South Africa will start to emerge out of the broadband desert, achieving nearly 870 000 subscribers by 2009, according to a new BMI-TechKnowledge report. This represents access to the Internet using personal computers, while an additional 4,4 million subscribers will be using cellphone 3G services by then.
According to Tertia Smit, co-author of the report, "the good news is that rapidly-falling broadband service prices will have a significant impact on the rate of penetration of broadband in the market, but the flip side is that overall market will remain relatively backward compared to developed countries, in the short to medium term."
The report has a dual focus - firstly on the emergence of wireless access loops, which in future will be used to provide both a voice service and an Internet connection. The second focus is on the growth of broadband access, through various types of fixed line and wireless connectivity.
"The aggressive push by the mobile cellular operators into the broadband wireless data space will create an additional dynamic in terms of fixed-mobile convergence, as some degree of overlap occurs in the broadband access space," says Smit. "However, our belief is that the dominant impact will be to create new market growth opportunities centred around mobility, especially for business users, rather than to be a straight substitute for a fixed line - or even fixed wireless - access connection."
"This means that the average business user will have multiple connections, thus driving new growth in overall subscriber numbers," Smit adds.
Another new dynamic in the market will be the expanded - albeit more niche - role of wireless technologies like TD-CDMA, CDMA2000 and WiMAX connectivity, which will in future also be available via handsets. Currently, only TD-CDMA based networks are present in South Africa, and these are used only to provide Internet access.
A shift is already being observed as traditional fixed line service providers are moving to incorporate more fixed wireless access in response to newly-licensed wireless access providers and mobile cellular operators' offerings. A slew of WiMAX trials are in progress, conducted by players ranging from fixed line and mobile cellular operators to ISPs and PTNs - including Metro Councils.
Wireless Internet connectivity is being stimulated by corporate mobile adoption. WiMAX-enabled notebook PCs will most probably enter the SA market from 2006. However, the impact of WiMAX in terms of actual network rollout and user adoption, remains a wildcard at this early stage of market development. WiMAX will be an important backhaul technology, at the very least, and will begin to emerge as a direct access technology and grow to significant volumes by the end of the forecast period.
As a result of the shift from narrowband to broadband (and the resultant shift from dial-up 'voice' call charges to 'data' revenues), Internet access revenues are forecasted to grow from about R2,5 bn in 2004 to about R5,8 bn in 2009. The largest share of revenue will be apportioned to ADSL by the end of the forecast period, with business revenue contributing about two-thirds of this. This reflects the relatively low level of residential penetration, compared with most developed countries, in which home users typically account for the majority of connections, and 50% of revenues.
South Africa will follow a worldwide trend, in that ADSL will continue to account for the majority of all broadband connections over the forecast period; download speeds will increase dramatically, and entry-level service prices will decline by 50% within two years - with the net result being accelerated residential broadband penetration.
"However, despite the price/performance improvements and accelerated growth over the next five years, unless service offerings reach even higher levels than the report's forecasts suggest, South Africa will remain in the doldrums relative to developed-world standards," concludes Smit.
For more information contact Tertia Smit, BMI-TechKnowledge, +27 (0)11 540 8000, tertia@bmi-t.co.za
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