South Africa’s fibre operators accused of corruption and anti-competitive practices

South Africa’s wireless Internet providers have accused the country’s fibre operators of anti-competitive practices and corruption involving municipalities.

In a statement issued on Tuesday, the Wireless Access Providers Association (WAPA) said fibre operators were getting preferential treatment when applying for wayleaves from municipalities, while wireless providers were getting blocked.

WAPA is a non-profit trade association acting as an intermediary between the government communications regulator, network operators, service providers, and consumers.

Wayleaves refer to the permissions granted by municipalities to trench public spaces such as roads to make way for infrastructure.

According to WAPA executive committee member Paul Colmer, large fibre operators are engaging in monopolistic practices through wayleaves.

“There is anecdotal evidence suggesting that these providers manipulate municipal wayleave processes to their advantage, often with political interference,” Colmer alleged.

“For instance, an SME wireless Internet service provider (WISP) that recently applied for an aerial wayleave was refused and was asked for a bank guarantee of R800,000 for a trench-only wayleave; aerial was declined,” he said.

“A large fibre operator entered the municipality and secured their own aerial wayleave without issues.”

Aerial wayleaves allow operators to hang cables from poles above ground. Trench-only usually means they have to dig in the road reserve and lay conduits through which to lay fibre.

“At another municipality, an SME WISP was rolling out fibre when wayleave acquisition was not an issue, until the big players moved in and all his future wayleaves were declined,” said Colmer.

“Meanwhile, the large players were granted wayleaves for the duration of their fibre rollout projects.”

Colmer said such anti-competitive behaviour undermines small-to-medium enterprises and contradicts the government’s goal of universal connectivity.

“The lack of a standardised, national regulatory framework for wayleaves allows larger operators to dominate the market, side-lining smaller competitors and stifling innovation,” he said.

Colmer explained that each municipality has its own pricing and processing system for wayleaves.

He also said that it has become an important source of revenue for municipalities with electricity sales declining.

“Traditionally, municipalities have relied heavily on revenue from electricity sales,” he said.

“However, with the widespread adoption of solar power by paying customers and frequent load shedding reducing electricity usage, municipalities are now seeking alternative revenue streams, like wayleaves.”

Colmer said that in some areas, the cost of obtaining a wayleave has been pushed so high that laying fibre has become economically unfeasible.

“This disparity in costs, combined with various bureaucratic processes, creates a significant barrier to uniform connectivity expansion.”

Colmer said the industry has experienced a shift caused by Internet service providers (ISPs) expanding their service offerings and partnering with large fibre service providers.

This has caused intensifying price wars, squeezing profit margins to as low as R50 per month per client.

As a result, many ISPs find it very difficult to sustain their operations.

According to Colmer, for SMEs to compete in this environment, they need to apply for wayleaves, which, depending on the municipality, can range from R8,000 to several hundred thousand rands.

“The situation is exacerbated by the monopolistic practices of large fibre providers,” he said.