Shane Chorley, Head of Sales and Marketing, Frogfoot Networks
The concept of open access (OA) business model is here to stay. It provides the most effective way of driving competition between internet service providers (ISPs) while giving customers freedom of choice at affordable rates.
Under an open access model, the fibre network operator (FNO) provides an infrastructure that can be used by any number of licensed ISPs. This creates a clear distinction between the responsibilities of both parties. The roll-out and maintenance of the physical infrastructure, for example, the fibre cables, are the domain of the FNO. The ISPs, in turn, are responsible for the value-added services offered on top of that, i.e. the internet access sold to the customer.
It is also why many operators in smaller towns are still clinging to a traditional approach that sees them providing both infrastructure and connectivity to customers. For them, it is about capturing an entire community from both FNO and ISP perspectives to eliminate any potential for competition. The implication of this is that things like customer service and product innovation will often fall by the wayside.
The carrot they dangle in front of consumers and businesses clamouring for abundant, reliable, high-speed connectivity, is low rates. But once customers are on the network, there is little stopping the FNO/ISP from incrementally increasing prices leaving users with no choice but to keep on paying due to a lack of competition.
Access done differently
Open access eliminates that.
Take Frogfoot Networks as an example. We supply fibre to over 140 ISPs on our national network. This means consumers and businesses can choose a service provider that delivers the value they are looking for at a price they can afford. The ISP has the benefit of getting access to fibre infrastructure at a standard price so it can focus on competing on quality, customer service, and value proposition. The FNO can commit to connecting as many cities and towns to high-speed internet with the ISP responsible for switching the customer on.
Of course, the challenge with this is that the FNO does not have a direct relationship with the end customer. It is very reliant on the ISP sales channel. Fortunately, the relationship between the ISP and the FNO is a symbiotic one. Each needs the other to deliver on their respective strategic mandates.
Connecting South Africa
Because open access is becoming a more common methodology, we see that larger FNOs may consolidate the smaller FNOs in time. The larger businesses will continue to roll out infrastructure throughout the country and will engage more with the ISPs servicing towns in remote areas.
But this will not come without challenges. By taking fibre infrastructure out of the equation, a smaller ISP must now focus on expanding into other areas. So, while some might have only delivered wireless services due to a lack of fibre infrastructure, this is about to change requiring a rethink about their service offering.
But ultimately, the focus remains on delivering reliable connectivity to as many South Africans as possible. Larger FNOs are investing heavily in this infrastructure and using open access as their go-to-market strategy. To this end, we encourage ISPs to partner with those FNOs who have embraced open access and provide a more compelling value proposition to customers.