The South African broadband market made significant gains in 2020, as a result of the COVID-19 pandemic, and the trend is set to continue next year.
This is according to local market analyst firm BMIT in its latest South Africa Broadband Market Report 2020.
It gives a review of the South African broadband market and industry, including market sizing and five-year forecasts. It also unpacks competitive forces and substitution across access media, including fibre, fixed wireless, LTE and 5G in the local residential and business broadband segments against the backdrop of global trends.
In an e-mail interview with ITWeb, BMIT analysts Brian Neilson and Christopher Geerdts say the market analyst firm has revised its forecasts higher for both fibre-to-the-home (FTTH) and 5G fixed mobile as a result of the aggressive plays being made by operators.
Firstly, the analysts say the likes of Vumatel are making aggressive plays in the next-tier of the residential fibre market with Vuma Reach, and there is a possibility that others may also elect to play in the sub-R400 per month price range.
5G momentum
They also point to the equally aggressive drive into 5G, as Vodacom and MTN have also entered the market, and the attractive price points for uncapped services offered by Rain.
In May, Vodacom switched on its 5G mobile network in three cities – Johannesburg, Pretoria and Cape Town – with further rollouts planned to other parts of the country.
Yesterday, Vodacom announced it is rolling out its 5G network in key municipal districts in KwaZulu-Natal.
In June, MTN also launched its next-generation 5G network, which it says delivers higher peak data speeds, ultra-low latency, increased reliability and greater network capacity.
Launching with 100 sites, MTN’s 5G network covers areas of Johannesburg and Cape Town, as well as Bloemfontein and Port Elizabeth.
The two leading operators used the emergency spectrum issued by the Independent Communications Authority of South Africa (ICASA) during the COVID-19 lockdown to launch their 5G networks.
ICASA has promised to auction the much-needed spectrum by end of March next year and it is only after that process is completed that mobile operators will accelerate 5G networks.
In September last year, mobile data-only network operator Rain activated Africa’s first commercial 5G network.
Home connectivity boost
Describing how the COVID-19 pandemic impacted on the local broadband market, Neilson and Geerdts say business connectivity took a back seat, while residential connectivity was accelerated, impacting both fibre and fixed-mobile (4G and 5G).
They note that home connectivity acceleration included company-sponsored connectivity for employees to enable them to work at home.
“However, this step-change also highlighted again the stark impact of the digital divide, so that while privileged schools were able to switch effectively to an online classroom environment, the majority of learners suffered significant disruptions to their school years,” the analysts say.
On the leading players, Neilson and Geerdts point out that DFA and Openserve are ahead in the business-to-business market; Vumatel and Openserve lead in the business-to-consumer space; while Telkom Mobile is a mover and shaker in the fixed-LTE market.
Rain is price leader in true uncapped LTE and 5G, they note.
BMIT believes fibre deployment could accelerate if local authorities responded more quickly to right-of-way requests, and brought down the pricing in some municipalities.
It notes that open access providers have created a vibrant Internet service provider market in fibre, and this approach needs to extend to mobile broadband.
“The report spends some time unpacking the dynamic interplay between competing access technologies, scrambling to take over from copper but also pulling in new clients. These technologies are constantly re-inventing themselves – fibre is finding markets beyond the most affluent suburbs; new wireless technologies are being rolled out, and satellite is re-positioning itself,” Neilson and Geerdts say.
2021 prospects
Looking into 2021, the analysts expect the country’s second phase of its broadband project to take shape. “In 2021, SA Connect Phase Two will move forward again, with detailed implementation planning,” they say.
In September, the Development Bank of Southern Africa and Department of Communications and Digital Technologies appointed BMIT to conduct a feasibility study for SA Connect phase two.
Communications and digital technologies minister Stella Ndabeni-Abrahams agreed to ensure 80% of the South African population has access to the Internet by 2024.
“The high-demand spectrum auctions will be closely watched to see who gets spectrum and how this impacts mobile data quality improvements, cost reductions and coverage expansion into rural areas,” Neilson and Geerdts say.
“Eight years after TV white spaces technology was successfully piloted in Cape Town, we finally expect to see commercial services launching from April, particularly in rural areas. Low Earth orbit satellite services seem set to disrupt the market, but these are likely to only take off commercially in SA from 2022,” they conclude.
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