Internet, 3G uptake to boom in SA

By Damaria Senne, ITWeb senior journalist

Johannesburg, 18 Jul 2005

South Africa is set to achieve nearly 870 000 broadband access subscribers by 2009, says BMI-TechKnowledge`s latest report.

This figure represents access to the Internet using PCs. An additional 4.4 million subscribers will use 3G services on cellular phones by then, says 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 the overall market will remain relatively backward compared to developed countries in the short- to medium-term," says Tertia Smit, a BMI-T analyst and co-author of the report.

The report, based on a combination of research and analysis processes, investigates the deployment of wireless networking and broadband access in SA. It updates BMI-T`s 2004 research on broadband and wireless in SA.

The report also focuses on the emergence of wireless loops, which will in future be used to provide both voice and Internet services, and the growth of broadband access through various types of fixed-line and wireless connectivity, Smit says.

Wireless won`t replace fixed-line

According to the report, the aggressive push into broadband wireless data by Vodacom and MTN will affect fixed mobile convergence. This will in turn affect the creation of new market growth opportunities, especially for business users.

"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," Smit says.

This will result in the average business user having multiple connections, driving new growth in overall subscriber numbers.

The role of wireless technologies like TD-CDMA, CDMA2000 and WiMAX connectivity will also be expanded.

A shift is already being observed as traditional fixed-line service providers move to incorporate more fixed wireless access in response to newly licensed wireless access providers and mobile cellular operator offerings, the report says.

A number of WiMAX trials, conducted by fixed-line and mobile cellular operators, Internet service providers and some metro councils, are also in progress.

The report also forecasts that WiMAX-enabled notebooks will likely enter the South African market from 2006, and that by 2009, the majority of notebooks sold will likely have the Intel Centrino and Rosedale chips embedded. However, the impact of WiMAX in terms of actual network roll-out and user adoption remains a wildcard at this stage of market development.

Broadband growth

According to the report, the growth of Internet access revenues will more than double, growing from R2.5 billion in 2004 to about R5.8 billion in 2009. ADSL will account for the largest share of revenue, with business revenue contributing about two-thirds.

This reflects the relatively low level of residential penetration as compared with most developed countries, where home users typically account for the majority of connections and 50% of revenues.

However, SA will follow a worldwide trend, in that ADSL will continue to account for the majority of all broadband connections over the forecast period.

"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, SA will remain in the doldrums relative to developed world standards," concludes Smit.