South Africa’s Internet and broadband market has finally taken off after years of stagnation due to an expensive operating environment created by Telkom SA’s dominance in the fixed-line and international bandwidth market. Wireless broadband, including 3G mobile data services now rival available ADSL offerings in terms of both speed and price, and have consequently taken the upper hand in terms of subscriber numbers. With its fixed-line network reaching less than 10% of the population, the incumbent has reacted by launching its own 3G network and the country’s first commercial WiMAX service, but various competitors are hard on its heels rolling out the same technologies, including second national operator Neotel.
A new converged licensing regime has created hundreds of companies licensed to offer Internet services. There has been consolidation in the sector which is expected to continue.
The landing of four new international submarine fibre-optic cables in South Africa between 2009 and 2012 has brought down the cost of international bandwidth dramatically. Previously, Telkom had been monopolising access to the only major cable serving the country, SAT-3/WASC/SAFE. Several additional cables with terabit capacity are expected to go online in 2014.
Cost of international fibre bandwidth has collapsed since monopoly ended; More room for price reductions on retail level; Local loop unbundling (LLU) may create new opportunities for fixed broadband; Innovative wireless broadband services amidst spectrum allocation delays; Google tests wireless broadband using White Space spectrum.
Companies covered in this report:
Telkom SA, Neotel, Vodacom, MTN Network Solutions, Cell C, Atlantic Internet Services, Business Connexion, Internet Solutions, Verizon Business, MWEB, Vox Telecom (DataPro), Sentech, iBurst (WBS, Blue Label).