BMI-T has completed some fascinating research on the growth of Internet in South Africa. Projections are that the current 2-million Internet users will grow to 4.5-million by 2013. Fezekile Mashinini reports further.

 

The SA broadband market is showing no signs of maturing and continues to record phenomenal growth in terms of service take-up, a trend that is poised for even bigger growth going forward. BMI-T estimates that by 2013 a total of 4.5 million, fixed and wireless, unique broadband subscribers / connections will have been reached, this representing a 27% compound annual growth rate (CAGR) from December 2008 connection figure of 1.3 million. Narrowband connections meanwhile will witness a decline from the 659 636 connections as at December 2008 to 236 611 in 2013, see figure 1 below.

 

Under BMI-T’s base scenario wireless subscribers driven mainly by 3G HSPA connections are expected to dominate the local broadband market, accounting for 67% of total broadband connections. As at December 2008, 3G HSPA subscribers accounted for 54% of total broadband connections and had overtaken ADSL connections which stood at 39%. The market is also becoming more competitive in terms of service offerings. Consumers have more choice than ever before with, inter alia, Neotel unveiling its CDMA 2000 and WiMax offerings, and Telkom having launched its W-CDMA offerings. IBurst (and by extension Vodacom) have also launched WiMax -based services. Neotel has also introduced metro Ethernet in selected metros around the country.

The rapid pricing reductions across the board that were witnessed in 2007 have not been repeated across all technologies, but indications are that with the imminent commissioning of new under-sea cables from mid-2009, more competition in the international-bandwidth market will lead to further retail price reduction. An ongoing trend in the market is that of offering greater levels of performance at the same tariff point, and this will play out to reveal more products with relaxed data cap restrictions based on the lifting of international bandwidth constraints in future. Already the mobile operators have followed what most ISP’s are doing in terms of rolling over unused bandwidth, a move that has been hugely welcomed in the market.

Another pricing trend is the introduction of differentiated time-of-day based tariffs. A wider range of niche products can be expected in future as service providers seek to differentiate their services.

A major wild-card in the broadband market remains the success of WiMax roll-outs. A number of players were given trial licences to test the service, whilst Icasa has not finalised the methodology they will use to allocate the scarce spectrum for the service, some service providers such as iBurst (with Vodacom’s backing) already have the licences and have started rolling out broadband services using WiMax.

Besides the above-mentioned drivers for broadband proliferation, another emerging trend that is driving broadband has been the recognition by governments across the globe of the service as a key economic and social development catalyst. Various initiatives have been undertaken by governments aimed at closing the digital divide, and in SA such intervention has been the setting up of Broadband Infraco, and the various municipal and provincial broadband initiatives.

 

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