From R1,029 for uncapped 4Mbps to R547 for uncapped 40Mbps — how fibre killed ADSL

The prices and value of uncapped broadband Internet connectivity in South Africa have improved drastically over the past 13 years.

Where one megabit-per-second of speed would have cost you R224.75 per month on a popular package from a major Internet service provider (ISP) in 2010, it now costs R14.18 per megabit from that same ISP.

The first form of household fixed connectivity available in South Africa was dial-up Internet, which first picked up steam locally in 1997.

Dial-up uses public switched telephone network infrastructure to establish communication between a user and the Internet.

The highest download rate of cutting-edge dial-up modems was 56Kbps (0.056Mbps), about 0.11% of the speed that several fibre network operators (FNOs) now consider entry-level — 50Mbps.

At this speed, it would have been impossible to enjoy the types of high-bandwidth applications we use today — like video streaming and cloud storage.

It was also not possible to use the telephone and Internet at the same time.

The first always-on fixed broadband — asymmetric digital subscriber line (ADSL) — arrived in 2002.

It uses the same telephone copper lines for Internet connectivity but operates outside the frequencies of regular voice communication.

Initially, ADSL packages came with strict monthly caps. ISPs were later allowed to sell top-up data, and in 2010, Mweb blew the market wide open by launching affordable uncapped DSL.

At that point, Telkom offered line speeds ranging from 384kbps to 4,096kbps (4Mbps).

The fastest option was R1,029 per month, including the Telkom analogue phone line rental — which the company made compulsory until 2020.

While South Africa’s telecommunications landscape had been mostly liberalised thanks to a landmark 2008 court ruling, Telkom remained unchallenged in fixed-line network infrastructure for years.

Some companies had built small-scale fibre networks as test projects in places like the Maboneng District, or in affluent estates where Telkom wasn’t already present.

However, this all changed in 2014 when Vumatel burst onto the scene.

Before Vumatel launched, the peak download speed on DSL technology in South Africa was 40Mbps on a VDSL package.

Axxess offered among the best prices for uncapped VDSL at the time — at R1,895 per month, including Telkom’s landline rental.

Fibre was still a very young technology and primarily used for backhaul connectivity.

Frustrated with Telkom’s poor service in their area, well-to-do Johannesburg suburb Parkhurst issued a tender for companies to build them a fibre network.

The tender went to a company few people had heard of at that point — Vumatel.

Parkhurst’s publicity opened the floodgates. Affluent neighbourhoods around South Africa launched similar tenders, and lenders were stepping up to provide fibre network providers with funding.

Vumatel’s boldness paid off. It had proven there was demand and challenged conventional thinking on the financial feasibility of taking on Telkom in fibre.

It also soon overtook established alternative fibre players like Frogfoot and Metrofibre Networx, which had already been in the market for years.

By 2019, Vumatel had overtaken Telkom’s Openserve as the biggest fibre-to-the-home operator in South Africa by number of homes passed — despite Telkom’s much more extensive network footprint.

However, as with all young and cutting-edge technologies, it was not cheap to deploy and higher-end services were still relatively expensive.

For example, the package most comparable to 40Mbps VDSL was Vumatel’s symmetric 50Mbps line, which cost R3,298 per month at launch.

There were more affordable options with lower speeds — but these were still more expensive than ADSL.

Crucially, Parkhurst had negotiated that Vumatel’s entry-level 4Mbps line would be free to its residents to boost adoption.

Demand led to more aggressive rollouts by fibre network operators (FNOs) and more ISP competition in FTTH.

By 2016, when ADSL connections in South Africa peaked, the prices of 50Mbps fibre packages were already substantially cheaper than 40Mbps VDSL products.

A 50Mbps fibre package on MetroFibre could be bought for as little as R848 per month if a customer opted for Cipherwave as their ISP.

On Vumatel’s network, the same ISP offered a product with the same speed for R888.

Among the cheapest 40Mbps VDSL bundle packages in that same year cost R1,284 on Axxess, including the cost of the landline rental.

A boost from Covid-19

FTTH prices remained relatively stable over the next few years.

However, the surge in the need for bandwidth at homes during the Covid-19 pandemic set off a fibre price war that saw FNOs radically increasing speeds on many of their packages.

That meant that customers were getting a much better price for every megabit-per-second of speed.

That trend has been maintained after the pandemic, with many FNOs even phasing out their entry-level packages completely.

While that has meant that cheaper, sub-R500 fibre is a rarity, the per-Mbps prices have come down drastically.

As of October 2023, Mweb sells a 50Mbps symmetric package on Vumatel for R709.

But even cheaper options are available from some of Vumatel’s rivals — including a 40/20Mbps line on Openserve’s network with a monthly price of R547 via Afrihost.

Where it once was infamous for its high ADSL prices and for charging more for FTTH to not cannibalise its DSL products earlier on, Telkom now seems to make a point of undercutting rival FNOs in entry-level prices.

2020 also saw a significant move from Telkom in the DSL category.

After years of pleading from consumers and ISPs like Mweb for “Naked DSL”, it finally scrapped the requirement for a landline rental with an ADSL package.

This reduced the price of uncapped 40Mbps VDSL to R899 in 2020.

In 2023, a 40Mbps VDSL service will cost you R697 per month through Afrihost.

However, it will be a challenge to find areas that still support DSL connectivity.

Homes connected with fibre now stand at nearly 1.6 million across eight of the biggest networks.

Vumatel has the most customers connected and homes passed — 600,000 and 2 million, respectively.

In contrast, Openserve’s ADSL customers had dropped to around 74,000 by the end of March 2023, down from a peak of roughly 1 million in March 2016.

However, while Openserve lags behind Vumatel in terms of homes passed by its fibre network, its connectivity rate is higher. It boasts over  515,000 homes connected.

The table and graph below show how the most affordable prices of 50Mbps FTTH and 40Mbps VDSL changed from 2014 to 2023.

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