Growth in Internet access in South Africa will receive a kick-start in 2004 after a dramatic slowdown in the past three years.This is the key finding of the latest edition of World Wide Worx’s annual study of the South African Internet access industry.
According to “The Goldstuck Report: Internet Access in South Africa 2004”, 3,1-million South Africans had access to the Internet at the end of 2002. Growth in 2002 was around 7%, the slowest since the Internet became available to the public in 1993, and the first time it had been below 20%.
Growth in 2003 was set to be only 6%, with 3.28 million South Africans expected to have access to the Internet by the end of 2003. This is a mere 1 in every 13 South Africans, marginally up from 1 in 15 at the end of 2001.
Three developments are expected to boost growth in 2004, namely:
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The roll-out of competitive access services to businesses by the Second Network Operator (SNO), which has finally been granted a licence to operate;
The roll-out of high-speed or broadband wireless access by Sentech, which is characterised in the report as the HNO, or Half Network Operator, due to its wide ranging license to provide access services;
The healthy rand-dollar exchange rate, which has dramatically brought down the cost of equipment for rolling out infrastructure.“From having no choice at all, the South African market will suddenly be faced with two new players who are both eager to supply Internet access needs,” says Arthur Goldstuck, MD of World Wide Worx, who led the research in collaboration with IT outsourcing organisation netsurit and ISP value-added applications provider Systemsfusion.
Among the most significant findings were:
The size of the dial-up market passed the one-million mark for the first time in 2002, largely due to the marketing campaigns of Telkom and Absa’s Internet services, while the subscriber base of traditional ISPs fell for the first time;
ISPs tended to be more focused on serving existing customers than on chasing growth in users, and this in turn resulted in the most profitable year yet for the access industry, despite the slowdown in user growth;
The leased line market for corporate access remained healthy, largely thanks to companies focusing on the reliability of their networks and putting more backup systems in place. As a result, the number of lines grew faster than expected, but growth in users with access to such lines was slower than expected.
Schools connectivity will receive a boost in 2004 as a range of long-awaited projects are finally implemented.For the first time, the annual survey included a survey of small, medium and micro enterprise (SMME) usage of the Internet, which saw research partner Netsurit surveying more than 2200 SMMEs with Internet access. Almost half reported e-mail as their primary use of the Internet, while a third cited banking as their primary online activity.
The survey also found that small businesses with Internet connections were increasingly pursuing high-speed connectivity, with only one out of five using traditional dial-up modem access.
Future versions of the survey will extend this research to corporates and consumers.
On the technology front, the report concludes that 2004 will see the biggest explosion of technology options yet available to Internet users in South Africa. “From broadband wireless supplied by Sentech to ADSL and ISDN from Telkom, to a range of creatively packaged technology options from a variety of ISPs, it’s like 1994 all over again,” says Goldstuck. “Once again, the challenge will be an educational one for the existing market, and affordability for those who are still not connected.”
Nevo Hadas, VP of marketing for the survey’s support partners Systemsfusion, warns that this poses a huge challenge to ISPs. “They have to make their offerings not only simple to use, but also simple to understand,” he says. “The Internet user wants a fast, reliable connection, rather than a technically brilliant way for it reach the computer. The industry has to be technically brilliant in such a way that the user doesn’t even know about it.”
Content includes:
Key factors influencing Internet access in SA:
The SNO process
The emergence of Sentech as a hybrid network operator
The continued impact of the Virtual ISP model
The role of non-ISP providers (e.g. Absa)
The impact of Telkom
Data tables:
Number of ISPs in SA, 1994-2003
Number of users in SA, 1987-2003
African ranking
World ranking
Breakdown of academic, dial-up and leased-line users
Inside the industry:
Profiles of leading access providers
Interviews with key executives at 10 leading access providers
History of Internet connectivity in South Africa
The Goldstuck Model of Internet Services
Survey of Internet-connected SMEs:
Form of connectivity; satisfaction with bandwidth
ISP currently used; ISP satisfaction
Main use of Internet; proportion of e-mail, web and online banking access
importance of security
Firewall use and regularity of anti-virus updates
Satisfaction with hosting
Purpose of web site and sourcing of web development
Click here to find out more about the latest Internet Access Report |
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