A New World
The most exciting innovations in the telecom industry are happening in the wireless world, and they hold out the greatest hope for cheaper and faster data services for South Africans.
Cellphone calls are several times more expensive than land-line calls, but the ubiquity of cellphone towers makes fixed line an almost quaint old technology.
Fixed-line operators the world over are being forced to reinvent themselves as more than just telephone providers, including broadband and latterly video on-demand into a so-called triple-play of services. To stay relevant, they have to offer more value to hang on to their subscribers or lose them to the “fixed-mobile substitution” that has denuded Telkom of its voice, but not its monopoly.
The problem with cellular offerings is that they are expensive. Voice, and especially wireless broadband offerings, are often much more pricey. However, faced with months of delay and poor service, more than 200 000 South Africans have opted for some form of wireless broadband, be it 3G high-speed downlink packet access (HSDPA), iBurst, or even Sentech’s MyWireless.
Wireless is where the most innovative new technologies are emerging, including SA’s great wireless hope, WiMax.
Once laughed off, cellphone banking came of age last year, with the big banks expecting to capture R650m worth of transactions in December, according to First National Bank mobile and transact solutions CEO Len Pienaar. FNB expects to capture R100m of that, as does Standard Bank. Absa expects to capture R400m, and Nedbank R50m.
Wizzit, the start-up mobile banking provider, has shown the appetite for these services, especially in the under-serviced areas like townships.
Recent developments show that wireless is the locus of some market-stirring activity:
- After buying a 10% stake in iBurst’s parent company WBS, Vodacom now resells a 16-channel satellite-television package from Multichoice to its subscribers.
- Cell C, the smallest of SA operators, has opted to give all its subscribers a limited two hours of free calling to other Cell C users on weekends, if they buy airtime the proceeding week.
- Vodacom and MTN had a mini price war over 3G data rates earlier this year, settling on 19c and 20c a megabyte respectively. The consumer has benefited, but these prices are still at a premium to fixed-line broadband services like ADSL.
Overpriced broadband remains a big problem for the SA economy.
“We’re a broadband colony,” says Arthur Goldstuck, the managing director of researchers World Wide Worx. “We pay for broadband as if it’s a foreign currency, though most of the broadband we use is local currency. We need to see a democratization of broadband.”
The strength of wireless is evident in Goldstuck’s latest annual Internet survey. By the end of this year, there will be 828 000 broadband users, up from 392 000 at the end of last year. Of these, 378 000 are ADSL users (as opposed to 223 000 users last year) and 450 000 are wireless broadband users (significantly more than last year’s 169 000).
He warns, however, that “at least half of all 3G users are using it as a backup to ADSL. In terms of the primary form of broadband being used, the total will be only 658 000 broadband users.”
Vodacom Group chief communications officer Dot Field says that there is high growth in data usage. “The demand for data-related services looks set to continue growing – and Vodacom is going to invest substantially in data infrastructure to provide quality data services. We are also investing in converged voice and data services and expanding into areas such as WiMax and Wi-Fi to meet the ever-evolving and increasingly sophisticated requirements of customers in various market segments.
“With cellphone Sim penetration in SA estimated at 84%, and competition among telecommunications players higher than ever, the trend is towards addressing customer satisfaction across all market segments with renewed vigour.”
Se says Vodacom is looking for opportunities to “expand its growth horizontally in the communications market; and also to branch into new products and services that will embrace the convergence revolution.”
New MTN SA managing director Tim Lowry is excited by the possibilities presented by SA’s unique mix of developed and emerging markets. “Data is going to grow significantly faster, this is a phenomenon around the world.”
“I don’t think we have (reached voice penetration),” he says. “the market is not 100% penetrated because people have one or two phones. Some markets have up to 110-115% penetration.”
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