The City of Tshwane metropolitan municipality, which includes Pretoria and surrounding towns, has published “significantly” increased fees for deploying telecommunications infrastructure. But the move is likely to disincentivise operators from building networks, further widening the digital divide in the vast metro, the FTTX Council Africa, an industry body, has warned.

FTTX Council nonexecutive director Mike Silber told TechCentral in an interview on Thursday evening that the new fees and rules, which are buried in the city’s new integrated development plan, will make it more expensive and onerous to deploy new telecoms networks, including fibre infrastructure, and this will affect middle- and low-income areas worst.

The City of Tswhane covers an area of 6 300sq km and includes places such as Atteridgeville, Centurion, Cullinan, Ga-Rankuwa, Hammanskraal, Mamelodi and Soshanguve. The FTTX Council has a large membership base, which includes big names such as MTN, Vodacom, Vumatel, Liquid Telecom, Dark Fibre Africa, Telkom, Google, Huawei, ZTE and FibreCo.

A notice about the new integrated development plan was published in two city newspapers on 6 April for discussion. The changes affecting the telecoms industry are included in the lengthy document. “Most of us missed it,” Silber said. “Until now, the city has engaged directly with operators.”

Tshwane has increased the prices to such an extent, he said, that it “creates risk” for operators and is likely to put the brakes on new deployments. “The price increases are so high, it’s likely to result in significant increases in the cost of deployment. And, of course, increases in these costs are going to passed onto someone – be it a retail or wholesale customer.”

The new rates, which are set to come into force next week, include the requirement for a refundable security deposit of R250 000/application. Previously, operators simply had to provide a covering guarantee. Other fees include R15 000 for a single wayleave application. There are also higher fees for running infrastructure through sewers and storm water drains. The refundable deposit per application “simply doesn’t make sense”, Silber said. “That’s the sort of thing that would have been useful to engage on.

“The intent is to try to encourage us not to be disruptive, but it doesn’t take into account that we contribute to the city’s economy,” he said. He added that the “unilateral” cost increases are “really concerning”.

“We thought we had a partnership and were actually working together on this.”

‘Short-sighted’

Asked if he believes the new fees amount to a revenue-raising exercise by Tshwane, Silber said he doesn’t think so, but described the move as “short-sighted”. The “small uptick” in revenue the city will receive “is vastly overshadowed by the decrease in investment in infrastructure that is likely to follow”.

“They are facing challenges, and they do need to preserve the integrity of the road reserve and the city’s infrastructure, but the days of multiple operators building along the same stretch of road have largely passed,” he said. “If the idea is to stop that from happening, most of those routes have been built. What we are trying to do now is either build redundancy or expand to areas that are not covered.”

Given that high-income areas are already well covered, the impact of the higher fees will be that operators will be less inclined to build in less financially viable areas, whether commercial or residential. “Increasing costs will create a greater digital divide in the city. They should be encouraging us to go to those less developed and affluent areas, because that’s where there is greatest need for infrastructure.”

Silber emphasised that the industry is “not looking for some sort of free ride”. But “having to write a R250 000 cheque with every application”, and not knowing exactly when that money will be refunded, will affect deployment negatively. Rather, he said, the city should allow operators to provide an upfront guarantee at the start of each year. “We get what they are trying to achieve – to ensure they are not hurt by fly-by-night operators. It makes sense but do it in a way that is practical and in a way that doesn’t create a disincentive.”

He said the FTTX Council does not want to be seen to be pointing a finger at Tshwane specifically. “There are many issues we are finding in multiple metros. There is no single approach; no uniformity. Lots of cities are looking at this, but it is disjointed. At least Tswhane has it in terms of by-laws.”