Local survey shows slower Internet growth

Johannesburg, 24 May 2000

Media Africa`s fourth SA Internet services industry survey shows that there were 1.82 million people connected to the Internet in SA by the end of 1999. That figure is already outdated.

"Right now, at this very moment, there are probably about two million users out there," says Acuity Internet MD Arthur Goldstuck. Media Africa is a division of the Acuity group.

The 1.82 million known users are broken down into 560 000 dial-up users, 980 000 corporate users and 280 000 users connected through academic networks.

That is a total growth of 44% for the year. But that is lower than the growth seen in 1998, and lower than the 33% Media Africa forecasts for 2000, by the end of which 2.4 million users are expected to be connected.

Dial-up users grew from 366 000 users in 1998 to 560 000 in 1999, and leased-line users grew from 700 000 to 980 000.

Goldstuck says the slow-down in corporate usage is due to increasing saturation and the slowing down of access to infrastructure, while new dial-up subscribers are daunted by the high cost of local telephone calls. That will not change, he says, until real fixed-line telephony competition comes to SA.

"If Telkom gets real competition we will see lower rates and more innovative products," notes Goldstuck. Media Africa believes the number of home users could double with cheaper local calls and that corporate users will also install more leased lines.

The survey assumes 200 corporate users for every one of the 4 900 leased lines it says have now been installed in SA. It also assumes that every dial-up account represents one user, while other studies have shown that the average home account has between two and three active users. Goldstuck says the overlap with corporate users, many of whom also have home access, balances out that discrepancy.

Academic users grew from 280 000 in 1998 to 360 000 in 1999, and Media Africa says an increasing number of schools are obtaining their connections from Internet service providers (ISPs) other than Uninet, the research and academic network.

The survey also found that M-Web remains the largest consumer ISP in the country, with Vodacom World Online not far behind. The only other ISP with a significant user base is Intekom, a subsidiary of Telkom, but Media Africa says the industry is surprisingly healthy, with more than 100 other ISPs with smaller user bases. "Up to a certain size you don`t need a huge number of subscribers to make money," says Goldstuck. "You can piggy-back off the SAIX network and be profitable as a small business."

The Internet Solution, a Dimension Data company, leads the corporate connectivity race, with UUNET, a Datatec company, trailing. Their only real competition, USKO/GIA Internet, fell out of the running as a competitor during 1999. "They refused to participate in the survey, which indicates the bad times they have fallen on," says Goldstuck. "But we have an idea [of the size of their business] and they are no longer serious competition."

The full report will be available by the end of this week.