Internet access grows – for the haves

Internet Research

5 July 2007:- The number of South Africans with access to the Internet will grow by little more than 3% in 2007, despite massive growth in broadband connectivity.This is the key finding of the “Internet Access in SA 2007” study, announced today by World Wide Worx. The study shows that a total of 3.85-million people in South Africa – a mere 8% of the population, or 1 in 12 people – will have access to the Internet by the end of 2007.

“Despite the dramatic rise of broadband usage, this is the slowest growth we’ve seen in overall user numbers since the arrival of the Internet in South Africa,” says World Wide Worx managing director Arthur Goldstuck, who has been tracking the Internet market since 1993.

The study reveals that there will be more than 800,000 broadband subscriber accounts active in South Africa at the end of this year. However, these represent only 650,000 unique users, or separate individuals. And, of these, a third also use another form of connectivity.

“The harsh reality is that broadband has not yet made a major impact on overall connectivity numbers, even while dramatically increasing the usage of those who are already connected,” says Goldstuck. “The majority of broadband users are simply migrating up the connectivity food chain, from dial-up to broadband. So, while the haves get more, the have-nots remain locked out.”

To emphasise this point, the number of dial-up users is falling dramatically this year, dropping by 122,000 users, and falling below the million mark for the first time since 2001.

While this can be partly attributed to the growth of broadband within the dial-up user base, it also reveals the limited extent to which new users are coming on board at the entry level. It is clear, says Goldstuck, that the high cost of local calls – the single Telkom usage rate that is not coming down in price in August – is a major obstacle to Internet connectivity for the unconnected.

“Add to that the fact that line rental is in fact going up in price, placing yet another limit on the growth of fixed lines, and you have a no-win situation for the mass market,” says Goldstuck.

This makes Telkom both the villain and the hero of Internet connectivity in South Africa, the report states. Telkom’s ADSL offering has been the main driver of broadband adoption in South Africa for the last four years. While it is expected to be overtaken by MTN and Vodacom’s 3G mobile broadband by the end of 2007 in number of connections, it will continue to be the principal form of connectivity for most broadband users until at least 2009. Many of these will use 3G as a backup connection or for use when out of the office or home.

The study shows that the only broadband offering attracting large numbers of new users, rather than upgrading existing users, is iBurst, the wireless broadband service from WBS. Until now the growth of iBurst has been held back by availability, but through its relationship with Vodacom it is expected to make a dramatic impact over the next two years.

Vodacom’s own pending new ISP, Neotel’s offerings expected in the coming months, and the effect of metropolitan city councils offering wireless broadband, have not been included in projections or expectations of growth for 2007 and 2008, due to the presently undefined nature of these offerings, says Goldstuck. However, he sees these as major interventions in connectivity growth and experience.

“The entry of these major players into Internet services has to make a massive impact,” he says. ”Far too much is being invested in their infrastructure for them not to make a difference. By 2010 we can expect to see a substantially altered connectivity landscape. But certainly not in 2007.”

About World Wide Worx

World Wide Worx is South Africa’s leading independent technology market research consultancy, leading research into technology trends, financial services, media and marketing. It conducts independent and commissioned research projects, and evaluates mobile, online, technology and marketing strategies and implementations.

The hitchhiker?s guide to going mobileArthur Goldstuck is author of more than a dozen books, including The Hitchhiker’s Guide to the Internet and The Hitchhiker’s Guide to Going Mobile. He was responsible for groundbreaking research that first revealed the size of the South African Internet user base during the 1990s, and through World Wide Worx has continued leading valuable research into the impact of technology on business strategy.

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