Cheaper internet for South Africa

South Africans are tipped to access
affordable internet.

Cell C’s Lars Reichelt said they aim to
connect all parts of South Africa.

Vodacom has improved its infrastructure
in Johannesburg. (Images: Bongani Nkosi)

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Broadband pundits are predicting internet connection rates in South Africa to drop by between 20% and 25% in the next 12 months.

Most of the executives who spoke at the My Broadband conference in Midrand, north of Johannesburg, on 20 October forecast that prices will drop significantly in the next year, citing new infrastructure developments and escalating competition in the industry.

Broadband wholesaler and network operator Neotel forecast price cuts of about 20%. Underwater cable operator Seacom’s Suveer Ramdhani said they expect international rates to drop by between 20% and 25%.

South Africans who are connected to networks are now using more broadband, a trend that’s a plus to the growth of the young industry.  “You’ll see costs dropping in the next 12 months. People are using more bandwidth,” said communications company Telkom’s managing executive Steve Lewis.

Since the introduction of the Eassy and Seacom fibre optic cables, rates are said to have come down by about 40%. Eassy came online this year, while Seacom has been operational since 2009.

“It’s great to see that prices have come down,” said Ryan Sher of Eassy. “There’s now more competition,” he added.

“As an industry we’ve been keen to bring down prices,” said Sameer Dave of mobile provider MTN.

There has certainly been an upsurge of mobile internet usage across the country. More and more South Africans now have Facebook accounts. Thousands of youngsters use Mxit and other chat sites. This is a prevailing trend even in rural areas where broadband connectivity is limited, and is aided by a range of data packages offered by all of South Africa’s mobile networks.

“Prices are coming down, it’s a continuous evolution,” said mobile operator Vodacom’s CEO Pieter Uys.

A great number of South Africans are currently without access to broadband connectivity. Of the estimated population of 47-million, between one and four million are said to be connected. This is blamed on inaccessibility to fibre optic networks in many areas, and excessively high rates for both internet service providers and consumers.

“Local tariffs are still high, they have to drop,” said Uys.

Infrastructure being improved

Mobile service provider Cell C has embarked on a campaign to broaden its HSPA+ 900 network across the country. It’s already covered most of Port Elizabeth, where it started in September, and is aiming to have 34% of the country on the network by the end of 2010, with 64% connectivity by 2011.

“We’re really serious about bringing the internet to the 45-million have-nots,” said Cell C’s CEO Lars Reichelt.

The provider’s services have become the fastest in South Africa at 5.23 Mbps, surpassing other internet service providers including Telkom, Mweb, Vodacom, MTN and Internet Solutions. “Cell C is number one in terms of speed,” said Reichelt.

He predicts that South Africa’s broadband capacity will improve within the next 12 months. “The amount of fibre that we have coming up is unbelievable. It is good news and we have to be smart about embracing it.”

The West Africa Cable System fibre optic infrastructure is scheduled to go live by mid-2011. The 14 000km-long submarine network is predicted to be the next most exciting broadband connectivity development for Africa.

Vodacom’s Uys said the group has also improved its infrastructure, having replaced all their equipment in Johannesburg over the last 18 months.

The state-owned Broadband Infraco will launch in the third week of November, opening its fibre optic network for usage by internet service providers, which include the likes of Vodacom, Cell C, iBurst, MTN and a range of others. Infraco is focused on widening connectivity to provinces that are currently underserved.

DOC and Icasa urged

The industry called on the Department of Communications and the Independent Communications Authority of South Africa to play more decisive roles in regulating the telecommunications industry. “We need a strong DoC and a strong Icasa,” said John Holdsworth, CEO of telecoms group ECN.

Icasa “should stand up and take control” over the current 89 cents charged for interconnection between mobile networks, Holdsworth said. “The interconnection rate is too high.”

Internet rates in South Africa remain high compared to that of many countries, despite recent industry developments.

8.ta bringing competition

Introduced on 18 October, Telkom’s new mobile network 8.ta promised to “disrupt” the telecommunications industry. 8.ta became the fourth mobile network operator in South Africa, thereby increasing competition.

Like the three other network operators, MTN, Vodacom and Cell C, 8.ta is also offering data services. Industry analysts have predicted tough times ahead as the new network attempts to penetrate the market, given that Cell C, which became a third mobile network operator in 2001, is yet to reach its maximum customer base.

Virgin Mobile relies completely on Cell C’s network, therefore isn’t considered a mobile network operator but a units reseller.

Telkom is confident of the network’s prospects. “We really believe this will succeed,” said Lewis.

The network already enjoys a nationwide connectivity through its 800 new base stations. Telkom also signed agreements with Vodacom and MTN’s to roam on their infrastructure. “We’re starting to disrupt the market,” Lewis said.

He added that they want to make broadband more affordable.

More competition is good for consumers, the experts agreed. “We embrace competition. It’s good for everybody, for us and the consumers,” said Uys.