SA’s future broadband scenario

About a week ago I went up to Mtunzini to visit the cable station that recently finished construction. Seacom is an underwater fibre-optic cable being installed along the coast of East Africa — a tremendous boost for all the countries affected. When it comes to internet bandwidth, Africa has always been left behind, thanks to monopolies and poor legislation with devastating effects on its economies and quality of life. I might sound dramatic, but if one takes into account that the digital divide is currently increasing at an exponential rate, it is not far-fetched to once again call us the “dark continent”.

South Africans are not much better off either. Our primary source of international bandwidth is supplied by the very limited SAT3 connection, currently about 130 gigabits per second (Gbs) which is also divided up by major operators such as Telkom. This leads to very low bandwidth actually reaching end users — in fact, ADSL has been available in SA for seven years yet the standard “package” is still a 3 gigabyte (GB) capped connection with a slow 384 kilobits per second (kbps) line. This is not, however, what the rest of the world calls “broadband”.

True broadband is at least 4 megabits per second (Mbps) and is theoretically uncapped. True broadband is the ability to use the internet without taking the amount of consumption into account. US citizens use internet TV services like hulu instead of having to subscribe to hundreds of channels. Once we have this attitude we can call what we have in SA “broadband”. Seacom might not be that enabler, but it sure does get us one step closer.

Seacom will boost our bandwidth from 130Gbps up to 1.28 terabits per second (Tbps). This increase in bandwidth will theoretically make it much cheaper for service providers to buy wholesale bandwidth. These cost savings can then be passed on to the consumer and make it much cheaper to transfer large amounts of data. Due to past monopolies, SA ISPs had to use Telkom’s infrastructure and network, which led to very low margins and high costs for end users. Due to legislation passed last year, any ISP with the necessary capital can now build their own network infrastructure.

Now it is important to remember that “cheaper” internet in SA does not mean that the base cost of having “fast” internet will suddenly drop to R100. No, there are still businesses that are built up around a revenue model that relies on customers spending more than R300. If the price is suddenly R50, those businesses will fold, regardless of how cheap bandwidth might be.

Instead, what we might see in SA over the next year (Seacom goes live in about a month) is a dramatic increase in the amount of “capped” data we can get for the same amount of money. Instead of spending a total of R400 for an ADSL line rental and 3GB data, the same user might now get 5GB or (hopefully) 10GB. A big problem currently is that networks in SA are currently unable to use all the extra bandwidth properly. Telkom cannot easily jump above the 4Mbs it currently offers due poor quality cables and infrastructure. But Neotel and a few cellular operators have started investing in land-based fibre cable, right to the curb in some areas. This means that these players might be the first to actually be able to use the wave of extra bandwidth. MTN and Vodacom have also started to enable 7.2 Mbps HSDPA on its network, which theoretically means that if you wanted the fastest broadband line in SA, you have to go 3G.

So what does Seacom mean for SA end users in the near future? In my opinion, a few things will happen. First (the next 6 months) I believe networks will try to get maximum profits because bandwidth is suddenly cheap. This will lead to increasing pressure from end users, and then we can wait for an ISP to offer a “disruptive product” which will cause all subsequent offers from ISPs to drop tremendously in price. (Telkom and a few other ISPs have dropped the price on local ADSL bandwidth.) The fact of the matter is that ISPs in SA have always been used to low-profit margins and can easily adapt their businesses to once again operate on those margins once bandwidth is cheap. It will only take time.

This is an exciting time for communications in SA — we are in a perfect storm of situations which can contribute to a sudden reconnection to the world.