/ 7 February 2003

Most small companies in SA still using dial-ups

Preliminary results from a survey of the small, micro and medium enterprise (SMME) sector in Cape Town, Durban and Gauteng show 83,3% of small companies connect to the Internet via modem and ISDN.

An overwhelming 61,9% chose the most basic modem connection that comes as part of the bundled starter pack offered by the Internet Service Providers.

The next most popular connection is an ISDN (Integrated Services Digital Network) line with a 20,4% penetration. Leased lines are the third most popular at 11,5%, then satellite with 1,4%, mobile at 1,2%, DSL lines at 1.0% and other forms at 2,6%.

The study — the South African Internet Economic Study (SAIES) — started surveying in June 2002 and more than 6 000 companies have been contacted. Of these, some 2 200 agreed to participate in the survey and the preliminary results are based on 390 returned questionnaires.

The study intends surveying other metropolitan areas such as Port Elizabeth, East London and Bloemfontein, as well as rural areas, to establish to what extent SMME’s use the Internet and how the Internet has enabled small businesses to compete effectively in the global environment. “The preliminary results show that there is a desperate need for training, so that small businesses can make the best use of the Internet. A large 62% of small businesses have their own website, yet 61,9% have remained with a dial-up modem. The migration to an ISDN line has largely been prompted by the slow download speed of the modem. Another interesting observation is that the much touted mobile connection only has a 1,2% penetration amongst small businesses.

This may be due to resistance to change,” project manager Angela Preuss said.

“It is interesting to note that the modem is still the most popular form of Internet connectivity despite the education drive around ISDN and to a lesser extent DSL. The cost of a modem connection (including telephone cost) is around the same cost of ISDN and DSL. There is clearly a lack of education around newer, faster connectivity technology (i.e. ISDN, DSL, leased line etc). At around the same cost of a modem connection, ISDN, DSL or leased lines have a far better connection. It is also surprising to note that small companies are happy with their connection despite having the bottom of the range connectivity,” Vinny Perumal, Marketing: Research and Development Manager at UUNet said.

The study aims to survey at least 1 800 urban SMME’s and 200 rural SMME’s to determine how the Internet has enabled them to compete effectively. It will also produce case studies and business plans so that other SMME’s can learn how to avoid the pitfalls and build on the success of other SMME’s.

The study has the active involvement of the Department of Trade & Industry (DTI), whose slogan is “opportunities unlimited”, and Statistics South Africa, which provides decision makers with the data, information and analysis required for implementing and monitoring the country’s growth and development strategy. – I-Net Bridge