SA Internet access set to grow

5 January 2004

The rollout of Internet access services by South Africa’s second telecommunications operator is one of three factors which will kick-start growth in Internet access in the country in 2004, according to a study of South Africa’s Internet industry by independent technology research organisation World Wide Worx.

The licensing of the second national operator (SNO) by the government means that the monopoly currently enjoyed by Telkom will soon come to an end.

According to The Goldstuck Report: Internet Access in South Africa 2004, the rollout of high-speed or broadband wireless access by Sentech, and the healthy rand-dollar exchange rate, will also significantly contribute to increased access in the country.

Sentech has been granted a wide-ranging licence to provide access services, while the stronger rand will reduce the costs of equipment to build infrastructure.

“From having no choice at all, the South African market will suddenly be faced with two new players who are both eager to supply Internet access needs”, says World Wide Worx MD Arthur Goldstuck, who led the research in collaboration with IT outsourcing organisation Netsurit and internet service value-added applications provider Systemsfusion.

The last three years has seen a dramatic slowdown in Internet access growth in South Africa. According to the report, 3.1-million South Africans had access to the Internet at the end of 2002.

Growth in Internet access in 2002 was around 7%, the slowest since the Internet became available to the South African public in 1993, and the first time it had been below 20%.

In 2003 growth was set to be only 6%, with 3.28 million South Africans expected to have access to the Internet by the end of 2003. This is a mere 1 in every 13 South Africans, marginally up from 1 in 15 at the end of 2001. (South Africa’s total population, according to Census 2001, stands at 44.8-million.)

For the first time, the annual survey included a survey of small, medium and micro enterprise (SMME) usage of the Internet, which saw research partner Netsurit surveying more than 2200 SMMEs with Internet access.

Almost half of SMMEs reported e-mail as their primary use of the Internet, while a third cited banking as their primary online activity.

The survey also found that small businesses with Internet connections were increasingly pursuing high-speed connectivity, with only one out of five using traditional dial-up modem access.

On the technology front, the report concludes that 2004 will see the biggest explosion yet of technology options available to Internet users in South Africa.

“From broadband wireless supplied by Sentech to ADSL and ISDN from Telkom, to a range of creatively packaged technology options from a variety of ISPs, it’s like 1994 all over again”, says Goldstuck.

“Once again, the challenge will be an educational one for the existing market, and affordability for those who are still not connected.”

Nevo Hadas, VP of marketing for survey support partners Systemsfusion, warns that this poses a huge challenge to ISPs. “They have to make their offerings not only simple to use, but also simple to understand”, he says.

“The Internet user wants a fast, reliable connection, rather than a technically brilliant way for it reach the computer. The industry has to be technically brilliant in such a way that the user doesn’t even know about it.”

Other significant findings of the report were:

  • The size of the dial-up market passed the one-million mark for the first time in 2002, largely due to the marketing campaigns of Telkom and Absa’s Internet services, while the subscriber base of traditional ISPs fell for the first time. 
  • ISPs tended to be more focused on serving existing customers than on chasing growth in users, and this in turn resulted in the most profitable year yet for the access industry, despite the slowdown in user growth. 
  • The leased line market for corporate access remained healthy, largely thanks to companies focusing on the reliability of their networks and putting more backup systems in place. As a result, the number of lines grew faster than expected, but growth in users with access to such lines was slower than expected. 
  • Schools connectivity will receive a boost in 2004 as a range of long-awaited projects are finally implemented SouthAfrica.info reporter