There is so much growth and opportunity within the local telecoms space and the team from Rain is poised to make the most of it. As I write this story, Rain is in the news. Headlines detail Telkom’s calls to the Competition Tribunal to investigate the spectrum arrangements between Vodacom and Rain because it believes that the agreement between the two companies constitutes a merger.
“Telkom has a history of complaining about everyone to the regulators,” says Gustav Schoeman, Rain CTO and one of the company’s co-founders. The abovementioned claim is nothing but a rehash of a complaint made by Telkom in 2017, which objected to Rain’s purchase of WBS through Multisource, he adds. “These assumptions were shown to be incorrect after the first investigation. We believe it’s simply Telkom’s intent to be a spoiler and delay the upcoming spectrum auction.”
Backed by heavy hitters like former FNB CEO Michael Jordaan and billionaire businessman Patrice Motsepe, and valued by investor African Rainbow Capital at R15.03 billion (which makes the company more valuable than Telkom) in September 2020, Rain entered the market a few years ago and promised to be an industry disruptor. And disrupt it has. “No one really expected another large operator to start up. From the customer side, we’ve had a very positive reception. Our launch was also well received by fibre providers and tower companies. We had a very negative response from the guys we compete with directly.”
“Everyone wants to fight each other. And they want to fight with regulators. Everything is supposed to be regulated, but it’s still quite tough to get access to infrastructure.”
For Schoeman, one of the things that struck the Rain team when it entered the telecoms space was just how litigious the industry is. “Everyone wants to fight each other. And they want to report you to the regulators. Everything is supposed to be regulated, but it’s still quite tough to get access to infrastructure.” This is why the company struck the aforementioned deal with Vodacom. Describing the relationship as a commercial transaction, he notes that without this sort of deal, the industry would waste time and money overbuilding infrastructure. “Personally, I think it’s good for the industry that companies partner, but some operators see access to infrastructure as a competitive advantage. We currently spend an incredible amount of money renting infrastructure from Vodacom. It took Vodacom a while to get over the idea that we will use this infrastructure to compete with it in the market.”
The data-only mobile network also has people talking after recently being voted the worst service provider in South Africa, according to a Q3 2020 broadband and ISP report based on thousands of customer satisfaction ratings from South African broadband users between 1 July and 30 September 2020. Speaking to this ISP ranking, Schoeman explains that the majority of Rain’s customers are on its speed limited packages, which are restricted to 10MBps. Claims that customers are experiencing ‘deteriorating network speeds’ don’t take this into account. In saying this, he does acknowledge that the company has faced some customer experience challenges and that it’s working to improve the level of service it offers.
Ripe with opportunity
Having worked in the tech space for much of his career, Schoeman has watched the industry oscillate between a centralised and decentralised approach. In the mainframe days, there was a computer in a central location and everyone connected to it. Then we moved away from that with the internet. Now, as more and more businesses move to the cloud, we’re heading back to a centralised approach. “This creates a massive growth opportunity for the networks that plumb everything, especially with the launch of more and more smart, connected devices, from watches and bikes to homes and refrigerators.” This industry evolution also signals a change in customer preferences.
Speaking of market changes, he discusses the rise of 5G and what impact the technology will have on our day-to-day lives. “2G allowed us to make calls from anywhere; 3G offered basic data services like email on your phone; 4G really enabled us to access rich media on our mobile devices. 5G is about connecting everything and anything to the network – be it cars or factories or robots.” It’s cited as a key enabler of the Fourth Industrial Revolution. But none of this is possible until you build the right network, and until affordable hardware, like IoT sensors, becomes more readily available.
What is promising is that lower frequency 5G can be delivered using the same amount of towers as a 4G network. But if you’re looking for the super high-speed connectivity and ultra-low latency to enable something like self-driving cars, you’ll need hundreds of thousands of towers, he explains. “I think that in two to three years’ time, we’ll really start to see some exciting things coming out in this space.”
Schoeman says Rain is aggressively growing its 5G network and has no plans to stop doing so. While there’s no denying that 5G marks the next wave in network innovation, this investment is not without risk. The political fallout between the US and China is having a massive impact on the technology industry, he states. “Unfortunately, we can’t afford to wait for things to cool down. This is a fast-moving industry so we have to keep moving and take the risk.”
Still described as a ‘new kid on the block’, Schoeman wears the title with pride. “It’s not a negative thing. We’re lucky in that we can still operate much like a startup, making quick decisions, working in an agile way and taking risks. We just want to create great products and have fun doing so.”