Business

Bandwidth prices predicted to fall rapidly

Tiisetso Motsoeneng

Prices of bandwidth are set to fall more rapidly in the future as submarine and terrestrial fibre-optic cable developments gain momentum.

Prices of bandwidth are set to fall more rapidly in the future as submarine and terrestrial fibre-optic cable developments gain momentum, removing one of the key inhibiting factors for the provision of broadband internet, an information and communications technology researcher said on Tuesday.

Brian Neilson, a research director at BMI-TechKnowledge (BMI-T), said several cable projects have been planned since December 2006, with at least 10 undersea fibre cables and a significant number terrestrial cables either planned or under construction in Africa.

Although the demand for capacity is set to grow rapidly in the next few years, the planned cables will create a “significant capacity glut” in some regions, he said.

“The good news arising from this is that international wholesale prices of bandwidth will fall much more rapidly in future,” he said.

According to Neilson, the cost of using ADSL—a technology that enables the transfer of data over copper telephone lines—has dropped from about R1 000 per month to about R400 this year. By 2010, the cost of using ADSL will have plummeted to R200 per month.

He said competition to provide international bandwidth in South Africa will also increase dramatically with Neotel’s recent access to the SAT-3 cable landing stations and the advent of new undersea cables due for launch from June next year.

“However, it is necessary to note that competition in national long distance and local access is also necessary, since the price reduction in international bandwidth will only be part of the overall cost structure,” said Neilson.

By 2011, BMI-T predicts that the dial-up market in Africa will decline to 1,9-million subscribers as the number of DSL connections rises to the region of 5,4-million, while total wireless connections—both cellular and fixed wireless—will rise to 5,2-million.

The total five-year cumulative capital expenditure for broadband infrastructure is expected to reach $1,1-billion by 2011.—I-Net Bridge

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