Broadband internet access, which finally made an impact on South Africa this year with the first 147 000 users settling into high-speed online lives, will almost double in usage in 2006 to 277 000 users.
This is one of the key findings of Broadband in South Africa 2005, a new research report from World Wide Worx.
“It’s the kind of growth rate we saw in the early years of internet take-up in South Africa, but it’s still going to be a big disappointment for some operators,” said Arthur Goldstuck, MD of World Wide Worx, in a statement released on Monday. “Those who are investing in broadband roll-out expect instant take-up by the public, and that simply does not happen in what is still a luxury category.”
However, the growth will be constant, Goldstuck told the Mail & Guardian Online on Tuesday.
“When the prices will come down eventually, and I am talking about the future five years, the outcomes will be more positive,” he said.
The biggest success story of broadband, according to the report, is Telkom’s much-criticised ADSL service. Aggressive marketing and continual movement in pricing and bundling strategy has seen a far more rapid roll-out than Telkom’s critics had forecast. Not surprisingly, Telkom dominates broadband, with ADSL holding 66% of the market — a share that is unlikely to diminish next year.
“We found that there is little incentive for Telkom to respond to critics of ADSL, since the customers are voting so strongly with their wallets,” said Goldstuck in the statement. “Particularly among small, medium and micro enterprises [SMEs], it is a solution that works, at a price that has not scared them off. For consumers it remains expensive, and that it is the source of most of the criticism.”
For now, said Goldstuck, Telkom can continue to rely on continued demand from SMEs, as well as pent-up demand from high-end consumers. Only after it has met this demand will it be forced to address pricing issues, unless the regulator steps in first.
The barriers to consumer entry also mean that broadband will not grow South Africa’s internet user base dramatically in the short to medium term. The report, which forms part of World Wide Worx’s annual study of the internet access market, shows that if broadband growth rates projected for 2006 continue until 2008, the broadband market will still only represent about 14% of the internet user base.
Telkom’s ADSL, Sentech’s MyWireless, WBS’s iBurst, Vodacom 3G and MTN 3G are likely to be joined by another two players in 2006, while the second national operator may well launch wholesale services that open the way for more niche operators.
“The good news is that we are seeing real choice beginning to emerge, not just among the five broadband providers, but also within the product range of each of the operators,” said Goldstuck, who also released South Africa’s first handbook of mobile and wireless communications, The Hitchhiker’s Guide to Going Wireless, this month.
“The premium offerings may be expensive, but for the ordinary user with average internet needs, there is a price point to suit the pockets of most working people who have computers and phones at home.”
The report strikes a sobering note with regard to the digital divide, warning that broadband is not the solution that will bridge the gap between the haves and the have-nots. For that, massive intervention is still required by the government.
“Technology by itself won’t change the lives of the disadvantaged,” Goldstuck told the M&G Online. “There will be a spin-off, it becomes easier to have an internet shop in the township, but this does not directly help the digital divide in terms of access for the people in the township.
“For that, you need a commitment from government, and that commitment must run from top to bottom. In the absence of meaningful policy leadership, access to technology will remain the domain of the privileged.”