The economic downturn and credit crunch may have an impact on mobile network capacity. Concerns were raised at the Mobile World Congress in Barcelona that more advanced mobile devices and bandwidth intensive applications may start to put strain on existing cellular networks. <\/p>\n
Typically a cellular network operator would get credit to upgrade its network to cope with demand – and then recuperate these costs over time from its subscribers – but the worldwide credit crunch means that it may not be possible to get adequate funding for all the needed network upgrades. This in turn can result in network congestion, especially with mobile devices supporting multiple-Mbps speeds and bandwidth intensive multimedia services like YouTube.<\/p>\n
Good news for South African consumers is that all three cellular operators seem unfazed by the global economic downturn in terms of network investments. <\/p>\n
Steve Boiles, Cell C’s acting chief technical officer, says that the company is increasing its network rollout this year. "We are in fact increasing our network rollout in 2009 compared to previous years and expect to bring a further 600 new sites on air," said Boiles.<\/p>\n
"Network upgrades to our core network during 2008 have replaced legacy infrastructure and offer a more cost effective platform for increasing capacity when and where required. Cell C’s EDGE data network is utilized by those on the move to keep in touch via handset browsing, email and instant messaging services. These services tend not to be bandwidth hungry services when compared to home use via DSL or its wireless substitutes."<\/p>\n
MTN is also confident about its continued network investment. "Access to capital is clearly a problem in the current world economic climate. However, MTN requests for funding in order to expand capital infrastructure has always been built on sound financial business cases that reflect acceptable rates of return. In this context, nothing has changed in the SA climate," says Zunaid Bulbulia, chief financial officer of MTN SA.<\/p>\n
"The business case for investment in network capacity to carry additional broadband traffic is a very compelling one – the growth in data traffic has been phenomenal over the last few years and will continue to be the case. SA has a very low internet penetration ratio and the demand for broadband access over mobile continues to be one of the fastest growing areas in our business – expanding network capacity for this makes very sound business sense in this environment," says Bulbulia.<\/p>\n
"Due to a successful expansion and an increased investment strategy for the mobile Network in 2008 MTNSA’S network is already on track to absorb higher market growth."<\/p>\n
Vodacom did not provide any valuable feedback about the impact of the credit crunch on the company or its future network investments, simply saying that it "will continue to build the network to offer a quality service to our customers".<\/p>\n
Challenges remain<\/strong><\/p>\n While the credit crunch may not have a significant impact on network investments from Vodacom, MTN or Cell C, challenges remain in terms of transmission capacity supplied by Telkom. It is well known that the significant backlog of transmission links from Telkom is keeping Vodacom and MTN from launching higher speed broadband services.<\/p>\n "Telkom’s speed of delivery and ability to provide uninterrupted service will remain a dependency for MTN SA. Any form of under investment or degradation of service to save costs by Telkom will have a direct impact on MTN’s customers. Foreseeing this as a major dependency MTN has already embarked on a journey of self provisioning in a cost effective manner in order to reduce our reliance on Telkom," said MTN’s Bulbulia.<\/p>\n "Also, being mindful of the current credit crunch, we have chosen to work in collaboration with other companies to ensure we carry on focusing on increasing our capacity while sharing the cost. This is evident in our recent shared investments in fibre rollout across SA. The current scenario has also resulted in further refining our OPEX and CAPEX to ensure we manage our Network investments in line with the market and economic scenario," Bulbulia concluded.<\/p>\n South Africa does not only seem to be bucking the trend of network investment slowdown, but many local operators looks to be accelerating both their wireless and fibre network rollout to cope with growing bandwidth demand. If MTN and Cell C’s network investments and rollout plans are anything to go by local consumers have little to be concerned about in terms of network congestion.<\/p>\n