Undersea telecoms cable Seacom went live yesterday, but analysts cautioned consumers not to expect an immediate reduction in Internet bandwidth prices.
Mooted two years ago, the $600 million (R4.5 billion) cable linking Johannesburg, Nairobi and Kampala with India and Europe aims to make bandwidth up to 50 percent cheaper.
Dobek Pater, a telecoms analyst at Africa Analysis, said the launch was positive news but cautioned that consumers should not get ecstatic.
"Prices are going to come down, but not dramatically. It will be a gradual reduction of probably 20 percent year on year," he said, adding that Seacom also had to make a return on investment.
Pater added that even if Seacom were to slash prices by half to the operators, that did not mean end users would receive the same discount.
Until recently, Africa was solely dependent on Telkom's SAT3 cable, resulting in congestion and high international bandwidth tariffs.
Seacom spokesman Suveer Ramdhani said the company expected to start turning profit in the next five years.
Arthur Goldstuck, the managing director at World Wide Worx, said the Seacom launch marked the end of the beginning of Internet history in South Africa.
"Now the role of the Internet and access to Internet is no longer controlled by one organisation. But prices are not going to drop quickly," he said.
Ramdhani hopes that operators will pass on savings to consumers immediately. He added that prices would fall even more dramatically after three years when operators had paid for their right to use the cable.
The launch of Seacom opened up unprecedented opportunities, at a fraction of the current cost, as the government, businesses and citizens could now use the network to compete globally, drive economic growth and enhance the quality of life across the continent, the company said in a statement.
Seacom will enable services such as fast movie downloads and video conferencing transmission, high definition video and Internet television.
Brian Herlihy, the chief executive of Seacom, said ultimately Seacom would be judged on the changes that took place on the continent over the coming years.
The 17 000km fibre-optic cable system has a capacity of 1.28 terabits per second.
The Seacom cable will land in South Africa under Neotel's licence.
Neotel's chief technology officer, Angus Hay, said Seacom's impact would be felt immediately as more ISPs and telecoms started using its cable.
Seacom's local investors are Venfin with 25 percent, Andile Ngcaba's Convergence Partners and Cyril Ramaphosa's Shanduka Investment (12.5 percent each).
Kenyan development agency Industrial Promotional Services has 25 percent while 23.44 percent is held by US-based Herakles Telecom.
Seacom chairman Nizar Juma said that the cable clearly demonstrated that, provided with an enabling environment, the private sector can efficiently mobilise resources required to deliver complex and expansive projects for the benefit of the people.
