While the expansion of mobile broadband and fibre-optic networks are driving growth of ICT services in South Africa, additional infrastructure investment will be needed to keep pace with rapidly-rising market demand.
South Africa has a set of ambitious targets laid out in its national broadband policy, South Africa Connect, which includes achieving 50% internet coverage with speeds of 5Mbps by 2016; roughly 90% coverage at the same speeds by 2020; 50% coverage with speeds of 100 Mbps by 2020; and universal 100Mbps coverage by 2030.
As a result, the country has emphasised improvements in both last-mile and backbone infrastructure. The country’s average speed was 4,1Mbps in the fourth quarter of 2015, according to the “Q4 2015 State of the Internet” report issued by Akamai Technologies, a US content delivery network and cloud services provider. This fell short of the global average of 5,6Mbps.
Significantly, however, the report noted that South Africa’s average broadband speed increased by 26% year-on-year in 2015 and was up 11% during the fourth quarter, surpassing the 4Mbps mark for the first time.
The South Africa Connect policy also targets enhanced connectivity at schools, medical facilities and public institutions, emphasising public-private partnerships such as the Broadband for All initiative to achieve these targets.
Central to achieving the South Africa Connect goals is the opening up of a wider swathe of frequencies for wireless broadband, according to Jannie van Zyl, executive head of innovation at Vodacom.
“If we are able to access more spectrum for mobile broadband services, this will have an extremely important benefit for all South Africans, as recent studies by the World Bank have shown that a 10% increase in a country’s broadband penetration results in a 0,6% increase in GDP,” he told industry media in March.
Currently, delays in spectrum allocation have hampered ICT development. Digital migration – which entails a shift from analogue to digital TV broadcasting in order to free up spectrum for increased telecoms usage – was originally scheduled in 2011, but has been delayed several times.
Telecoms operators are keen to gain access to these bands – particularly the 700MHz spectrum that has been deemed suitable for 4G LTE services – which should become available once South Africa completes the long-awaited transition.
Licensing of other high-demand spectrum, such as the 1.9-GHz, 2.3-GHZ and 2.6-GHz bands, which are well suited for deploying next-generation mobile broadband in urban areas, is pending publication of the integrated national ICT policy white paper. As of March, the policy was still under discussion at the cabinet committee level, according to the Ministry of Telecommunications and Postal Services.
In the interim, some operators are repurposing previous spectrum allocations to accommodate newer mobile technologies. In doing so, however, operators will need to be careful to avoid compromising services for existing users, Mteto Nyati, CEO of MTN South Africa, told industry media in March.
A rise in local demand – in particular for cloud and bandwidth-intensive services – has increased the urgency of expanding fibre-optic networks.
With household consumers keen to access services like video streaming, the development of fibre infrastructure will likely gain pace in the coming years, according to Suveer Ramdhani, chief development officer at Seacon. Greater scale should help to further bring down investment costs and reduce perceived risk for operators, he added.
Currently, South Africa has an estimated 180 000 km of fibre cable, the bulk of which is owned by majority-state-owned incumbent operator Telkom.
However, private operators have increasingly moved to invest in new backbone infrastructure, which is helping to expand fibre beyond its traditional centres in wealthier suburbs and high-density commercial areas.
“Roughly 5% of businesses are connected by fibre networks. There is massive opportunity here; however, it is capital intensive,” Willem Marais, the CEO of Liquid Telecom South Africa, a data, voice and IP provider, told OBG late last year.
For example, in 2015 South Africa’s Vox Telecom announced plans to build its own national fibre-optic network, which will connect business subscribers to its core infrastructure. The plans are part of a five-year strategy that will also see fibre circuits deployed to secondary cities after connecting Johannesburg, Durban and Cape Town.
Additionally, in April, Metrofibre Networx announced it would replace all the leased fibre links in its 250-km core network in Gauteng over the next two years with its own fibre infrastructure.
* This South Africa economic update was produced by Oxford Business Group.