The South African Internet market has finally reached "critical mass", according to Media Africa`s latest industry research report.
Media Africa today released its second Internet Services Industry Survey, reporting startling growth in Internet usage in South Africa, and in the process debunking many myths around Internet growth statistics. The report, based on a survey of more than 100 South African ISPs, tracks growth among dial-up users, corporate and academic users over a six month period from October last year to March this year.
"South Africa has passed the long-awaited landmark of one million Internet users," Media Africa analyst Arthur Goldstuck announced in Johannesburg today. "The Internet is flourishing as an information and communications medium and we predict that this growth trend is set to continue at least through to the end of the year. The implications for electronic commerce are enormous in terms of the potential marketpalce."
The survey is endorsed by the independent Internet industry association, the Internet Services Providers Association (ISPA).
Media Africa`s survey of the industry last year represented groundbreaking research for the Internet industry. It established for the first time the extent to which South Africans had embraced the Internet.
Last year Media Africa measured 154 000 dial-up users - mainly consumers using the internet from home. This figure had grown to 240 000 users by March this year, underscoring the massive growth of the consumer market. Corporate users in South Africa total 600 000, say the researchers.
The 1998 South African Internet Services Industry Survey divides the Internet market into three categories: dial-up users accessing the Internet via modems, corporate users gaining access through company networks, and academic users and educational institutions.
The researchers have challenged the negative perceptions of Internet growth put forward by the US-based Network Wizards in their biannual Domain Name System survey of worldwide connectivity. Network Wizards reported in August that South Africa had slipped in the world rankings from number 14 to 20, almost falling out of the top 20 countries in terms of acceleration of Internet growth. Goldstuck says that the findings of the new Media Africa survey indicate that Internet growth is not slowing and that projections are for continued growth.
A comparison of the DNS survey with the Media Africa research does highlight, however, the increasing gap betwen rapid growth in the user base and slower growth in Internet infrastructure in South Africa. While the Media Africa research also examines corporate connectivity and ISP infrastructure, it`s major focus is on the number of users.
"The three categories amount to 1 040 000 Internet users in South Africa," says Goldstuck. "The general market perception is that 1-million users would represent a critical mass for Internet usage in South Africa. We can thus safely conclude that the Internet has reached critical mass in this country."
Cathy Stadler, co-author of the report, concurs. "The fact that we tracked over 90 000 new dial-up users - in just six months - underlines the scope of growth."
The dramatic growth of the Internet is attributed to the aggressive marketing campaigns of major players like M-Web, who have raised general consumer awareness of the Internet. Campaigns by other large ISPs, like Icon and UUNet Internet Africa, have also contributed to increasing the rate of adoption of the Internet.
"The entry of more major players with substantial marketing budgets into the Internet market subsequent to the completion of our statistics gathering indicates that growth is unlikely to slow down," she says.
In addition, the researchers found that there had been substantial consolidation and growth within the ISP industry. "There are at least 120 ISPs - including virtual ISPs - which piggyback on the infrastructrue of a larger network provider," says Goldstuck. He points out that, once again, there has been little of the widely predicted fall-out of ISPs.
The research also once again underlines the fact that the market is not completely dominated by two or three service providers. The September 1997 survey had revealed that UUNet Internet Africa and The Internet Solution had been joined by a third ISP, Global Internet Access as "giants" in Internet dial-up provision, each with more than 15 000 users, and predicted that M-Web would join them in the coming year. At the end of March 1998, the number of giants had grown to four and, as predicted for 1998 in the previous survey, newcomer M-Web had emerged as the second largest ISP in the country.
In September 1997, a further four service providers had boasted between 5000 and 15000 users. This tally remained constant at the end of March 1998, despite one medium-large ISP (M-Web) joining the large players, and another two being taken over by larger players.
In the medium-sized market, namely ISPs with between 1000 and 5000 subscribers, no less then nine ISPs have emerged, up from seven at the end of September 1997.
The only category drop observed in number of ISPs is in the small-medium market, which serves between 500 and 1000 dial-up customers per ISP.
Of the ISPs that provided figures for leased line installations, the market continued to be dominated by The Internet Solution (IS) and UUNet Internet Africa, along with Global Internet Access, with IS remaining the dominant force in that market. There is no longer a close correlation with the rankings of ISPs in the dial-up market. While it still appears far more difficult for small ISPs to challenge the dominance of the large operators in the leased line market than in the dial-up market, specialised service providers are beginning to make their presence felt.
Media Africa is an Internet research, publishing and strategic consulting organisation. Previous reports include:
- The 1998 South African Web Commerce Survey
- The 1998 South African Web User Survey
- The 1997 South African Internet Services Industry Survey
Media Africa Publications include:
- iStrategy: http://www.istrategy.co.za - the first South African Internet strategy magazine
- Gadget: http://www.gadget.co.za - South Africa`s only online consumer technology magazine
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