South Africa slipping further behind in broadband rankings

South Africa has the worst broadband penetration out of a sample of 30 countries according to a recent broadband penetration survey.

The recently released statistics from the Organisation for Economic Co-operation and Development (OECD), an international organisation helping governments tackle the challenges of a globalised economy, reveal that the number of broadband subscriptions throughout the OECD continued to increase in 2005 from 136 million in June 2005 to 158 million by December 2005.

The leading countries in the survey were Iceland, Korea, the Netherlands and Denmark, each with more than 25 subscribers per 100 inhabitants. Japan leads the OECD in fibre-to-the-premises (FTTP) with 4.6 million fibre subscribers at the end of 2005. It is interesting to note that fibre subscribers alone in Japan outnumber total broadband subscribers in 21 of the 30 OECD countries.

The survey also indicated that DSL (a fixed-line broadband connection where Telkom is currently the only provider in SA) is still the leading platform in 28 OECD countries with 62% of the market, followed by cable with 31% and other technologies like satellite, fibre and fixed wireless making up the other 7% of the market share.

Whilst not all countries are able to reach the impressive rates of Iceland and Korea the average broadband penetration rate in the participating OECD countries is 13.6%, showing a growth of 4.5 % in the last year. South Africa’s broadband penetration rate currently sits at around 0.5% which is a full 2700 % lower than the OECD average. Compared to the OECD countries we come in stone last and convincingly so.

The second worst country regarding broadband penetration is Greece which sits at 1.4% making S.A. three times worse than our closest competitor and four times worse than the third last country on the list, Turkey, who has a 2.1% broadband penetration rate.

The OECD figures point to the fact that whilst our broadband penetration rate is increasing the growth rate is simply not in line with international standards. Over the last three years the average penetration rate in the OECD grew by 10.8 %. If you take into consideration that South Africans first saw broadband in 2002, the comparative local growth was only 0.5%.

The question is how we came to be ranked so low in the Internet arena where we were once considered to be innovative. The most likely reason is that we are one of the few countries who still endorse a monopolistic fixed line environment. Telkom is currently the only company that provides fixed line connectivity and this is the market that really determines broadband penetration. Over 95% of all broadband connections in the OECD countries are fixed line connections, while just over 60% of broadband users in South Africa make use of ADSL.

It has often been stated that it is unfair to compare SA to just any developed country because we have unique challenges to deal with like large, open spaces which need to be covered. But even a comparison with Australia, the country which Telkom suggested at last year’s ICASA ADSL hearings that South Africa will be best compared to, does not look good.

In December 2005 Australia had 2 785 000 broadband users, over 1000% more than South Africa’s 230 000. Their broadband penetration rate was 13.8 % making it 2760% more than South Africa’s 0.5%.

Any which way you arrange the statistics South Africa’s performance is very poor reiterating the fact that drastic steps will have to be taken to remedy the situation. Increased competition, legalizing self-provisioning by VANS, reducing the wholesale cost of both local & international bandwidth and a significant reduction in the price of residential broadband should be the first steps in a well laid out plan by Government.

Unfortunately this is not the first or the only time these remedies have been laid out in black and white for the Department of Communications. There have been two colloquiums, a telecommunication pricing working group plus a mass of workers all ferreting about trying to be effective without doing anything. The DoC as majority shareholder in the legally protected Telkom has predictably shown a lack of willingness to effectively address the issue of high telecoms costs in South Africa.

The two colloquiums are often cited by the DoC as an indication that they are willing to tackle this issue. But despite these two large and rather expensive events last year very little has changed. The DoC reneged on promises that consumers would start to see changes within eight weeks bearing truth to the rather pointed statement by the International Telecoms Union guest speaker’s comment at the last colloquium, Dr David Kelly, that the DoC is better known for its talking than for its action.

So do we pin our hopes on Telkom? The SNO? Or maybe the mobile operators who have been very innovative in their broadband advances? Or perhaps we give government another go, place all our chips on the DoC and hope for the best?

The answer lies in a combination of companies, technologies and strategies. Government should be spearheading these strategies, but unfortunately it is currently doing little else than hampering the broadband growth through undue interference and restrictive legislation.

In an ideal world where government serves the needs of the people the DoC would get rid of its shares putting an end to the inevitable conflict of interests, they would open the market to competition and govern telecoms rather than own companies “on behalf of the people”, a quote used by the Director General of the DoC, Lyndall Shope-Mafole in her recent Carte Blanche interview to explain why they will not sell their shares.

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South Africa slipping further behind in broadband rankings