The Southern Africa broadband market, covering SA, Angola, Zambia and Lesotho, generated over $2.2 million in 2009 and the figure is expected to surpass $11.1 million in 2016.
This is according to analysis from Frost & Sullivan, which notes the demand for broadband services and the decline of wholesale bandwidth prices are expected to be the main drivers for the broadband market in the Southern Africa market.
“The demand for bandwidth-intensive applications and services that are available on the Internet has been growing in the Southern Africa market,” notes Frost & Sullivan senior research analyst Dr Vitalis Gavole Ozianyi.
“Enterprise users - both large, corporate and SMEs - as well as consumers have adopted the Internet as a major source of information and means of conducting business and communication,” he adds.
However, the analyst firm notes high bandwidth costs remain a major constraint to the rapid growth of the market though the landing of additional undersea cables, which has resulted in the decline of international wholesale bandwidth.
“Moreover, this has spurred significant investments into terrestrial fibre and wireless network infrastructure aimed at boosting network capacities,” remarks Ozianyi.
“Increasing competition in the market is resulting in the decline of retail bandwidth prices, contributing to the steady growth of the broadband market.”
Scrapping caps
In order to take advantage of the undersea cables, World Wide Worx MD Arthur Goldstuck urges Internet service providers (ISPs) to consider scrapping data caps.
“It's conventional wisdom already that you can't have truly unlimited caps, but a 3GB or 5GB cap is simply stupid. The current services offering those kinds of caps should be coming with 30GB or 50GB caps, at the same price,” he says.
With the landing of the undersea cables, Goldstuck believes all major telecommunications networks will have equal access to them.
“This means costs to the consumer or business will be based on competitive business models rather than on the tradition of keeping prices artificially high simply because there was limited supply, controlled by a limited number of suppliers,” he reckons.
On the other hand, Frost & Sullivan notes that low penetration of fixed broadband infrastructure in the Southern African market has resulted in high retail bandwidth prices.
At the same time, it adds, the high cost of maintaining fixed lines translates to high charges for ADSL services.
“This factor is contributing to the slow growth in the adoption of ADSL as a primary broadband connection for enterprises and consumers.”
Goldstuck concurs, saying the low fixed broadband in Africa is a simple function of lack of telecommunications infrastructure.
He believes governments have never seen fixed broadband as a priority and have preferred to invest in military infrastructure or the organs of government itself.
“Ironically, where telecoms has been prioritised, citizens have used it not only to gain unprecedented access to information about what is happening in their world, but also unprecedented means to disseminate such information themselves and to coordinate responses to that information.
“It does not seem entirely coincidental that Tunisia, Egypt and Morocco are three of the countries that have seen the greatest expansion of telecoms infrastructure in Africa in the past decade - and are also three of the countries experiencing information-driven social upheavals,” Goldstuck says.
Last mile fibre
According to Frost & Sullivan, leading operators and ISPs are deploying fibre in the last mile. However, the firm notes that the capex involved in fibre deployments is significant and requires steady revenue to ensure ROI in a given timeframe.
“As a result, few enterprises will be connected by this technology in the short-term,” Ozianyi states. “It is only when the penetration of ADSL and fibre reaches significant levels that the broadband market will achieve its full growth potential.”
Significant investments in fixed as well as wireless broadband will enable operators and ISPs to benefit from the revenue potential of the Southern Africa broadband market, the analyst firm notes.
“They need to leverage on the earliest available opportunity to invest in broadband infrastructure and gain an edge over competition in the market.”
Moreover, it explains, broadband is an enabler for the delivery of next generation services to enterprise users and consumers, adding that the growth of the broadband market will be accompanied with growth in data traffic.
“This will affect fixed, wireless and mobile networks. Reliable delivery of quality broadband services will be a key differentiator in a highly-competitive market that will characterise the Southern Africa region,” comments Ozianyi.
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