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Southern Africa has a marginally low broadband penetration rate and the broadband market is, therefore, highly underserviced. But major network operators, Internet Service Providers (ISPs) and Internet Access providers (IAPs) are entering into strategic collaborations in order to undertake and invest in terrestrial network expansion and connect to the undersea cable network.

New analysis from Frost & Sullivan, Southern African Broadband Market, finds that the market earned revenues of $3,78-billion in 2010 and estimates this to reach $19,08-billion in 2017. The research covers South Africa, Zambia, Lesotho and Zimbabwe.

Traditional technologies for broadband connection, like dial-up and VSAT, are now experiencing a gradual decline in subscriptions in the wake of reliable mobile broadband technologies like W-CDMA, WiMax, HSDPA and HSPA+. The main target for ISPs and operators are enterprises and SMEs, due to the constant need for connectivity.

“Extensive terrestrial network expansion, decline in prices of broadband products and mobile broadband are expected to be the main drivers in the southern Africa market,” notes Frost & Sullivan’s ICT research analyst Chipo Ngongoni. “With improved connectivity, revenue and growth in the market is expected to be spurred by mobile broadband, and data-based, value-added services for the next three to five years.”

Infrastructure investment expands coverage and network capacities to underserviced areas; thus increasing broadband subscribers and revenue. Connection to undersea cables has caused an overall decline of wholesale bandwidth prices which, in turn, has triggered a reduction in the prices of available data packages. Furthermore, network operators have launched mobile broadband services and low cost devices that enable cheap connectivity.

The growth of the broadband market is, however, likely to be inhibited by regulatory inefficiencies. Low disposable incomes will, moreover, restrain the demand for data services which will be further aggravated by limited access to infrastructure.

“Regulators in southern Africa are responsible for services, technologies and spectrum applicable to broadband communications in their countries,” explains Ngongoni. “However, the turnover from framework inception to implementation is quite low, and this affects the rate at which technology is dispensed to the public; thus restricting growth in the broadband market.”

Furthermore, the region has a high level of unemployment limiting the expenditure on broadband products. Limited infrastructural access limits the number of consumers able to use data services.

Regulator facilitation of spectrum allocation and technology policies, in a timely fashion, will accelerate the deployment of technologies. Market segmentation is important for operators to provide a range of products that meet all market demands.

“Collaborated infrastructure expansion and sharing will enhance broadband penetration as service providers expand network coverage and cut costs,” concludes Ngongoni. “Broadband operators in the Southern Africa market should embrace infrastructure sharing and market segmentation in order to intensify competition and rapidly grow market share.”