World Wide Worx | Business Technology Research South Africa

Broadband in South Africa to double up

Broadband Internet access, which finally made an impact on South Africa in 2005 with the first 147,000 users settling into high speed online lives, will almost double in usage in 2006 to 277,000 users.This is one of the key findings of “Broadband in South Africa 2005”, a new research report from World Wide Worx.

“It’s the kind of growth rate we saw in the early years of Internet take-up in South Africa, but it’s still going to be a big disappointment for some operators,” says Arthur Goldstuck, MD of World Wide Worx. “Those who are investing in broadband roll-out expect instant take-up by the public, and that simply does not happen in what is still a luxury category.”

The biggest success story of broadband, according to the report, is Telkom’s much-criticised ADSL service. Aggressive marketing and continual movement in pricing and bundling strategy has seen far more rapid roll-out than Telkom’s critics had forecast. Not surprisingly, Telkom dominates broadband, with ADSL holding 66% of the market – a share that is unlikely to diminish in 2006.

“We found that there is little incentive for Telkom to respond to critics of ADSL, since the customers are voting so strongly with their wallets,” says Goldstuck. “Particularly among small, medium and micro enterprises (SMEs), it is a solution that works, at a price that has not scared them off. For consumers it remains expensive, and that it is the source of most of the criticism.”

For now, says Goldstuck, Telkom can continue to rely on continued demand from SMEs, as well as pent-up demand from high-end consumers. Only after it has met this demand will it be forced to address pricing issues, unless the regulator steps in first.

The barriers to consumer entry also mean that broadband will not grow South Africa’s Internet user base dramatically in the short-to-medium term. The report, which forms part of World Wide Worx’s annual study of the Internet access market, shows that if broadband growth rates projected for 2006 continue through to 2008, the broadband market will still only represent around 14% of the Internet user base.

Telkom’s ADSL, Sentech’s MyWireless, WBS’s iBurst, Vodacom 3G and MTN 3G are likely to be joined by another two players in 2006, while the Second Network Operator may well launch wholesale services that open the way for more niche operators.

“The good news is that we are seeing real choice beginning to emerge, not just among the five broadband providers, but also within the product range of each of the operators,” says Goldstuck, who also released South Africa’s first handbook of mobile and wireless communications, The Hitchhiker’s Guide to Going Wireless, this month (November 2005).

“The premium offerings may be expensive, but for the ordinary user with average Internet needs, there is a price point to suit the pockets of most working people who have computers and phones at home.”

The report strikes a sobering note with regard to the digital divide, warning that broadband is not the solution that will bridge the gap between the haves and the have-nots. For that, massive intervention is still required by the Government.

“Technology by itself won’t change the lives of the disadvantaged,” says Goldstuck. “For that you need a commitment from Government, and that commitment must run from top to bottom. In the absence of meaningful policy leadership, access to technology will remain the domain of the privileged.”

Media Contacts

* For more information, please contact Arthur Goldstuck by e-mail on arthurg@internet.org.za, by phone on (011) 7827003 or on his cell phone on 083 3264345

It’s Easy To Order This Report

This Broadband Report is included in our 2005 Internet Access report. It is available in PDF format at a cost of R5600 excluding VAT. Complete the online order form or call Steven Ambrose on 083 6010333 for any sales queries.