Broadband: SA’s schizophrenic performance
The Organization for Economic Co-Operation and Development (OECD) recently released its latest broadband statistics focusing on a range of indicators which reflect the status of individual broadband markets in the OECD.
According to the latest broadband statistics there were 283 million broadband subscriptions in the OECD in December 2009 with the inclusion of Chile as a member of the OECD.
The average penetration rate across the OECD has grown to 23.3 subscriptions per 100 inhabitants up from 22.8 in June 2009.
Fibre continues its growth relative to other broadband technologies accounting for half of all broadband connections in Japan (54%) and Korea (49%). Other leading countries in the fibre rollout arena include the Slovak Republic (28%) and Sweden (23%).
DSL is still the dominant technology in the OECD, accounting for 60% of all lines. Cable makes up 29% and fibre based connections have grown to 11% of all lines.
South Africa
South Africa continues to slide further behind the rest of the world in terms of both broadband penetration rates and the speed of local fixed line broadband offerings.
While Vodacom and MTN are showing strong growth in the mobile broadband market and often exceed the mobile broadband speeds and technologies available in the developed world, Telkom’s fixed line broadband performance is dismal when compared to its international counterparts.
The latest World Wide Worx & Cisco Internet access report shows that at the end of 2009 South Africa had just over 2 million broadband subscribers, consisting of 630,000 ADSL users and 1.49 million mobile and wireless subscribers. This equates to a broadband penetration rate of 4 subscribers per 100 inhabitants, well below the OECD average of 23.3 subscriptions per 100 inhabitants.
South Africa is however an anomaly in terms of broadband subscriptions by technology. In the OECD basically all broadband connections are fixed line services – 60% DSL, 29% Cable Modem and 11% Fibre and LAN.
In South Africa only 30% of broadband connections are fixed line connections (i.e. ADSL). This means that the local fixed line broadband penetration rate is only 1.26 subscriptions per 100 inhabitants – 18 times lower than the OECD average.
The South African conundrum
According to World Wide Worx MD Arthur Goldstuck the strong mobile broadband growth and comparatively weak ADSL growth essentially comes down to competition.
Goldstuck points out that the number of wireless broadband connections grew by 88% in 2009, around four times higher than the 21% growth in ADSL subscriber numbers.
Goldstuck jokingly points out that there is four times more competition in the South African cellular market than in the ADSL space. Goldstuck said that the lesson in South Africa is simple: In order to increase penetration rates vigorous competition is needed.
True competition in the local ADSL and fixed line broadband market is highly unlikely in the short term, but Goldstuck said that there are ways that Telkom can ensure that it makes up ground lost to the mobile operators.
Goldstuck suggested the scrapping of compulsory analogue line rental with ADSL and further suggested the drastic reduction in ADSL access charges. “Creating a lower barrier of entry will significantly increase ADSL uptake,” said Goldstuck.
Goldstuck further suggested far higher monthly usage limits (caps) associated with Telkom’s bundled ADSL services, hence making it more attractive to broadband consumers when compared to mobile broadband offerings.
The World Wide Worx MD is however realistic, adding that there is not a strong culture in Telkom of slashing costs to remain competitive – something which may well be a remnant of its years of monopolistic reign.
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