Unless retail broadband prices are lowered with the introduction of new fibre infrastructure - the African broadband market will not experience any significant growth.
This is according to the latest Balancing Act voice and data bandwidth forecast, which highlights the key role that will be played by the introduction of new, cheaper international fibre bandwidth in 2009 and 2010.
According to the research company, if there is “only modest annual price erosion on retail broadband prices, broadband penetration will only grow marginally on the continent”.
The report further states that, with a step-change in broadband pricing where operators pursue a low-price, high-volume strategy, penetration in individual countries will increase by 0.2% to 3.8%. This will produce almost five times as many subscribers as the much more cautious approach of sticking with high prices.
International bandwidth from sub-Saharan Africa has increased from 11.3Gbps in 2006 to 26.1Gbps in 2008 - but the use of international fibre increased as more regional inter-connections came on-stream, the report states. Balancing Act states that, despite growth in voice demand as prices fall, most of the new demand has been compressed, resulting in more or less the same capacity.
The report emphasises the need for pay-as-you-go (PAYG) fixed and mobile Internet, saying: “At present, mobile broadband is still quite limited in terms of price and availability, but making WCDMA, HSDPA, CDMA2000 1X available on a PAYG basis immediately lowers the entry barrier of a monthly subscription price and will stimulate casual and low volume usage.”
Ancient satellites
The report also notes satellite bandwidth supply will increase and there will be at least 13 new satellites giving coverage over Africa by the end of 2010. But most of these are not new developments as they will be “replacement capacity as many of the current satellites were launched in the 1990s and are reaching the end of their life”.
Despite the increase in satellite bandwidth, the number of countries solely dependent on satellite has dropped and will continue to drop. Currently, 24 countries still get their international bandwidth entirely from satellite but with the arrival of the new fibre cables on the East Coast of Africa, this number will decrease to 13, the report states.
Voice traffic is on the rise as Africa's international voice traffic has consistently grown “well above” the world average for a number of years, it adds.
This growth is driven by three factors: an increase in fixed and mobile subscribers capable of making or receiving a call, the liberalisation of markets and licensing of new operators, and a decrease in international tariffs.
However, it notes: “This new growth has largely been absorbed by ever higher levels of voice compression.”
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