The local broadband market has grown by 30% over the last two years, according to a study conducted by Frost & Sullivan.
The analyst firm says the South African broadband market earned revenue of over $291.6 million in 2008 and estimates this to reach $1.62 billion by 2015.
“The introduction of undersea cables and the anticipation that prices will be lowered due to new competition has resulted in greater optimism about broadband services with higher rates of uptake,” says Frost & Sullivan senior ICT industry analyst Lindsey Mc Donald.
She says following the uptake, operators have decided to provide better value to their clients and Mc Donald expects this trend to intensify over the next three years.
Backbone required
However, she says the market's ability to capitalise on the potential connectivity of undersea cables depends on the level of national infrastructure. “Unfortunately, the required quality of infrastructure is still lacking in SA. Operators such as MTN, Neotel and Telkom are working towards addressing this challenge,” she adds.
The lack of national infrastructure is a threat to the growth of broadband in SA, she notes. “Most people utilise mobile technology, which is still very expensive and out of the reach of many people in the country.”
Internet service providers should understand the nature of their customer base. Engaging in customer segmentation processes will help them understand who their clients actually are and also reveal the best way in which to offer services to these clients.
Getting there
Meanwhile, operators have started to increase local capacity through a joint national fibre project, which will see thousands of kilometres of fibre cable boost local browsing.
Neotel CTO Angus Hay previously said the traditional players competing in the broadband market have realised that building a network of this size cannot be done alone. However, he notes it's been a challenge to rapidly roll out a national broadband fibre-optic network combined with the pressure of high costs.
He added that Neotel is seriously looking into fibre to the home, which he said hinges on business case and channel partners.
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