Unresolved regulatory issues hamper networking growth

Internationally, the networking industry is pushing hard towards the delivery of multimedia converged services, ie the integration of IT, computing, broadcasting and telecommunications. This demands a supportive regulatory framework that SA does not have.

Issues such as delivery of voice, either separate or as part of an integrated service, over any medium are still unregulated, and licences to cover integrated broadcasting, telecommunications and IT services do not exist. As a result, rapidly developing technologies such as new services built on Internet Protocol (IP) are experiencing some difficulty taking off in this country.

If SA does not keep abreast of change, its industries will become marginalised globally, the digital divide will widen, and South Africans will not be able to access the knowledge economy facilitated by such converged IT services. In order to keep up, the local networking industry must be able to provide all types of converged services, such as digital access networks providing video streaming.

As a result of industry pressure, public and private stakeholders recently held a national convergence colloquium in Johannesburg, highlighting the regulatory gaps and planning future action. However, despite these obstacles, the networking industry has experienced a rebound, which started late last year and carried on into 2003.

Better, converged applications are increasing the demand for networking capacity, and there will be continued growth in the areas of WAN interconnectivity, voice converged services and systems management. Where the networks are mature, convergence and management will be the growth drivers. The general focus is on return on investment and business-case-driven network spend.

In order to keep up, the local networking industry must be able to provide all types of converged services.

Zappi von Plato, regional chief executive of telecommunications, Comparex Africa

While the financial services enterprises have continued to be cutting-edge in the area of networking, there are still a multitude of small and medium enterprises (SMEs, companies with R50 million to R250 million turnover) that are looking to implement or upgrade their networking infrastructure. Factors that could be driving this trend in SMEs include the move for connectivity to facilitate e-commerce interaction with both suppliers and clients in SA, and African/global expansion.

A relatively recent trend in Africa is the growth of interconnectivity between African banks and the world, in order for them to become standardised, competitive and remain in vogue with global banking electronic fund transfer (EFT) standards. Trends like this could contribute to and help drive growth in the local networks market.

Technologies to watch include the increasing activity and growth of campus local area networks (LAN) and wide area networks (WAN), including their switches, virtual private networks (VPN) and security, content delivery networks, network management, and IP telephony revision. Strong growth is also envisaged for wireless LAN and storage area networks.

Converged voice will be a competitive growth space for solution providers, as the market is beginning to accept converged services more readily and there is a wider acceptance of the logic and benefit of using a third-party VPN infrastructure service provider. Network integrators will move up the value chain as areas where they add value, for example content management, network security and professional services, become increasingly important.

The industry will also find enterprise solutions and telecommunications converging more in future. This is because both companies and network integrators continuously seek to reduce costs by building economies of scale. As always, there will be pressure to achieve these economies of scale by looking closely at network design and content delivery.

Telkom`s introduction of asymmetric digital subscriber line (ADSL) will mean higher bandwidth availability, allowing for more use of technology like video streaming. This in turn will drive growth in LANs and WANs as more data travels faster and cheaper through more affordable and wider bandwidth.

While bandwidth is still cost-inhibitive, there will be increasing trends towards shared services such as hotspots. Open source initiatives are another way to cut costs. All of these technology developments will potentially impact both corporates and consumers.

Corporates will become more comfortable using VPNs which will increase investment and realise bandwidth savings. ADSL will also change consumers` behaviour, as they will possibly take advantage of cheaper bandwidth by working from home. Affordable and accessible broadband services will impact the whole ICT industry, boosting network growth into 2003 and 2004.