The Internet economy of G20 nations is expected to almost double in size between 2010 and 2016, and is projected to reach $4.2 trillion in 2016.
According to research by The Boston Consulting Group (BCG), the digital economic growth driver will be a “dramatic” increase in the number of users around the globe, which will surge from 1.9 billion users in 2010, to a projected three billion users in 2016.
However, while Internet users in SA will almost double in the next four years, the country is set to miss out on the digital boom unless the cost of connecting to the Internet comes down dramatically, and speeds improve, note market commentators.
Make hay
BCG's report - The Digital Manifesto: How Companies and Countries Can Win in the Digital Economy - classifies SA in the “aspirant” category, along with countries such as India and Egypt. The report was launched on Friday during the World Economic Forum's annual conference at a discussion co-hosted by BCG and Google.
Natives are classified as countries such as the UK, South Korea, Sweden and Japan. The report lists “players” as Australia, New Zealand, Span and Canada, among others, while laggards are Greece, Italy, the United Arab Emirates and Saudi Arabia.
Laggard
However, the high cost of connectivity will hold SA back from fully benefiting in the surging digital economy, says World Wide Worx MD Arthur Goldstuck. He says price reductions at wholesale level have not translated into cheaper access for end-users, as providers are just offering more for the same price.
Recent research from Ovum found that fixed and wireless broadband in SA is as much as 20 times more expensive when compared to 18 other countries that are also classified as emerging markets.
The number of people online is expected to grow from about 16% currently, to 30% by 2015, as cheaper smartphones enter the market this year, says Goldstuck. This will lead to a “massive” intensification of Internet use at the low end, he says.
Despite the anticipated growth of South Africans moving online, there are “logjams”, because bandwidth is too costly, and users will not spend more overall, says Goldstuck. He explains that for SA to benefit hugely from the expected surge in the digital economy, costs will have to come down dramatically.
Chris Gilmour, Absa Investments analyst, says SA is not well-placed to move up the curve rapidly, because end-user access to ICT infrastructure is “laughable”. He says end-users have not seen a significant reduction in costs and improved speeds despite several undersea cables landing in recent years. “Maybe I'm just being impatient.”
The G20 includes Argentina, Australia, Brazil, Canada, China, the EU, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, SA, South Korea, Turkey, the UK, and the US.
Share
