SA’s broadband grows up
Sales of wireless devices are skyrocketing as costs plummet and a growing array of wireless broadband connectivity options become available. That’s good news for South African companies, which have for years been stymied by the lack of bandwidth, a highly regulated — some say barren and frustrating — telecommunications landscape and costs that have been among the highest in the world.
But don’t pop the champagne corks yet — there’s a fair distance to go before the country catches up with developed economies in terms of the fairly painless, cheap wireless and broadband services they enjoy.
For decades, businesses have been under the yoke of Telkom’s monopoly, and they have paid dearly. But this year, for the first time, they have options. It’s a painfully slow and arduous process, but progress is being made.
“We’ll see a drop in the price of broadband wireless technology in 2009 as new players in competition with Telkom enter the market,” said Fezekile Mashinini, an analyst at research firm BMI Techknowledge. “This will force Telkom to drop its prices too.
“New network operator Neotel will offer lower data pricing, as will the cellular networks. Bandwidth shortage will be greatly relieved by the launch of three new undersea telecommunications and data cables, the first of which, Seacom, is scheduled to go online in June,” he said.
The other two, the Western Africa Cable Consortium and the East African Submarine System, will be up in 2010, which will effectively end data bottlenecks that exist today.”
The deregulation and opening up of the wireless spectrum for wireless network operators means that companies such as M-Web, Internet Solutions and Altech — with deep enough pockets — will be able to run wireless services profitably. “Expectations are high that there will be positive changes in the service-provisioning side of the market, with more technological choices for the consumer. Telkom launched 3G/HSDPA services late last year (in competition to the cellular operators in the limited mobility broadband arena), and also uses WiMax as a filler technology in areas where there is no fixed-line ADSL footprint.
“With telecoms companies now being allowed to roll out their own networks, the ones with the necessary financial muscle will most likely roll out WiMax offerings, although the extent of this remains to be seen. All this will depend on whether they get allocation of the scarce spectrum required for the service. Telecommunications regulator Icasa has indicated it will only finalise spectrum issues in the third quarter of 2009,” Mashinini said.
He said PC access still dominated Internet usage for most “serious browsing” purposes, but this would gradually change to more hand-held devices because the vast majority of South Africans have a mobile device, and as consumers seek mobility for communication-critical applications such as e-mail and social networking such as Facebook, for example.
“The number of HSDPA-enabled handsets in South Africa is only around 500000, but this number is projected to hit the 2-million mark within the next 12 to 18 months.”
HSDPA is a high-speed broadband wireless system that runs on cellular networks.
In BMI Techknowledge’ s 2008 Digital Lifestyle Predictor survey, respondents pointed out the “ability to access Internet” as one of the most important attributes they considered when buying a handset.
“Although service providers are expected to reduce prices in general, another key trend that will emerge in the medium term will be that of offering more bandwidth for the same price,” said Mashinini.
“After the arrival of the Seacom cable, increased competition in the international bandwidth provisioning space will drive this trend, because service providers will find themselves in a position where they can source international bandwidth at cheaper prices. And the most likely move they will make is to on-sell more bandwidth at the same prices to consumers,” Mashinini said.
“Another trend that has emerged is that of bundling broadband with voice services in a so-called double play. Again, service providers are using this strategy as a differentiator and are offering on-net calls free of charge,” he said.
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