BuddeBlog

South Africa is the economic powerhouse and leading telecommunications market of the African continent. At around 100% market penetration, the country’s mobile operators are forced to find innovative ways of distinguishing themselves from the competition in order to gain and retain customers, save costs and develop new revenue streams. Their entry into the Internet sector with 3G/HSPA mobile broadband services, combined with media and entertainment content is one way of achieving this. Another is the rollout of fibre optic national backbone networks in competition with other infrastructure providers. The arrival of new international submarine fibre optic cables to the region in 2009 will bring down the cost of international bandwidth dramatically.

South Africa boasts the continent’s most advanced telecom market in terms of technology deployed and services provided. Following years of delays with its licensing, the second national operator Neotel has finally launched services in competition to Telkom SA, using wireless technologies such as CDMA and WiMAX to provide alternatives to the incumbent’s copper access network. Billions of dollars are being invested in IP-based next-generation networks capable of delivering converged services more efficiently. In addition, the government has created InfraCo, a national infrastructure company to provide cheap backbone network capacity to service providers, and the mobile operators are rolling out their own national fibre optic backbone networks. Despite this significantly increased competition on the infrastructure level, many municipalities are implementing their own fibre and wireless broadband networks, including all of the major metro areas.

SA’s Internet and broadband market is finally taking off after years of stagnation due to an expensive operating environment created by Telkom’s dominance in the fixed-line and bandwidth market. The arrival of new international submarine fibre optic cables to the country’s shores in 2009 will bring down the cost of international bandwidth dramatically. With mobile market penetration at around 100%, South Africa’s mobile network operators are seeking new revenue streams from entering the broadband sector. Their 3G/HSPA mobile data services now rival available ADSL offerings in terms of both speed and price, and consequently subscriber numbers. With its fixed-line network reaching only 10% of the population, Telkom has reacted by launching its own 3G network and the country’s first commercial WiMAX wireless broadband service, but various competitors are hard on its heels rolling out the same technology.

This, in combination with sweeping liberalisation measures initiated four years earlier, legalising – among other things – the use of VoIP, is beginning to change South Africa’s telecoms landscape fundamentally. Under the new regulatory regime, alternative service providers are pushing into the market with converged services. VoIP revenue was expected to triple in 2008. ISPs are turning into phone companies, and vice versa. Both are moving into delivering media, entertainment and lifestyle content over their networks, while in turn the traditional electronic media carriers are discovering the potential of their infrastructure for telecommunications service delivery.

Other highlights:

• Mobile market reaches 100% penetration in South Africa, mobile data revenue growing at around 45% per annum;
• South African SNO Neotel exceeds 2008 revenue target;
• Third fixed-line licence and fourth mobile licence expected in South Africa in 2009;
• Telkom SA exits Vodacom, launches own 3G network;
• More 3G/HSPA mobile broadband users than ADSL subscribers in South Africa;
• South African mobile operators launch fibre backbone networks;
• South Africa has three commercial WiMAX networks, WiMAX spectrum auction to be held in 2009.

Telkom ADSL wholesale services – 2007 – 2008

(Source: BuddeComm based on company data)

See also: 2008 Africa – Telecoms, Mobile and Broadband Lesotho, South Africa and Swaziland

This entry was posted on Monday, January 12th, 2009 at 11:45 am and is filed under From Paul's Desk. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.