Expect disappointing bandwidth for years

Johannesburg, 02 Jul 2004

South Africa will not see the type of bandwidth that the people who write in to the myadsl Web site are after for at least another five to 10 years.

This is the view of analyst Mark Rotter, of Africa Analysis, speaking at yesterday`s launch of Storm Telecom`s new consumer Internet service.

Rotter said despite the best intentions of Telkom, Sentech and the government, the level of bandwidth that such people are seeking is still a long way off.

"A big cause of SA`s bandwidth problems is a lack of backbone competition - since we still have no second national operator - and also the geographic issues surrounding international connectivity.

"Competition between the US and Europe in terms of connectivity has brought bandwidth prices right down, but one cannot use that as a comparison in African terms, as this continent is the hardest and most inaccessible place in the world to deliver bandwidth to."

Rotter believes it will remain this way for a long time to come too, as there is a clear link between geographic proximity and bandwidth delivery.

"The Internet industry in SA has moved from a stage of 'heroes and chaos` - an emerging phase - to a phase of growth. It showed huge growth initially, although this has slowed somewhat now, but it is still fairly significant growth.

"We are now at the stage where we`re beginning to see the segmentation of the market, with players adopting a niche focus, and there is also more consolidation and managed growth, with the players defining and positioning themselves more accurately."

He believes SA has reached the stage where players are beginning to carve out niches in the market - such as Storm`s consumer Internet service - and foresees room for more growth as the country moves towards a market with systematic product line integration.

Asked his opinion on SA`s bandwidth problems, Rotter said there is enough bandwidth in SA, but it is the price that is the real problem.

"This is why we need price competition at all levels of the value chain. The issue is not as simple as just saying that Telkom is being unfair, but perhaps it is time that they are held accountable and perhaps ICASA should be given more power to enable it to regulate better.

"There is still room in SA for the prepaid Internet subscriber market, even though WiMax, 3G and EDGE technologies will undoubtedly impact on the high end of the market. It will, however, take years before it begins to affect the lower end of the market."