Broadband connections shooting the lights out.

Fezekile Mashinini

The South African broadband market is showing no signs of maturing and continues to record phenomenal growth in terms of service take-up, a trend that is poised for even bigger growth going forward.

BMI-T estimates that by 2013 a total of 4.5 million, fixed and wireless, unique broadband subscribers / connections will have been reached, this representing a 27% compound annual growth rate (CAGR) from December 2008 connection figure of 1.3 million, while at the same narrowband connections will witness a decline from the 659,636 connections as at December 2008, to 236,611 in 2013 see figure 1 below.

Under the base scenario wireless subscribers driven mainly by 3G HsxPA connections are expected to dominate the local broadband market, accounting for 67% of total broadband connections. As at December 2008, 3G HsxPA subscribers accounted for 54% of total broadband connections and had overtaken ADSL connections which stood at 39%. The market is also becoming more competetive in terms of service offerings. Consumers have more choice than ever before with, inter alia, Neotel launching its CDMA 2000 and WiMAX offerings, and Telkom having launched its W-CDMA offerings. IBurst (and by extension Vodacom) have also launched WiMAX-based services. Neotel has also introduced metro Ethernet in selected metros around the country.

The rapid pricing reductions across the board that were witnessed in 2007 have not been repeated across all technologies, but indications are that with the imminent commissioning of new under-sea cables from mid-2009, more competition in the international-bandwidth market will lead to further retail price reduction. An ongoing trend in the market is that of offering greater levels of performance at the same tariff point, and this will play out to reveal more products with relaxed data cap restrictions based on the lifting of international bandwidth constraints in future. Already the mobile operators have followed what most ISP’s are doing in terms of rolling over unused bandwidth, a move that has been hugely welcomed in the market.

Another pricing trend is the introduction of differentiated time-of-day based tariffs. A wider range of niche products can be expected in future as service providers seek to differentiate their services.