THE new undersea cables along the east and west coast of Africa are creating considerable excitement in the market, with Seacom being the first to go live last week.<\/p>\n
Seacom CEO Brian Herlihy says the most significant benefit of the new undersea cables will be better quality connectivity and reduced bandwidth prices.<\/p>\n
“You would expect bandwidth prices in SA to be on a par with India and western Europe, but they are 10 times higher.”<\/p>\n
He says Japan and the US have the cheapest prices, at $3 and $4 per megabit a month respectively.<\/p>\n
In the US, users have spent the same amount per month for connectivity for the past 10 years, but the speed and quality has improved more than a hundred fold.<\/p>\n
Higher-speed connections are needed to support applications like video-on-demand, which is in common use in the US where users can choose from 300 to 400 titles to download and view.<\/p>\n
He says with sufficient bandwidth it will even be viable for post-production houses to collaborate and edit films online.<\/p>\n
As the demand for bandwidth hungry applications increases operators are being forced to increase the capacity of their networks and the same thing will happen in SA.<\/p>\n
Herlihy says in the US recently AT&T had to upgrade its network to cope with the increasing amount of bandwidth smartphone users were using to download web content to their devices.<\/p>\n
Operators will need to re-invest constantly in their networks to cater for the increasing number of users who want to create content and upload it to websites.<\/p>\n
“Apple iPhone users can now take a video with their phone and send it anywhere in the world, and this will place a strain on the networks,” he says.<\/p>\n
Irnest Kaplan, of Kaplan Equity Analysts, says over the past 10 years the price of bandwidth has been kept artificially high due to Telkom’s monopoly of the international link, and this has been a major stumbling block to progress. “There is now hope that bandwidth prices will drop and this will be good for consumers and will stimulate demand because customers will use more.”<\/p>\n
However, he says the new Seacom cable will only provide more capacity on the links in and out of the country and will not change the reliance on the existing national infrastructure.<\/p>\n
“We will still rely on the existing incumbents to pass on the benefit of reduced costs of international bandwidth.”<\/p>\n
The advent of new services such as Dark Fibre Africa, which is building local fibre infrastructure and renting it out to operators and service providers, will help. “But the incumbents will still dominate the national infrastructure.”<\/p>\n
He says when it comes to the last-mile connection between the customer and the backbone network, this infrastructure is still dominated by Telkom with its copper-wire telephone infrastructure and MTN and Vodacom cellular networks.<\/p>\n
Even then, while the mobile networks have thousands of base stations across the country, the transmission networks that link their base stations still rely heavily on Telkom’s fixed-line infrastructure.<\/p>\n
Although mobile operators are starting to build their own fibre infrastructure, they are unlikely to replicate Telkom’s national infrastructure, says Kaplan.<\/p>\n
Andy Brauer, chief technology officer at Business Connexion, says with key local service providers, such as Neotel, Internet Solutions, MTN and Vodacom, buying international capacity from Seacom and more players building local infrastructure, it will pave the way for increased competition and reduced costs.<\/p>\n
He says both Neotel and Telkom have recently reduced the price of international bandwidth and Telkom has reduced the cost of its local ADSL service. “Telkom is realising the game is changing and wants to retain its customers.”<\/p>\n
As costs come down, it will increase the scope of services, and the dream of internet access for all in SA could become a reality.<\/p>\n
With more high-speed links in and out of the country, it will also open up opportunities for offshore outsourcing and for local service providers to offer hosted services to other parts of Africa.<\/p>\n
However, it will also make it more viable for overseas players to provide outsourcing services to companies in SA, says Brauer.<\/p>\n
Wayne de Nobrega, CEO of Altech Technology Concepts, says the two predictions driving the hype over the new Seacom cable are the cost and availability of bandwidth. “Apparently costs will drop between 25% and 90%, depending on which pundits you listen to.”<\/p>\n
He says other predictions being bandied about are that South Africans will have access to 40 or even 50 times more international bandwidth.<\/p>\n
On the surface, both these predictions are true, but the cable is new and is yet to be proved.<\/p>\n
He says it will take until next year or 2011 for there to be enough capacity in the international links, the long-haul inter-city links and the last-mile links to the consumer to see these prices and speeds.<\/p>\n
Business Day<\/p>\n