Danie Fourie, XDSL

Increased competition, demand, and speed in broadband bode well for SA

Mobile broadband is pegged as the single biggest revenue opportunity in Africa, according to research by Informa Telecoms & Media. In fact, the company predicts revenue will reach $18.5 billion by 2016.

According to Sean Nourse, executive of connectivity services at Internet Solutions, providers should be gearing up for more demand, as a result of more smartphones and tablets. “And demand brings with it opportunity. We believe the biggest opportunity in the mobile broadband space will be in the form of wireless hotspots. Wireless offers mobile users better capacity and speeds. The challenge in this space is coverage. Due to this predicted uptake, Internet Solutions is addressing the coverage issue by committing to multiplying our hotspot coverage tenfold over the next 60 months.” Internet Solutions currently maintains 1 500 WiFi hotspots.

In the last year, Nourse says, fixed broadband has finally reached a point where the price has settled. “It is now approximating a market-related cost – yet there is still more to be done. The local incumbent is still in control of cost, and more leeway can be given.”

He points out that some aggression has been seen from operators in the mobile broadband space. “This has seen data pricing coming down, so while we see advances, not enough has been done. We believe that critically, the incumbent’s monopoly in terms of infrastructure must be challenged, in order to make any real impact on pricing locally. Internet Solutions continues to invest in infrastructure to solve these sorts of problems, focusing specifically on wireless and fixed-line technologies, in order to expand a competitive network infrastructure.”

A research report by Peach Payments shows approximately 7.9 million people access the Internet through their cellphones, just over 6 million through traditional PCs and laptops, and 2.48 million users solely use their cellphones to access the Internet, explains Rob Lith, director of Connection Telecom. “Because of the increased competition, data costs will continue to come down and more users will adopt mobile VOIP to take advantage of further savings,” he says. The biggest change has been the increase in bandwidth capacity and the decreasing costs, Lith continues. “The fundamental reason for this is that it is the enabler for all the other technologies that change business models, and at times, entire industries. Two primary examples are the music and movie business, and the other is the telecommunications industry. Both have been turned on their heads because of bandwidth capacity and its cost. In the telecommunications industry, we have seen first the take-up of voice over IP services, which are now well established, and now that the fibre to the building is starting to change the landscape, we are seeing a very strong take-up of full cloud-hosted PBX services.”

PRICE WARS

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Anthony Laing, XON" />CTO of BWired, Willie Olivier, explains: “It is our understanding that mobile broadband already has a 90% penetration rate, so from a coverage perspective, there won’t be any big movers. What we are likely to see is that mobility will become a price war and we do expect prices to drop signifi cantly in favour of the consumer. Some of the cellular providers with a majority stake in business clients will, however, need to change to cope with the price adjustments. From this, I believe that we will most probably see the concept of airtime falling away as a result of lower call rates.”

He claims new providers and services being launched have been very good for broadband penetration. “We predict numerous international providers coming to SA to compete in this market. What is really exciting is that consumers and businesses now have a choice in deciding which provider to go with. This will go a long way in lowering broadband prices and increasing throughput. We are already seeing the consumer market increasing their online usage by almost 100% from last year, so for companies in the service industry, this is undoubtedly a very positive change.”

Anthony Laing, GM of networking at XON, believes fi xed broadband in SA is still very expensive (at over R1 000 per month for 4mbps uncapped), so there is a lot of opportunity for the operators to invest and make good money. “In other countries, where fi xed broadband is less expensive, the operators have a tougher fight,” he says.

LOCAL SERVICES

Danie Fourie, director of XDSL, says broadband in SA has changed quite a bit over the last year due to the competition that has entered the market with the undersea cables, which led to a decrease in prices. “One can also see the local prices decrease and, as the demand for broadband increases, the prices will drop further. When the demand for broadband increases, the result is an increase in fibre installation, which decreases the price further. Also, another aspect driving the prices down is neutrality. Two years ago, the ratio for companies who supply fi bre, data centres, etc, was 70% international and 30% local. Two years later, 70% is local and only 30% international. This is due to the fact that many services have moved to SA.”

Over the last year, Laing explains there has been considerable change in the mobile space locally.

“There is a new player in the form of 8ta, there are new services, improved quality and speed, reduced pricing and creative promotions, including subsidised laptops, tablets and more,” he says. “Fixed-line continues to be dominated by Telkom, with only a few players offering premium services over privately installed fibre networks, and they’re only reaching a handful of corporate parks and some lucky residential complexes.”

Siphiwe Nelwamondo, technical marketing manager at Aviat Networks, believes South Africans should be excited about the higher data speeds that mobile broadband will bring to augment the low data speeds that can be achieved on fi xed lines in SA today.

STATE OF LTE

According to Nelwamondo, all the benefits that long-term evolution (LTE) will bring to broadband can be enjoyed by South Africans, if the sought-after 2.6GHz and 800MHz spectrum can be made available. Nelwamondo further believes that LTE has a critical role to play in bridging the digital divide. He says LTE can solve national communications requirements by connecting education, healthcare and public safety organisations to the general populace. “A good example is the United States, where the Federal Communications Commission (FCC) has mandated that emergency communications be carried via LTE technology. The FCC chose LTE based on its proven ability to support voice, video and data communications at remarkably high data rates and low latencies, critical for supporting real-time applications.”

In a country where literacy levels are lagging behind other emerging countries like Brazil, Russia, India and China, video can play an important role in education, he states.

He also believes for LTE backhaul requirements, microwave radios – which are usually underrated when it comes to LTE backhaul – have sufficient capacity to backhaul LTE. “Backhaul traffic per 20MHz Tri-Cell eNodeB only requires around 150mbps, which is much lower than today’s microwave radio capacity limit, which stand at 2Gbps-plus throughput. Microwave radios also have the benefits of being more cost-effective and quicker to deploy compared to fibre, hence microwave offers a good option for LTE backhaul,” he explains.

As a technology, Norse believes LTE is certainly all it’s cracked up to be. “The setback comes with the deployment, which presents numerous challenges that will need to be addressed before the benefits of LTE become tangible. LTE deployment will, initially, ride on the back of 3G coverage. While similar, LTE requires more sophisticated and additional infrastructure than 3G, so providers can utilise existing towers, but will need to attach LTE-specific equipment to those towers. Additionally, 3G coverage is minimal in the country – only major metropolitan areas are covered, so geographically, we cannot expect broader coverage with LTE.”

Providers will also need to ‘steal’ spectrum from other mobile services in order to provision LTE, until such time as ICASA allocates enough spectrum to cover both technologies, he explains.

According to Laing, LTE makes a lot of sense, because it provides higher speeds at lower cost. It also makes use of all IP technology, which has expertise that is much more widely available than complex GSM in traditional 3G environments, he says.

“The big problem with LTE, however, is that the end-user hasn’t seen a benefit on price. All that happens is that consumers’ monthly allocation of bandwidth is consumed much quicker, and that actually scares most savvy consumers away. What is needed is a true broadband replacement solution based on LTE, which is going to mean creative pricing models from the operators. Unfortunately, operators have to upgrade their infrastructure, ideally with fibre to the base stations, buy or re-farm expensive frequency, just to be forced to give it all away for much less money. The technology is amazing, but the business case needs some creative attention,” he concludes.