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Wednesday, 11 March 2009

Broadband in South Africa

Compared to most other countries, South Africa's broadband speed is embarrassingly slow. What's even worse, is that the uptake is slow too.

There's about 4 million internet users in SA and roughly 1 million of them have broadband using ADSL. The slow uptake is largely due to a highly restrictive regulatory environment where the Communications Minister, Ivy Matsepe-Casaburri, spent the last few years protecting Telkom (only telecommunications company in South Africa until Neotel was introduced last year). She does not have a very good name in the SA telecoms environment, hence her nickname "Poison Ivy"! She has however indicated that she will be stepping down in 2009 so that quite frankly is a relief to everyone in the industry. She has stifled growth throughout her tenure as minister.

I'm writing this blog on a 384Kbps "broadband" ADSL connection (yup, 0,384Mbps!). I put that in quotes because 384Kbps does not really qualify as true broadband to begin with. The fastest ADSL connection you can get in SA is 4Mbps but it is quite expensive, when compared to other countries. In SA we have to pay a dubious "connection fee" or line rental every month for ADSL, then on top of that the subscription for bandwidth to your Internet Service Provider (ISP), where the cost per Gb is high. With slow speeds such as these, viewing video clips on sites like YouTube, or live streaming video is possible but the experience is woeful at best. A lot of buffering occurrs where you have to wait for the video to load and since we pay per Gb of usage, most people tend to avoid viewing video online to reduce cost.

The cost of international bandwidth is astronomical in SA. This is mainly because we only have one undersea cable that connects us to the world, the SAT3/SAFE cable which is owned by, you guessed it, Telkom. There is however a light at the end of the tunnel, the SEACOM undersea cable which is currently being built and is expected to land in SA in June this year. The 2010 FIFA Soccer World Cup will be held in South Africa and I'm sure this huge event had a lot to do with the rapid deployment of this new cable.

The bandwidth capacity of the SEACOM cable is much larger than the SAT3 cable and the owners have already released their pricing structure which results in roughly an 80% drop in the wholesale price of international bandwidth. This of course is fantastic news and it's therefore expected that the prices consumers are currently paying, will drop significantly. The big question is... WHEN?

According to the Internet Access in South Africa 2008 study, released by World Wide Worx, the following statistics were revealed:
  • 16% jump in internet providers in the last year.
  • ADSL dominance is at an end. Wireless broadband subscriptions outnumber ADSL 750,000 to 558,000 in 2008.
  • Broadband subscriptions leapt from 818,000 in 2007, to 1,308,000 in 2008; a 60% growth rate.
  • Over next five years the projected boost in internet access will see the amount of users grow from 4.5m in 2008 to 8.4m in 2013.
  • Dial-up is on the decline: from its highest subscription level of 1.08m in 2004, it has now dropped to 700,000 in 2008.
Although these numbers are positive, the reality is that only 10% of South Africans have internet access. It's simply too expensive for the majority of the population. There are several countries in Africa with much weaker economies who beat us into oblivion as far as broadband penetration goes. Between December 2000 and 2008, South Africa added only about 2.7 million new subscribers to its internet user base, compared to the 10 million added by Nigeria, eight million by Egypt, seven million by Morocco and three million by Kenya.

Let's hope drastically reduced broadband prices are a reality before the end of the year.

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