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    Home » Sections » Internet and connectivity » The commercial barriers holding back smaller ISPs

    The commercial barriers holding back smaller ISPs

    Promoted | Backspace's Jevon King says onboarding fees and minimum spends keep smaller ISPs from competing.
    By Backspace Technologies3 November 2026
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    The commercial barriers holding back smaller ISPs - Jevon King, Backspace Technologies
    The author, Backspace Technologies’ Jevon King

    A few months ago, communications regulator Icasa gazetted the National Radio Frequency Plan 2026 and the International Mobile Telecommunications (IMT) Roadmap 2026, which identify more mid-band spectrum for mobile networks. Separate regulations have been gazetted to open lower bands as shared innovation spectrum. The Electronic Communications Amendment Bill before parliament would, if passed, let Icasa apply “use it or share it” to unused post-2021 assignments.

    This is significant movement on the regulatory front, and anyone in the telecommunications sector will celebrate expanding fibre networks and spectrum access. On the surface, and certainly at a macro level, it is proof of progress. However, in South Africa, running a new or smaller business presents a different challenge, one not captured in the bigger picture.

    On the ground, nominal access to infrastructure does not necessarily mean smaller internet service providers are equipped to compete. The picture is far more complicated. South Africa’s telecommunications market does not necessarily suffer from a lack of theoretical network coverage; it suffers from commercial structures that keep smaller providers from competing effectively.

    We offer two flexible partnership models designed to suit different business goals. Whether you want to build your own brand or leverage ours, we provide the tools and support to help you succeed. Contact Backspace today.

    The real barriers are commercial, not technical

    An emerging ISP faces a number of challenges when trying to enter or scale in the local market. The most formidable is the punitive commercial friction imposed on it by dominant network operators and wholesale providers.

    What do these typical commercial barriers look like? First, smaller operators face exorbitant onboarding and implementation fees, before they even trade. This pressure is compounded as soon as they start trading, in the form of aggressive minimum spend commitments: fixed minimum monthly expenditure targets with steep ramp-up periods. These were designed for mature businesses with established subscriber bases, certainly not emerging challengers.

    Small businesses can be wiped out in a flash, but this is the reality of the contractual environment they must navigate.

    Jevon King

    This matters because cash flow is the lifeblood of a start-up or a smaller but growing business. They need liquidity to manage payroll, billing software and the marketing required to acquire customers. Forcing smaller players into massive fixed charges before they generate steady and predictable revenue channels scarce capital away from the fundamentals of running a business and towards a pay-to-play model that adds zero value to the end user. We’ve seen it – failing to meet a minimum spend commitment can shut down a young business almost overnight.

    Contract opacity and unilateral risk

    Let’s assume a smaller ISP manages to get through the starting blocks. Once it is operating, it finds itself in an environment fraught with contractual risk. Backspace has been in the industry long enough to know just how vulnerable small providers are to wholesale shifts. It is critical that ISPs understand every line, clause and exception in the contracts they sign, and shed their reluctance to negotiate aggressively.

    We’ve seen a wholesale network provider issue a 30-day notice on a fundamental commercial change. When it was implemented, entire product lines became uncompetitive virtually overnight. Businesses that sign up to these standard terms will have very little room to manoeuvre in situations such as these. Products are discontinued, operational losses have to be absorbed and customers need to undergo painful migrations. Not many businesses have the financial resilience to cushion a blow like this. Small businesses can be wiped out in a flash, but this is the reality of the contractual environment they must navigate.

    Choose a partnership model that fits your business – whether you want full control with a white-label solution or prefer earning commission through our brand. Contact Backspace today.

    Enablement as another route

    Modern businesses across sectors are moving to flexible, asset-light models rather than heavy capital ownership. This is out of necessity, because it makes them more competitive. Similarly, the telecommunications ecosystem is evolving through aggregation to create an environment of enablement for newer entities. Small or new ISPs don’t need to take on direct wholesale risk to deliver exceptional service.

    By working with enablement partners, ISPs can bypass direct onboarding fees and minimum-spend traps altogether, because the aggregators absorb the heavy commercial commitments. This, in turn, allows aggregators to enable smaller operators to compete, by giving them immediate access to a basket of services such as fibre, APNs, Sims and LTE, on flexible terms.

    The capital unlocked when smaller or newer ISPs do not have to navigate onboarding fees and minimum spend obstacles lets them focus entirely on what they do best: providing differentiated customer service and driving sales.

    Backspace Technologies

    Regulatory reform

    To complement industry-led aggregation, regulatory policy should also evolve. Icasa’s recent field trials of dynamic spectrum access show the industry that regulator-led reform is possible. However, deploying localised networks remains economically prohibitive under traditional spectrum fee structures.

    The amendment bill already proposes a 12-month spectrum-fee holiday for secondary users of unused assignments, with preference for community networks and small, medium and micro enterprises. That should be implemented and paired with flexible local licensing, so smaller operators can actually use shared spectrum without fee structures designed for national incumbents.

    There needs to be more innovation to catalyse widespread connectivity in the country. Regulators would do well to mandate pricing transparency and to enforce reasonable change-control safeguard periods on wholesale contracts. Critically, the regulator should expand low-cost spectrum for community-level deployments.

    Responsibility doesn’t end with policymakers. Established players and aggregators must continue standardising wholesale service level agreements to protect smaller partners from forced migrations.

    Growing into fair giants

    Reforming South Africa’s telecommunications market is not about vilifying or punishing the massive incumbents. It is about preventing commercial bullying so that there can be a fair, competitive environment where ambitious challengers can scale.

    Every telecommunications business aspires to grow and become a market leader, but as we build the next generation of large companies in the sector, our shared commitment must be to become “fair giants”. In our view, a fair giant is an operator that enables economic inclusion, fosters innovation and keeps the playing field open for those with growth aspirations of their own.

    Partnering with Backspace gives you access to our proven products and infrastructure, competitive revenue opportunities, training and onboarding assistance, marketing and sales support and a dedicated partner support team. Grow with us – get in touch today.

    • The author, Jevon King, is chief commercial officer at Backspace
    • Read more articles by Backspace on TechCentral
    • This promoted content was paid for by the party concerned
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