Competition is Essential

Competition, deregulation, and intervention are all crucial to South Africa's road to a true broadband infrastructure.

As in years, SA had some 67,000 ADSL subscribers. This corresponds to about 0.4% of world total, and supports the statement that SA remains, and is far behind the rest of the world for a long time to come.

Broadband penetration in households varies globally, with Korea is the world leader with a penetration rate of 68%, U.S. 28%, and the United Kingdom 16%. SA has a shameful broadband household penetration of 0.3%. The question here is why South Africa is so far behind ... The answer lies not in lack of access to technology, but only in the pricing. Many people think that Telkom's ADSL solution is one step closer to a true broadband solution in this country. But many industry specialists disagree.

"Telkom's ADSL offers are good but they just cost too much and are not viable solutions for many home users," says Dave Gale, business development manager at Storm. "South Africa's broadband costs may be the butt of global jokes, but to local users, especially individuals, schools, small businesses and current ADSL users, the affordability factor just makes the blood boil," says Michelle Branco, product marketing manager at Internet solutions.

South Broadband

According to Elia Tsouros, an executive at UUNET, is the spread of broadband in SA abysmal compared to other countries. A contributing factor is Telkom's pricing structure, and the fact that SA is so big and has such a distributed population. The consequences are large - a slowdown of broadband recording, a barrier to educational limitation for students to access the Internet; poor response times for researchers limited business and marketing opportunities and the list continues.

The lack of a wholesale facilities leasing regime for ADSL in South Africa makes it difficult for ISPs to gain a significant share of the ADSL revenue. ISPs are not eligible for ADSL line rentals at wholesale prices, and thus subscribers have to rent the line directly from the incumbent, Telkom.

This then further negates the possibility for ISPs to bundle value-added offers such as video and voice services with ADSL line. Together with the high costs of leasing circuits, it is international bandwidth. Telkom international bandwidth charges on the SAT-3 cable is very high, and it is common knowledge that although both Telkom and British Telecom to buy their bandwidth from the same supplier, Telkom will mark its costs by 80%, and British Telecom by only 20 %.

Roman Hogh, product development manager at M-Web Business, says that ICASA should have the power to control how much Telkom charges for cable.

Solutions on the Horizon

Currently in SA, the broadband is still considered by most as ADSL, even though there are other wireless solutions available on the market such as Sentech's MyWireless, Wireless Business Solution's (WBS) iBurst, and cellular solutions like 3G, EDGE and GPRS. All players in the industry say that to get this country on the road to true broadband, we need competition. According to Gale, just with a second network operator will not cut it. "When the SNO comes into play, it will be Piggybacking on Telkom's infrastructure for the first few months, so it will not help much in terms of increasing our volume of broadband." According Tsouros, SNO will be able to use up to 15% of Telkom's current infrastructure. The storm does however say that the SNO will compete with Telkom over customers - the result is a price war.

Fusion Reactor director, Grant Jackson, says that the fact that Telkom is the only company that can self-provision is to dampen the road to true broadband. "Should ISPs be able to self-determination, there will be much more competitive," he says.

He says that ISPs must deal with Telkom, whether they like it or not, and at the end of the day, although they are adding some form of value added services to the customer, the bottom solution cost is dependent on Telkom.

What are the alternatives?

Unfortunately we do not have a choice when it comes to wired broadband solutions. But we have a few alternatives when it comes to the wireless space. Sue Richardson, Gartner analyst, comments, "In European countries that already have strong fixed-line broadband solutions, wireless technologies like WiMax complement to fixed solutions. In SA these wireless solutions can be viewed as an alternative."

She continued to say, SA's geographical situation is unique. "Fixed lines are currently not available in many parts of SA, and a solution as WiMax means that people living in these areas will have a sort of Internet connectivity."

Chris Norton, Country Manager for Citrix, believes that wireless broadband makes more sense than a cable connection. "A cable connection is point to point," he says. "In other words, a user has to sit in his or her office to make use of broadband solution. But more and more people adopting a" mobile office route '. Businesses are still somewhat skeptical when it comes to users who work outside the office - especially when it comes to security. However, in the near future, more and more companies to adopt the wireless route. wireless solutions could certainly be an alternative to fixed line solutions in South Africa. "

He continued by saying: "At the moment, if we take a technology as WBS's iBurst, it announced that it has a download speed of 1Mb. That sounds quite a lot. But what people do not know ... it's just a burst of speed (or the maximum transfer speed a user), but they will not have it all the time. "

Norton believes that 3G is the broadband solution in the future. "If you think about it, the infrastructure is already in place, and although 3G coverage is still relatively limited; mobile players are the ones with money, and because of this, 3G will develop the fastest.

Brighter Future Expected

The future can only get better! South Africa has to jack themselves up to international standards - particularly in light of the soccer World Cup in 2010. Jackson says: "The general perception out there is to make our broadband up to international standards and that we need to introduce a much more competitive."

Industry experts still believe that in addition to the introduction of additional telecommunications operators: existing ISPs should be, self-provisioning rights. According to Michelle Branco, SA 'will follow international broadband trends that DSL will continue to account for the majority of all broadband connections in the foreseeable future, but it will have strong candidates in the cellular and wireless area. "

Looking at broadband connections in SA is more obvious that DSL is currently the broadband access device choice, as it accounts for 79% of all broadband connections, while wireless accounts for 9%, and the other wireless connections, as MyWireless and iBurst, accounting for 12%. Download speeds continue to rise and prices will fall by around 50% in the next two years.