While Africa is seeing fast Internet uptake levels, Internet service providers (ISPs) will have to think out of the box if they want to see continued growth.
This is according to international growth consulting agency Frost & Sullivan. "The growth rate of Internet usage in Africa is in the double digits," it said recently. "However, such growth has been predicated on a narrow base, with the overall number of Internet users remaining limited. Low penetration rates indicate a huge potential market available for Internet services."
According to Frost & Sullivan research analyst Spiwe Chireka: "The main factors dampening uptake is the widespread poverty that makes Internet services unaffordable, the low literacy levels that are limiting demand, and the high operating costs that continue to keep Internet service prices high. Moreover, poor telecoms infrastructure is hindering penetration rates even as the restrictive regulatory frameworks contain market growth."
He adds: "Moving forward, ISPs will need to consolidate their efforts and create strategic relationships with cellular operators. The further development and increasing penetration of cellular networks would allow ISPs to offer mobile Internet access and boost penetration of their services, thus reducing the high initial investment costs involved."
He adds that mobile handset operators will, at the same time, have to partner with ISPs to provide affordable tools for mobile Internet access. "To develop a sound market share in the limited market base characteristic of Africa, there is a need for product differentiation to increase consumers' switching costs," says Chireka.
"In addition, ISPs need to target markets outside the major urban areas, since these areas are currently saturated in terms of operators. Accordingly, partnerships with cellular operators would go a long way to address this challenge. Besides, low-cost and high-speed access will also be crucial to ensuring market growth."
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