook voice as the first site visitors on these networks, the shift introduced in elevated revenue margins.
Vodacom’s 30-year legacy and vital headstart have allowed it to dominate the market, and its CEO, Shameel Joosub, has been with the corporate from the beginning. A Harvard graduate with almost a decade as CEO, Joosub has steadily pushed Vodacom in direction of deeper market consolidation.
Not its first rodeo
Let’s be clear: this isn’t Vodacom’s first rodeo with tried mergers to tighten its market grip. In 2015, Vodacom’s proposed acquisition of Neotel fell aside after business outcry and intervention from its opponents as regards to the switch of spectrum. Regardless of this, Vodacom hasn’t let up on its mission to safe a stranglehold on web infrastructure in South Africa.
Now, with Maziv – the guardian of Darkish Fibre Africa and Vumatel – the corporate set its sights on a fibre goldmine. Maziv has already invested R30-billion into its fibre community, with one other R10-billion deliberate, positioning it as a linchpin in South Africa’s broadband future.
Learn: Vodacom indicators its first MVNO buyer
However Maziv can also be R25-billion in debt, not too long ago refinanced by Customary Financial institution in one of many largest offers of its variety. And let’s not ignore that Vodacom already owns its personal fibre community – one of many few within the nation that continues to be closed entry.
Vodacom has trotted out a drained promise: that purchasing Maziv would assist them “join the unconnected” in rural and underserved areas. That is, to place it bluntly, PR nonsense. Fibre merely doesn’t make monetary sense in sparsely populated rural areas, the place each the set up prices and potential subscriber pool render it unsustainable.
What’s extra, the declare that Vodacom immediately desires to offer reasonably priced broadband for rural South Africans rings hole. Simply two years in the past, the corporate argued in opposition to the “information should fall” motion, claiming it couldn’t lower information costs with out extra spectrum. After they lastly secured spectrum within the 2022 public sale, they not solely declined to decrease information prices – they elevated them, funnelling the additional income into their 5G community. This hardly displays an organization dedicated to reasonably priced, accessible broadband for the lots.
The 2022 public sale even featured a singular spectrum allocation lot in sub-1GHz that required rural roll-out earlier than it could possibly be utilized in city areas. And what did Vodacom do? Ignored it, as did the opposite operators. The spectrum stays unsold and there may be little proof of any rural roll-out since then.
The purple and yellow rainbow
With MTN eyeing Telkom’s community, Vodacom’s acquisition of Maziv would solidify a two-giant monopoly. Collectively these two gamers might hike costs and squeeze smaller suppliers out of the market. Smaller operators like these represented by Wapa, which has been bringing broadband to underserved areas for years, could be shut out by Vodacom’s deep pockets and aggressive pricing.
Vodacom’s closed-access community has been a persistent thorn within the aspect of open-access proponents, and Maziv’s community was open entry, which means it permits different suppliers to make use of its infrastructure. Authorities’s open-access directive geared toward fostering competitors could possibly be undermined if Vodacom took management of Maziv and determined to tighten the gates. Why would Vodacom, which has proven zero dedication to open networks, immediately prioritise sharing sources with opponents?
This isn’t about making a “Rainbow Nation” of web entry for all. It’s about making a closed-loop between Vodacom and MTN, the place they might set the phrases, preserve costs excessive and lock out innovation. If Wapa and smaller suppliers are squeezed out, rural South Africans will really feel the brunt.
Let’s keep in mind that South Africa’s telecoms panorama solely noticed actual disruption when firms like Cell C and Rain entered the market. By introducing extra reasonably priced, uncapped LTE choices, these smaller gamers shook up the established order set by Vodacom and MTN. With out them, Vodacom and MTN might need continued with their high-priced choices, catering primarily to higher-income, city clients.
The Competitors Fee’s resolution isn’t anti-growth; it’s pro-competition. In a free market, the value ought to be set by competitors, not monopolistic giants with inflated pricing methods. Smaller web service suppliers have already established footholds in rural areas – footholds which can be sustainable, cost-effective and cater to the communities Vodacom ignores.
Learn: Blocked Vodacom-Maziv deal derails telecoms M&A
Let’s face it, Vodacom’s providers are already obtainable in under-connected areas, however most rural populations merely can’t afford them. And why ought to they must? Simply as Wapa and its members convey entry at a good value, competitors – not monopolistic dominance – will guarantee underserved communities keep related affordably.
If Vodacom had succeeded on this deal, poorer, rural South Africans could be those to endure. So, let’s be grateful the Competitors Fee noticed by way of the skinny veil of guarantees. Rural communities don’t want monopolistic giants. They want competitors that drives reasonably priced entry for all, and this blocking transfer has ensured that, for now at the least, they’ll have simply that.
- The creator, Paul Colmer, is government committee member on the Wi-fi Entry Suppliers’ Affiliation
- Learn extra articles by Paul Colmer on TechCentral
