At the beginning of 2020, several of South Africa’s top fibre network operators warned Internet service providers that they essentially planned to increase wholesale prices. With retail price hikes happening on four of South Africa’s major fibre network operators, consumers are asking why the price of broadband is increasing.

 Inflation, labour, and foreign exchange

 “The reality is that our costs are increasing on an annual basis in line with labour costs of constructing networks, and inflationary increases in materials and other costs,” Frogfoot CEO and founder Abraham van der Merwe said.

 “None of these factors even take into account the massive weakening of the rand, which substantially increases our material costs as most is imported.”

 Fibre networks aren’t considering the increased costs as a result of the COVID-19 pandemic and resulting lockdown，as they will simply absorb those and not try and recoup any of these losses from customers. Customers must not lose sight of the fact that fibre network operators in South Africa have been a driving force in bringing down the price of broadband.

 Octotel COO Scott Cunningham agreed with Van der Merwe, saying that unfortunately all of their input costs have increased. The delivery of a quality fibre network has many input costs that are linked to areas of the economy that regularly experience price escalation.

 “These being construction costs, labour-related costs, as well as increasing supplier costs. Pricing is negotiated aggressively on an annual basis and at times we are in a position to defer these adjustments until later dates, but this is not always possible.”

 Cable.co.uk has published a report, South Africa saw a marginal average broadband speed drop of just over 5% during the period from 18 March to 30 June 2020, according to the report.

 This was in line with other countries in Sub-Saharan Africa, apart from Angola, which saw a significant increase of 117.19%.

South Africa’s statistics are summarised below:

 Average broadband speed change: -5.48%

Mean lockdown stringency: 57.31

Number of speed tests: 7,074,978

Average download speed during lockdown: 14.85Mbps

Average download speed outside of lockdown: 15.71Mbps