Publications
Partners
But there are several developments on the cards - both in terms of terrestrial and cellular connectivity - that will improve the situation. Internet service providers hampered in the past can now deploy their own networks without having to rely on Telkom, as they were forced to do previously.
But Telkom still controls much of what's referred to as the "local loop" - or domestic network that connects SA. And while Seacom has had an impact on wholesale prices of international bandwidth to SA it will only be when additional undersea cable projects land that we'll see real competition in the market.
That said, the market is growing and technology research company World Wide Worx recently announced results of its research into Internet usage in the country, indicating SA has passed the 5m user mark and that the number would double by 2015.
More pipes
Anthony Laing, head of service provider networking at XON, says that Telkom continues to throttle the local market. "South Africans have only two of the three components necessary to make inexpensive, accessible, reliable and proper broadband a reality," he says. "We have the undersea cables - the most recent delivery being Seacom - with more on the way over the next two years. We also have fibre connectivity between major cities. What we don't have is reliable and inexpensive broadband from the exchange to our homes and business premises. And we're not going to get that until Telkom unbundles the local loop."
Laing says many service providers have tried to remedy the situation by deploying wireless networks to consumers and businesses. "The problem with wireless is that, while it's accessible, it's not inexpensive or reliable. Even 4G wireless - yet to be deployed in SA and which promises more than 100Mbps - is significantly faster than the current best HSDPA of 7.2Mbps, will suffer from the same problems as the current 3G networks.
"Assuming perfect conditions, customers will still compete for that bandwidth with anyone in their area using the same base station. That lack of reliability makes it almost impossible to start considering services other than best-effort Internet and voice. Not only do fixed line services over copper cabling at the local loop level not suffer these problems but second generation VDSL2 running over existing copper telephone lines promises rates exceeding 100Mbps in both directions simultaneously. But Telkom won't allow access to the copper network. If it did then South Africans would gain access to unprecedented local services."
Solo mio
Nonetheless, some service providers have taken matters into their own hands and deployed their own networks - or at least forged agreements with third-party operators to assemble networks under the ISP's control. Web Africa is one such ISP and has migrated 20 000 users to its new network and away from Telkom as such, says CEO Matthew Tagg.
He says rolling out the network at year-end 2009 fundamentally changed Web Africa's business model, which was previously driven by reselling bandwidth to customers. By deploying its own network - along with new technology imported for the purpose - Web Africa has managed to control the quality of the bandwidth it provides. Tagg says from a user perspective that's a powerful differentiator.
Switching more than 20 000 ADSL subscribers from Telkom to Web Africa's own systems was a hairy move and the biggest migration away from a Telkom system ever, says Tagg. But it went smoothly, thanks to help from Telkom.
As more providers make the switch and adjust their businesses for fixed input costs, the benefits to consumers will come first in quality and later in price as costs are amortised and networks bedded down.
So much more
However, as was pointed out by XON's Laing, providers could do so much more if regulatory and legislative hurdles were removed. One point of contention is spectrum allocation, whereby radio frequencies are awarded to operators to use for their networks. Much of the spectrum available in SA is yet to be assigned and some wish the process could be speeded up.
Jannie van Zyl, CEO of iBurst, says another problem exists in the form of frequencies the regulator, the Independent Communications Authority of South Africa (Icasa) has allocated but aren't being used by the organisations they have been awarded to. "iBurst believes a 'use it or lose it' approach should be followed," Van Zyl says. "iBurst, which is using the least amount of spectrum, has managed to roll out 263 wireless base stations with just 5Mhz of spectrum - and is doing so more efficiently than other operators, like Sentech which is hugely inefficient."
Van Zyl says wireless is important, as it will be the future of broadband in SA, given the high costs associated with fixed-line infrastructure. "Players such as iBurst have mature broadband wireless networks in place and are now starting to deploy newer technologies, such as WiMax. In addition, the cellular operators have rolled out high-speed networks based on 3G evolutions, such as HSDPA, in most parts of the country.
"BMI-T estimates 54% of SA's current broadband subscriber base is comprised of users who depend on high-speed, third-generation (3G) cellular technologies. In addition to those using 3G data cards to access broadband Internet services, millions more are using their cellphones to access the Internet. That's helped to bring broadband access within reach of more people in more parts of the country."
MTN is increasingly focusing on data services and broadband to compensate for the lowered average revenue per user (ARPU) rates in its subscriber base in the South African market, which is more mature than most of the other markets MTN operates in.
Sharoda Rapeti, GM of products and services for MTN South Africa, says since March 2009 MTN has reworked its data proposition to reduce rates on its low-end 150MB data tariff plan. "All MTN customers within coverage and capability may also enjoy speeds of up to 7.2Mbps at no additional charge for the higher speeds, as opposed to our competitors," he says.
New possibilities
The certainty of improved broadband in SA will open new opportunities for business, with many already enjoying the benefits. MTN Business's Angela Gahagan says many companies are obtaining high speed connectivity at a fraction of the cost compared to previously. "That's a result of the initiatives undertaken in the broader telecoms sector bearing fruit. It's therefore fair to say the telecoms industry has and continues to experience a dynamic transformation. The most significant of those are costs and availability of broadband access.
"Not only has the larger telecoms industry realised Internet access is fast becoming a commodity but the focus on bigger pipes and international significance also only fuels the argument that supports Internet access as a 'primary telecoms need' for any sized business operating in SA," adds Gahagan. "The ISP market therefore should be responding to the market's needs by revolutionising operations, understanding customers' needs, intrinsically and essentially offering customers what I like to term 360 degree communications solutions.
"Organisations continue to look for value added services that won't only meet their business needs, save costs and are easy to implement but ones that also provide security and service flexibility and result in minimum downtime and high availability," says Gahagan.
"While it may seem obvious, corporate SA wants affordable, reliable services that will provide it with a competitive edge the only way that will become a reality is when ISPs start to understand the balance between the associated cost savings of bandwidth usage and the realignment of such savings into enabling its customers to take advantage of emerging phenomena - such as Software-as-a-Service, Cloud Computing and Virtualisation, all enabled over virtual private network's and broadband Internet access - to improve domestic business competitiveness on a global scale.
"In fact, a World Wide Worx survey commissioned by ourselves late last year indicated 75% of 200 corporate IT decision-makers and managers would increase usage if data costs came down.
"It's evident then that through additional available broadband the telecoms industry and ISPs alike will need to quickly realise the importance of ever more flexible and innovative services to ensure they become true catalysts for change," says Gahagan.
This year another two cable projects are expected to land and Government will continue to pressure the industry for lower prices, including broadband. Icasa must step in and intervene in terms of local loop unbundling, spectrum allocation and other regulatory processes.
