The southern African broadband market earned revenues of $3.78 billion in 2010 and is estimated to reach $19.08 billion in revenue in 2017.
This is according to research by market analyst firm Frost & Sullivan, titled “Southern African Broadband Market”, which covers SA, Zambia, Lesotho and Zimbabwe.
Nonetheless, the firm says the region has a marginally low broadband penetration rate and the broadband market is, therefore, highly under-serviced.
It says it has noticed that major network operators, Internet service providers (ISPs) and Internet access providers are entering into strategic collaborations in order to undertake and invest in terrestrial network expansion and connect to the undersea cable network.
Traditional technologies for broadband connection, like dial-up and VSAT, are now experiencing a gradual decline in subscriptions in the wake of reliable mobile broadband technologies, like W-CDMA, WiMax, HSDPA and HSPA+, Frost & Sullivan notes.
Speaking to ITWeb, Chipo Ngongoni, Frost & Sullivan's ICT research analyst, noted that, due to the relative economic and political stability of the southern African region as compared to other African nations, revenues are expected to be marginally higher than in the rest of Africa.
“Moreover, a lot of infrastructure investments are currently underway in the region geared towards driving the uptake of broadband,” she explains.
“Extensive terrestrial network expansion, decline in prices of broadband products and mobile broadband are expected to be the main drivers in the southern African market. With improved connectivity, revenue and growth in the market is expected to be spurred by mobile broadband and data-based, value-added services for the next three to five years,” she adds.
The firm also points out that connection to undersea cables has caused an overall decline of wholesale bandwidth prices, which in turn has triggered a reduction in the prices of available data packages.
Furthermore, network operators have rolled out mobile broadband services and low-cost devices that enable cheap connectivity.
However, the firm says the growth of the broadband market is likely to be inhibited by regulatory inefficiencies. Moreover, low disposable incomes will restrain the demand for data services, which will be further aggravated by limited access to infrastructure, it adds.
“Regulators in southern Africa are responsible for services, technologies and spectrum applicable to broadband communications in their countries,” explains Ngongoni.
“However, the turnover from framework inception to implementation is quite low, and this affects the rate at which technology is dispensed to the public, thus restricting growth in the broadband market.”
Furthermore, Frost & Sullivan says the region has a high level of unemployment, limiting the expenditure on broadband products. Limited infrastructural access limits the number of consumers able to use data services.
It believes regulator facilitation of spectrum allocation and technology policies, in a timely fashion, will accelerate the deployment of technologies.
“Collaborated infrastructure expansion and sharing will enhance broadband penetration as service providers expand network coverage and cut costs,” Ngongoni notes. “Broadband operators in the southern African market should embrace infrastructure sharing and market segmentation in order to intensify competition and rapidly grow market share.”
She also points out that broadband has been internationally recognised as a strategic tool in the building of an information economy and society.
“The benefits of accessible broadband can be categorised into mainly economic developmental growth and social benefits. Economically, improved connectivity can help stimulate the growth of SMEs through access to either knowledge portals or services.
“Access to knowledge and reliable communications enhances business levels and expansion into other areas of the country. A good example of this is South Korea, which has based its economic growth on ICT growth and expansion.”
Socially, she adds, integration of broadband into government service delivery results in relatively accessible government services.
“This leads to an improvement in the quality of sectors such as education and health. However, for countries to reap benefits from broadband connectivity, there is still a need to address the digital divide, as most African countries have a high rural population.”
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