SA broadband market to ‘remain in the doldrums’

South Africa will achieve nearly 870,000 broadband subscribers by 2009, according to a new report by BMI-TechKnowledge Group.

This represents access to the Internet using PCs — an additional 4.4 million subscribers will be using 3G services on cell phones by then.

According to Tertia Smit, co-author of the report: “The good news is that rapidly falling broadband service prices will have a significant impact on the rate of penetration of broadband in the market, but the flip side is that overall market will remain relatively backward compared to developed countries, in the short to medium term.”

The report has a dual focus — firstly on the emergence of wireless access loops, which in future will be used to provide both a voice service and an Internet connection. The second focus is on the growth of broadband access, through various types of fixed line and wireless connectivity.

“The aggressive push by the mobile cellular operators into the broadband wireless data space, as witnessed already by Vodacom and now MTN, will create an additional dynamic in terms of fixed-mobile convergence, as some degree of overlap occurs in the broadband access space,” says Smit.

“However, our belief is that the dominant impact will be to create new market growth opportunities centered around mobility, especially for business users, rather than to be a straight substitute for a fixed-line — or even fixed wireless — access connection. This means that the average business user will have multiple connections, thus driving new growth in overall subscriber numbers,” she adds.

Another dynamic in the market will be the expanded, role of wireless technologies like TD-CDMA, CDMA2000 and WiMAX connectivity, which, according to Smit, will in future also be available via handsets. Currently only TD-CDMA based networks are present in SA, and these are used only to provide Internet access.

As a result of the shift from narrowband to broadband (and the resultant shift from dial-up ‘voice’ call charges to ‘data’ revenues), Internet access revenues (excluding modem and installation charges) are forecast to grow from about R2.5 billion (US$3.7 billion) in 2004 to about R5.8 billion in 2009.

The largest share of revenue will be apportioned to ADSL by the end of the forecast period, with business revenue contributing about two-thirds of this. This reflects the relatively low level of residential penetration, compared with most developed countries, in which home users typically account for the majority of connections, and 50 percent of revenues.

SA will follow a worldwide trend, in that ADSL will continue to account for the majority of all broadband connections over the forecast period; download speeds will increase dramatically, and entry-level service prices will decline by 50 percent within two years — with the net result being accelerated residential broadband penetration.

“However, despite the price/performance improvements and accelerated growth over the next five years, unless service offerings reach even higher levels than the report’s forecasts suggest, SA will remain in the doldrums relative to developed world standards,” concludes Smit.

Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Related Tech News

Tech Jobs

Our experienced team of journalists and bloggers bring you engaging in-depth interviews, videos and content targeted to IT professionals and line-of-business executives.

Tech Companies Hiring Right Now