Much was expected in the local ICT space in 2019 – from being dubbed the year of the digital banks, to the year the fourth industrial revolution (4IR) will take stranglehold of SA. This was also a year that most believed 5G would become reality.
Several ICT market analyst firms made predictions for 2019, some of which came true while others are still to be realised.
ITWeb interviewed analysts to see if what they had predicted materialised this year, and also asked them to look into the crystal ball to see what 2020 has in store for us.
For IDC, data centres were the major highlight in 2019. Mark Walker, IDC associate VP for Sub-Saharan Africa, says the year saw disruption caused by hyperscale presence. 2019 also saw data centre consolidation and a shift towards co-location as an interim cloud migration.
This year, US-based software giant Microsoft announced the opening of two data centre regions in SA, a first in Africa.
“2019 was always set to be an explosive year for cloud with the launch of the Azure platform. However, the scale and scope of adoption was somewhat unexpected. We saw the Reserve Bank issue their cloud guidance late in 2018, and by mid-2019, Standard Bank had announced they were shifting core workloads to the offshore, public cloud. Government, through SITA, has made two key announcements: they’ve signed an MOU for private cloud with IBM and Huawei, and an MOU for public cloud with Microsoft,” Walker says.
Transformation stutters
According to IDC, digital transformation (DX) was predicted to accelerate in 2019 in SA. In certain key industries such as banking, this is certainly the case, Walker says.
“We’ve seen the launch of the emerging digital banks, as well as increasing digitisation of the big four – Standard Bank closing branches, Nedbank launching Open Banking API Marketplace, etc. However, DX of other industries has lagged. Manufacturing is one key example,” he says.
On artificial intelligence (AI), IDC predicted that for the most part, due to a lack of skill, most organisations would be passive consumers of AI – leveraging the developments made in their enterprise application software, rather than making extensive use of AI platforms directly.
Walker says this has largely held true, barring certain tier one enterprises that are able to pay for the right skills, such as the banks.
IDC also points out that 2019 was meant to be the year of the use case for blockchain in SA. “This has held true, but we end the year with slightly less enthusiasm than in the beginning of the year. Much of the hype has been lost, and despite real promise being shown in certain proofs of concept, there are still not many production use cases in the market,” Walker comments.
Regarding the Internet of things (IOT), IDC predicted consolidation in the industry. As such, the firm says, there have been acquisitions whereby bigger operators want to strengthen their offering to be able to participate fully in the IOT value chain.
The market analyst firm was optimistic on the sixth administration on spectrum allocation. “The predictions were that at least 4G spectrum will be allocated in 2019. Unfortunately, there has been continued delay,” Walker says.
On 5G, he says operators continued with pilots and trials with no clear differentiator to the current 4G/LTE offering.
“We have not seen much on the use cases, pricing and relevance. Most 5G deployments have been more out of vanity or to support unestablished use cases. Still a long way off and even so, not for consumers but to support IOT and instrumenting applications.”
Rural digital progress
For Ofentse Dazela, director for pricing research at Africa Analysis, rural connectivity is a subject that is increasingly featuring on the agenda of South African telecoms companies following years of lobbying by government and other interested stakeholders asking operators to intensify efforts to bridge the digital divide.
He points out that in recent months, it became apparent that mobile operators are starting to heed this call.
According to Dazela, Vodacom notably invested R82 million in KwaZulu-Natal during the 2018/19 financial year ended 31 March, as part of its rural network expansion programme. In Mpumalanga, he notes, the company invested over R400 million in the network during this period.
Dazela points out that content streaming services continued to gain popularity in the local market as predicted earlier in the year.
However, he says, this market remains a challenge for mobile network operators as far as efforts to monetise this service are concerned.
“Cell C’s Black offering failed to garner enough support in the market despite the operator making this service accessible through multiple technologies such as fibre, LTE and mobile. It must nonetheless be highlighted that Vodacom Play continues to gain good traction in the market. This gives hope that with right mix of content and pricing, this service can indeed become a key revenue-driver for operators in time.”
Looking into the 2020 crystal ball, IDC believes SA is going to see some key acquisitions of innovation accelerator companies (AI, IOT, blockchain) by large telcos or systems integrators.
“This is driven by the fact that the need for this technology is obvious to most organisations, but the skills are simply not present. However, the skills to build a product around these technologies are not immediately present in the large telcos even if the skills to use the technology are. To meet the needs of their customers, as well as in an attempt to differentiate offerings, I’d expect to see some acquisitions of fast-growing organisations in these fields occur,” Walker says.
“Similarly, we don’t think we’ve seen the end of the disruption brought by the hyperscalers yet. When Azure was launched, GoDaddy arrived in SA the next day. I’d expect more competition of international players over the coming year, piggybacking on their ability to deliver ICT infrastructure in exactly the same way they do in Europe, America or Asia.”
He adds that 2020 will see more back and forth discussions between telcos, the Competition Commission and ICASA on data pricing and spectrum allocation.
Walker says next year, more focus will go to the surveillance state versus citizens’ rights, as well as collaboration between government and financial service providers.
For Dazela, enterprise and wholesale markets are important growth areas that operators will increasingly focus on going forward.
He notes the wholesale market is nonetheless proving to be a challenging area, with operators such as Cell C and Rain having experienced profitability and capacity challenges in this space.
“The opportunity does, however, exist for established market players with robust balance sheets to host smaller mobile network operators and mobile virtual network operators on their networks.”
Dazela believes 5G services will start to become a reality for residential households and businesses in 2020.
“A policy directive on spectrum allocation that was issued by government recently is encouraging and brought hope that consumers can look forward to much cheaper prepaid data bundles late in the second half of 2020 or early 2021.”
Spectrum, regulation woes
On 2019’s disappointments, Walker points to slow revenues in outsourcing, with ripple effects throughout services spending.
There were also delays in regulation generally, he adds. “Lots of talk on 4IR, but the fact of the matter is that as long as we do not have policy regarding the use of, for example, artificial intelligence, we can only expect (a) jobs to be lost and (b) no sufficient investment into building the capacity within the country to utilise these technologies.”
The other let-down was continued delays in spectrum allocation. “The new minister started with much hype, having the right talk, and 4IR as the key focus of her department. But at this stage, there has not been much tangible from the department.”
Dazela’s disappointment was poor customer service as a result of cyber attacks. “Distributed denial of service attacks are on the rise in the local market and continue to disable critical telecoms infrastructure from time to time.
“These mounting attacks exposed the vulnerability of our networks with some Internet service providers to date still trying to fend off these attacks. It is also clear that local operators will need to introduce more proactive measures in response to these growing cyber attacks.”
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