- Published: April 2008
- Region: Africa
Internet Access in South Africa 2010
- Published: May 2010
- Region: South Africa
- World Wide Worx
The most comprehensive annual study of the Internet access market in South Africa, now extending into African connectivity in order to provide a context for South Africa’s rapidly expanding international links. The report is based on 15 years of studying this crucial market. The 2010 edition extends the previous edition’s analysis of the impact of new undersea cables into an overview of terrestrial fibre optic networks presently being rolled out across South Africa, and explains the phenomenon of the Experience Curve, which makes it possible to forecast usage patterns going forward 10 years.
Overview Of 2009
The year 2009 saw, only for the second time since 2002, the Internet user base grow at a double-digit rate.
Two major factors are still pushing substantial commercial investment in Internet infrastructure, namely:
- Broadband services coming of age.
- The number of Internet users with more than five years’ experience driving new demands on Internet infrastructure.
With regard to the uptake of broadband, this report delves deeper into the phenomenon known as the Experience Curve. This is a model that shows that advanced Internet applications, from online retail to social media, are only embraced after a user has been online for, on average, five years. The model has significant implications for cellphone and television access to the Internet.
The Experience Curve indicates the next boom in Internet application usage, following a mini-boom in 2006-2008, will occur from 2012/13 onward. This process is explored in detail in the course of the report.
SA Internet growth accelerates
The number of South African Internet users has passed the 5-million mark for the first time at the end of 2009, finally breaking through the 10% mark in Internet penetration for the country. This is the key finding of the Internet Access in South Africa 2010 study, conducted by World Wide Worx and jointly sponsored by Cisco. The data shows that the Internet user base grew by 15% in 2009, from 4,6-million to 5,3-million, and is expected to grow at a similar rate in 2010.
“The good news is that we will continue to see strong growth in 2010, and we should reach the 6-million mark by the end of the year,” says Arthur Goldstuck, MD of World Wide Worx
“A sustained growth in Internet penetration is a key factor that will positively influence the economy of South Africa”, says Reshaad Sha, Senior Manager for Cisco Internet Business Solutions Group. “The varied range of application services and social networking platforms used by local consumers has fuelled the uptake that we see today.”
Growth in the number of Internet users in South Africa was relatively stagnant from 2002 to 2007, when it never rose above 7%. However, this rate almost doubled in 2008, and continued accelerating in 2009.
World Wide Worx found that the landing of a new undersea cable on the South African coast was only one of a range of factors behind the growth. Of greater significance was the granting of Electronic Communications Network Service licenses to more than 400 organisations. This meant that service providers that were previously required to buy their network access from one of the major providers, could now build their own networks or choose where they wanted to buy their access.
The result was that a market previously characterised by a limited range of providers and services suddenly exploded as small providers were able to repackage the services provided by the large telecommunications corporations in any way they wished. The large providers, in turn, began to offer far more competitive packages to both customers and resellers.
World Wide Worx found that a second key factor in growth over the past two years has been the continued uptake of broadband connectivity by small and medium enterprises migrating from dial-up connectivity. Each company moving from dial-up to ADSL, for example, extended Internet access to general office staff. This process was found to add an additional one to 20 new users to the Internet user base for every small business installing ADSL.
While the headline findings examine the general numbers of users, the final Internet Access in SA 2010 report highlights the extent of new fibre-optic networks laid down across South African cities and between the cities. It also examines the impact of the range of new undersea cables that will be in place by the end of 2011, and which is expected to enhance competitiveness even further.
“In the coming year, operators will begin to leverage the combination of new undersea cable capacity and new fibre-optic networks to supply corporate clients and resellers with bigger, faster and more flexible capacity,” says Goldstuck. “Almost every large player in the communications industry has realigned its business to take advantage of this relentless change.”
“South African consumers and businesses are demanding access to online applications and services that can only be experienced via high speed connectivity, such as fibre-optic networks. The year ahead will see the proliferation of high speed connectivity materialising more widely than ever before”, concludes Sha.
A ten-year outlook
On 20 April 2010, the Minister of Communications Siphiwe Nyanda made a bold statement to Parliament. In his Departmental budget speech, he declared that South Africans will enjoy universal access to broadband by 2019:
"We have finalised the broadband policy whose vision is to ensure that South Africans have universal access and services to broadband by 2019. The benefits accruing from the policy will include the provision of multimedia and e-government throughout the country.
“The implementation of the broadband policy will impact on the growth of the economy through expanding markets, increasing business efficiency and promoting competition. South Africans will be able to see a single face of government and be able to connect with all levels of government and different departments using a single platform. ICT offers a possibility of e-government where government offers a seamless and integrated platform for interaction.”
However, he did not make clear how this vision would be achieved, beyond ensuring that all issues and regulations still before the regulator, Icasa, would be resolved in the coming year. As this report shows, a goal of universal access by 2019 is both highly admirable and deeply ambitious. It is anticipated that South Africa will enjoy around 20% penetration by 2014. Should the current rate of growth of around 15% a year continue for the next decade, it is possible penetration could approach the 50% mark. In summary, bold, ambitious strategies, backed by vigorous Government support across all Departments and by Cabinet, with clear deliverables and transparent processes, will be required to achieve anything close to universal access. SHOW LESS READ MORE >
1. EXECUTIVE SUMMARY
Overview Of 2009
SA Internet growth accelerates
3. CHANGING LANDSCAPE
The ISPs and ASPs
How South Africa’s ISPs Connect
The SEACOM connection
4. THE IMPACT OF NEW UNDERSEA CABLES
The new cables connecting Africa
TEAMs (The East African Marine System)
WACS (West African Cable System)
WACS and pricing impact
ACE (Africa Coast to Europe)
LION optical fiber submarine cable system
Infinity (Project West Africa)
FLAG NGN System-2
Maroc Telecom West Africa Cable
North African Cable Systems
The Big Picture
5. THE FIBER OPTIC CONNECTION
What is Fiber optic cable?
The Rise of Metro Fiber in South Africa
The municipal broadband future
6. BROADBAND IN SOUTH AFRICA
The Broadband Operators
The Broadband Technologies
7. THE BROADBAND PROVIDERS
a) Telkom ADSL
The Impact of ADSL on SMEs
ADSL Penetration by Sector
Penetration of ADSL by Company Size
Internet Access numbers at SMEs
Small business solutions
Medium Business solutions
Large business solutions 85
c) Vodacom 3G
Vodacom’s Data success story
d) MTN 3G
iBurst and ADSL-2
The Broadband totals
Broadband Users vs Broadband Subscriptions
Understanding the segmentation of broadband users
Pricing of Broadband data usage
8. THE DIAL-UP MARKET
Dial-up Growth Trends
Dial-up as primary form of access
Dial-up Growth and Decline
9. THE CORPORATE MARKET
Telkom’s Role in Leased Lines
Total Leased Line Connectivity Supplied By ISPs
10. ACADEMIC ACCESS
Schools and University Access
SchoolNet South Africa
2,010 for 2010
TENET’s move from Telkom to SEACOM
The limitations of GEN2 (Telkom) and GEN3
TENET and the SEACOM cable
The cost breakdown
Academic User Numbers
Academic Users and Percentage Growth
11. TOTAL NUMBERS
Overall Market Size
Current Market Size
Projected Market Size
User Growth and The Experience Curve
APPENDIX A: HISTORY OF THE ISP IN SA
When It Began
How Did It Work?
How South Africa Came On Board
What They Don’t Teach in Computer Science
Open For Business
Meanwhile, Back at the Web
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