Despite the massive growth in broadband connectivity in SA, the number of users with access to the Internet will only grow by 3% in 2007, says a new report by local research company World Wide Worx.
The study and market commentators agree Telkom's high cost of connectivity has caused this stagnation.
World Wide Worx's Internet Access in SA 2007 report predicts 3.85 million people in SA - a mere 8% of the population - will have access to the Internet by the end of 2007, says MD Arthur Goldstuck.
"This is the slowest growth we've seen in overall user numbers since the arrival of the Internet in SA," he says.
The study shows SA will have more than 800 000 broadband subscriber accounts active at the end of this year. However, this total is made up of only 650 000 unique users, with the rest of the numbers accounted for by people who also use another form of connectivity.
"The harsh reality is that broadband has not yet made a major impact on overall connectivity numbers, even while dramatically increasing the usage of those who are already connected," says Goldstuck.
The reason for the lack of growth is that dial-up Internet users are moving to broadband services, but there are fewer entry-level Internet users coming on board. The number of dial-up users is falling dramatically this year and will reach below the million mark for the first time since 2001, says Goldstuck.
Vicious circle
Goldstuck says Telkom is both the villain and hero of Internet connectivity in SA. Telkom's ADSL offering has been the main driver of broadband adoption in SA for the last four years.
"The problem is that Telkom still has control over the ADSL market, users can only get lines from Telkom, the process of unbundling the local loop is not being fast-tracked like it should be, and international bandwidth access is also under Telkom's thumb," explains BMI-TechKnowledge senior analyst Richard Hurst.
For consumers, the high cost of local calls is a major obstacle to Internet connectivity for the unconnected, says Goldstuck. Telkom's usage rate, which has a big impact on the price of broadband for consumers, will not come down in price in August when the fixed-line operator's new rates go into effect.
"Add to that the fact that line rental is going up in price, placing yet another limit on the growth of fixed-lines, and you have a no-win situation for the mass market," says Goldstuck.
Package deal
MyADSL founder Rudolph Muller says Internet service providers need to bundle a PC and Internet access at R100 per month to reach the low end of the market. "Unless this is done, it's difficult to see how a larger portion of the population can gain access to the Internet."
Most of the major Internet service providers do offer PC/Internet bundles, but none charge as little as Muller recommends.
He adds that local providers should not under-estimate GPRS as a platform for Internet access. SA has a massive penetration of mobile phones and good coverage countrywide, he notes.
GPRS could be used to introduce people to Internet services like e-mail, even while whetting their appetite for the greater access PC users enjoy, he says.
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