The South African Broadband Market is at a Watershed, Says Frost & Sullivan

(Business News & Technology News, 14 Oct 2009)

The South African broadband market has shown consistently significant growth rates of over 30 percent in the last two years. Frost & Sullivan expects this positive trend to continue for the next two years as well.

Despite the expense of network infrastructure roll-out, the country's top operators are still engaged in the crucial activity of increasing broadband penetration in South Africa. There are immense opportunities for Internet service providers (ISPs) and vendors because all electronic communications network services (ECNS) license holders are currently permitted to self-provision.

New analysis from Frost & Sullivan, South African Broadband Market, finds that the market earned revenues of over $291.6 million in 2008 and estimates this to reach $1.62 billion in 2015. The vertical sectors covered in this study are: retail, financial services, tourism, government and healthcare. The technologies covered are: asymmetric digital subscriber line (ADSL), worldwide interoperability for microwave access (WiMAX), mobile, wireless fidelity (WiFi), satellite and iBurst.

"The introduction of undersea cables and the anticipation that prices will be lowered due to new competition has resulted in greater optimism about broadband services with higher rates of uptake," says Frost & Sullivan Senior Industry Analyst Lindsey Mc Donald. "Operators have decided to provide better value to their clients and this trend is likely to intensify over the next three years."

However, the market's ability to capitalize on the potential connectivity of undersea cables depends on the level of national infrastructure. Unfortunately, the required quality of infrastructure is still lacking in South Africa. Operators such as MTN, Neotel and Telkom are working towards addressing this challenge.
"A lack of sufficient infrastructure is the main threat to the growth of broadband in the country," explains Mc Donald. "Most people utilise mobile technology which is still very expensive and out of the reach of many people in the country."

ISPs should understand the nature of their customer base. Engaging in customer segmentation processes will help them understand who their clients actually are and also reveal the best way, in which to offer services to these clients.