Advances in regulatory issues and continued investment in infrastructure will heighten competition in the South African telecoms industry in 2011, predicts the Internet Service Providers' Association of SA (ISPA).
Competition has been heating up in the telco industry, most notably with the launch of Telkom's mobile arm, 8ta, and the unveiling of Cell C's HSPA+ network and subsequent aggressive data pricing strategy.
That will be good news for consumers of telecom services, since prices of voice and data services will continue to fall, says Ant Brooks, GM of ISPA.
He notes that telecoms firms will also be forced to focus more closely on customer service and value-added products in a market where connectivity is becoming increasingly commoditised.
This was seen last year when Cell C did a complete overhaul of its corporate identity, with a renewed focus on the consumer - including the introduction of a customer complaint Web site.
Vodacom is following suit, having recently announced a R200 million investment in customer care services and brand identity.
Long-term gains
In addition to competition, telecoms tariffs will drop as a result of regulatory interventions, such as the Independent Communications Authority of SA's (ICASA's) moves around mobile termination rates.
However, these reductions may not be realised in the short-term, as operators adjust the way they do business.
This has left a bitter taste with the consumer, who was under the impression that the savings would be immediately filtered into a reduction in retail pricing.
Prior to the rate cuts, former ICASA chairman Paris Mashile said: “I will be very disappointed if the cellular operators do not pass on the interconnection rate cut to consumers.”
But analysts pointed out that this is still years away and that initial interconnect cuts would rather spur on competition among telcos, which would eventually translate into lower retail costs.
Brooks adds that pressure on telecoms companies' margins could boost consolidation among smaller players in the market.
ISPA believes that many of the regulatory building blocks for the South African Internet industry's growth are now in place, with the exception of the spectrum allocations needed for wireless broadband services.
Lobbying ICASA to accelerate the process of allocating this spectrum will be one of ISPA's major focuses for the year.
Bigger investments
Brooks also predicts that the telecoms industry will focus on infrastructure investment during the year ahead, especially on rolling out fibre-optic cable.
Many competitors will start working together to roll out infrastructure to share costs, states Brooks.
Newcomer 8ta is expected to invest R6 billion in its mobile network over the next five years.
Cell C forked out approximately R5 billion on its new network and will continue to invest in further expansion across the country in 2011.
In 2010, MTN invested approximately R500 million on its network upgrades and has stated that it is continuing to invest in its network.
Vodacom has also been investing heavily in its network and plans to increase its 3G coverage in the country with the addition of up 650 more base stations.
Falling access costs and investments in infrastructure will create a wealth of new opportunities for the telecom industry and its customers, explains Brooks.
Many companies will also aggressively adopt fixed-mobile convergence services. It is expected that Telkom and 8ta will unveil converged fixed and mobile offerings later this year.
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