South Africa’s broadband industry is likely to become increasingly dominated by mobile and wireless technologies such as WiMax and 3G as service providers and operators look to reach a larger segment of the market with always-on Internet access offerings.
That is the word from Mark Taylor, managing director at independent cellular service provider, Nashua Mobile. He says that consumers will eventually be able to choose between a range of wireless voice and data solutions ranging from fixed-lines from Telkom and the second network operator (SNO), through to WiMax (a metropolitan area wireless network standard), Wi-Fi and cellular technologies.
Broadband wireless technologies allow operators to quickly roll out broadband Internet services in areas where there is not a large enough market to justify the costs of laying down copper or fibre. Fixed operators are rolling out technologies such as WiMax while mobile operators such as MTN and Vodacom have deployed technologies such as EDGE and 3G to provide customers with high-speed wireless data access that supports services such as fast Internet access and streaming audio and video. For example, Vodacom recently launched Video SMS where the user can send or receive up to 30 seconds (300 kilobytes) of high quality video for 80 cents.
"Consumers are already benefiting from choice. No longer is Telkom the only company that can provide a broadband connection - other options such as Sentech and iBurst have come to market to compete," says Taylor.
Telkom is already piloting WiMax, as are a number of other operators and service providers in Africa. Since one WiMax base station can cover a large area in a city or town, the technology is a promising way for operators in developing countries to ramp up the rollout of broadband Internet services in areas where there is little or no fixed-line infrastructure.
South Africa's Wi-Fi market is also showing healthy growth as business users and international travellers start to rely on hotspots at airports, upmarket malls and hotels to keep in touch. However, Wi-Fi will only benefit wealthier consumers in urban areas until wide-area technologies such as WiMax are more widely available to provide backhaul connectivity to the Internet.
Broadband wireless is having a knock-on effect in other segments of South Africa's telecom market, particularly the cellular industry. Vodacom, MTN and Cell C have all aggressively slashed the price of their data services in recent months.
More price cuts can be expected in the months to come, but the operators are also on record as saying that unique, valued-added services will be as important to compete as the costs of their service. GPRS is widely available in South Africa, and penetration of EDGE and 3G is rapidly increasing.
For now, cellular data is most attractive as a supplementary connection for mobile workers, particularly when APN (access point name) technology is linked with GPRS to provide a secure, dedicated connection to the corporate network. However, in time, mobile operators may be able to package their data services as an alternative to other broadband offerings.
"In the short-term, mobile operators, fixed-line operators and Internet service providers may be on a collision course, but over time the lines between broadband wireless, cellular and fixed-line markets will blur," says Taylor.
"Major players such as fixed-line operators, Internet service providers, cellular service providers and cellular operators will most likely partner to give customers simple access to a bundle of converged products (for example, a bundle that offers Wi-Fi, GPRS, WiMax and fixed-line Internet access for mobile workers)," he adds.
Taylor says that South Africa's broadband industry still has a long road ahead of it. Delays in licensing the SNO have given Telkom time to consolidate its position in key corporate accounts and to build up cash-reserves that it can use to undermine its eventual rival in the fixed-line market.
According to a recent report from Genesis Analytics, Telkom's control over most of South Africa's international bandwidth has hamstrung South Africa's telecom industry. ISPs carrying VoIP traffic need to buy international bandwidth from Telkom while most hotspot operators have to buy backhaul connectivity from the operator, which puts high mark-ups on its international bandwidth.
"It will be some time before the SNO has the international links it needs to compete with Telkom in this area - indeed, the SNO will itself probably need to buy bandwidth from Telkom until it builds up sufficient capacity of its own. That means international bandwidth will remain expensive in South Africa for some time," says Taylor.
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