Open the market
In South Africa, its internet business M-Web is one example. Significant investment by Naspers in the early days made M-Web a leading internet service provider. But, when it got to 250 000 subscribers, growth seemed to dry up.
After the acquisition of Tiscali’s client base and the addition of some broadband subscribers more recently, the numbers are up to 314 000 dial-up subscribers and 30 000 broadband subscribers.
Given the apparent pent-up demand by South Africans to get online, one might have thought that the growth in a business like M-Web would have been explosive.
Bekker has expressed frustration about the slow pace of deregulation several times. But, on Moneyweb Radio this week, he put the lack of broadband into clear perspective.
Bekker said: “You know, broadband is something special in the economy. It’s not like, let’s say, a Vietnamese restaurant on the outskirts of town. It’s at the heart of the new economy for the 21st century.
“Broadband is the way a dentist will send his bill, or your kid will deliver his multimedia project to his teacher in future, or every single municipality will communicate with its clients. Broadband is it. That’s the highway of the new world, and we’re falling horribly behind the rest of the world.”
We’ve said it many times before, and are waiting to see what comes of the deregulation measures promised at the recent Colloquium. But, Bekker put it particularly well.
He went on to say the only thing that could fix the problem was “simply opening up the market saying to people if you want to serve Belinda in her home, you can do it by way of fibre optic or coaxial cable or Wi-Fi over the air, or maybe 4G technology. But all welcome, open up the market. That’s all we need.”
Tencent, the Chinese instant messaging business that Naspers is invested in’, employs 2 000-odd people on broadband projects. But, Naspers doesn’t employ a single broadband engineer in South Africa. It clearly would if it could.
OK, so we know the country is short on broadband, and the options for consumers are limited. But, at least there are a few options. Consumers can chose from fixed line broadband, in the form of Telkom’s ADSL, and wireless broadband; from Sentech, Wireless Business Solutions (WBS) and the two of the mobile operators, Vodacom and MTN.
The first time broadband activist website MyADSL tested and compared the broadband solutions on offer in the SA market; it looked only at the wireless providers. Now, in a new study, it has included Telkom’s ADSL offerings and rates the monopoly provider the best of the bunch. In coming to this conclusion, it took into account a variety of factors, including cost, reliability, upload and download speed, latency, as well as service and technical support levels.
MyADSL found that the best product is Telkom’s DSL 384, which it says is competitively priced (R608 per month) and performed well considering the price. The more expensive DSL 512 offering, which costs R736 a month, was not significantly faster than the DSL 384 offering and didn’t seem to warrant spending the extra cash on.
Meanwhile the fastest, DSL 1024 product was a “great service for those willing to pay for performance”, but at R929 a month, it is far from cheap or affordable for most consumers. The slowest of the ADSL products, the DSL 192 offering, is well priced, and is a step-up from dial-up or ISDN, according to MyADSL, but the slowness would frustrate some users.
The wireless offerings don’t hold up quite as well in terms of reliability and consistency compared to ADSL, the study showed. Sentech’s MyWireless product, which came out tops among the wireless offerings last time, hangs on to that positioning as the “most reliable and consistent” of the wireless offerings.
It lags other offerings in terms of download speeds, but makes up for this in reliability and with the significantly more lenient bandwidth cap of 20Gig, compared to the 3Gig caps imposed by Telkom and WBS and the 1Gig caps imposed by Vodacom and MTN. Sentech charges R699 a month, WBS R599, and the mobile operators; R499 a month.
MTN, the relative newcomer on the 3G block, is rated the worst of the 3G offerings. MyADSL calls it: “A newcomer that should improve.” The 3G offerings are seen as good to have for consumers wanting mobility, but expensive for anyone wanting more intensive bandwidth usage.
Such a study is very useful for consumers who want broadband now. And, at least future new entrants will know whom they have to beat.
Talking about relative newcomers, third mobile operator in South Africa, Cell C may have last-mover disadvantage in this market, but is managing to up its game.
While bigger rivals, Vodacom and MTN, have seen their average revenue per user (ARPU) figures shrinking in South Africa; Cell C has managed to get more revenue out of the average customer.
Speaking on Moneyweb Radio , adviser to the CEO Jonathan Newman said it focused in the past year on improving the subscriber mix. The number of higher revenue post-paid subscribers has increased to 23% of its 2,7m subscriber base, from 20% previously. The blended ARPU – which is the combination of post and pre-paid – rose from R142 to R153 at the end of September.
Vodacom’s SA ARPU dropped from R165 to R147 at the end of September, an eventuality that it had warned about. And CEO Alan Knott-Craig reiterated that it was not the ARPU, but the ARPU margin, as well as other critical measures of efficiency, like the customers per employee that really mattered – and these measures were all looking good.
MTN’s SA ARPU also declined, from R184 to R168. But, MTN said this was a gradual decrease that should be expected as it went deeper into the market. The bigger problem for MTN in South Africa has been the loss of some market share in the pre-paid segment. CEO Phuthuma Nhleko said it planned to manage churn more efficiently in the second six months than it had been doing, and would continue to increase its distribution channels.
Another factor that should help the ARPUs of the operators, although Vodacom and MTN are not seeing significant evidence of this yet, is the uptake of data services. Instead of going the whole hog through 3G, Cell C will soon launch EDGE, which is effectively 2,5G – not as fast, but more manageable than GPRS. Newman said it preferred to adopt a phased approach and would launch 3G at a later stage.
Cell C also believes it will get a kicker from the introduction of number portability. The long-awaited Virgin deal should also have some impact – although exactly what this will be is still unclear. Newman said it hoped to announce something before the end of the year and launch the venture next year.
But, despite Richard Branson’s open protestations while in South Africa recently, that the country’s telecoms and banking costs are too high, there’s a non-disclosure agreement which means Newman can’t spills any beans on what the deal will mean for consumers just yet.
Not only consumers, but also other players in the telecoms space, wait with bated breath for Branson’s arrival.
Source: http://www.moneyweb.co.za
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