SA now has a "stable and mature" Internet market, says ICT market analyst firm BMI-TechKnowledge in its latest South African Internet services report.
BMI-T analyst Iain Machanick says industry consolidation has meant that the service providers` success will be determined by the value and service offering to end-users.
"Overall, the South African Internet services market grew by 18.9%, while the access market grew by 16.2% and non-access market grew by 20.6%," he says. "The driving factor behind the growth has been the associated cost savings, convenience, the steady growth of B2B [business-to-business], the improvement of customer service and the arrival of wireless access."
BMI-T believes Internet service providers should be evaluated against criteria such as backbone, peering, customer orientation in terms of focus on consumer or business, track record in the industry and current service levels.
Machanick says these standards offer a better means of comparison than the current accepted debate over tiers.
In terms of access, the report predicts that for the foreseeable future, the corporate market will be serviced by leased lines, while the consumer market will be primarily focused on dial-up, both analogue and ISDN, and is expected to grow by 6% over the next five years.
Machanick adds that ADSL growth has been primarily due to the dial-up subscribers seeking higher throughput. "The uptake of ADSL services in SA has been reasonable given the negative publicity surrounding the delay of the launch, the lack of nationwide availability, the 3GB cap and pricing issues affecting resellers` margins," says Machanick.
"In addition, the arrival of WiFi has meant that vendors and service providers will have to develop a solid business case for the technology and uncover the true value for the subscribers, bearing in mind that the wireless technology is simply a different means of connection."
The market inhibitors uncovered by the report include the lack of available bandwidth and its associated cost, the delay in licensing the country`s second national operator, which has meant a lack of competition to the incumbent Telkom, the perceived security threats of the Internet and the effects of the worldwide economic downturn.
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