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Telecoms users set to win

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Judging by all the recent changes in the telecommunications sector, the South African market is in for some interesting developments as lines of business are blurred and new revenue streams are created.

This is the view of Andy Brauer, chief technology officer at Business Connexion, who says the move by Tata Communications to increase its shareholding in Neotel is perceived to be very positive.
"This will allow for an escalation in decision-making within the board, which should lead to aggressive momentum in the rolling out of infrastructure."
From a consumer perspective, Neotel's entry into the market has been seen as being relatively cautious, almost as they have been testing the water. "I believe with the change in shareholding, their moves will become a lot bolder and that we can look forward to increased penetration."
Brauer believes the models Neotel is introducing to the market from an enterprise solutions perspective, clearly shows that they have an understanding of the convergence market as they are providing a blend of IT and telecommunications services.
"This becomes a critical success factor for them, as Telkom is still following a silo approach and will have to actively review their business models and infrastructure."
He believes that Telkom currently operates under a false sense of security. "They have Neotel on one side and Vodacom on the other, which means they are in for some serious competition."
Telkom is currently running multiple networks compared to Neotel's one network and the basic math points to where the benefits lie. "The cost of running one network is considerably lower, which means that the benefit will eventually filter down to the customer level."
He believes that a further thorn in Telkom's side is the fact that there are now four providers, including Telkom, that can self-provide infrastructure – and the race is clearly on to get fiber into the ground.
Consolidation in the ICT sector will continue as traditional IT companies move into telecoms and vice versa. The introduction of media companies into the mix changes the dynamic even further. Brauer believes that Internet service providers will be impacted most.
"Network providers are moving into a new era of providing blended services, which means that the need for separate service providers is diminishing," he says. "We are already seeing some of these service providers being integrated into telcos, and I believe this is a trend that will continue."
The biggest winners at the end of the day will be the end customer – both from a consumer and enterprise perspective, says Brauer. With the telecoms players
investing in fiber, bandwidth in the country should increase dramatically, giving customers the ability to consume content such as high definition television.
"In addition to the benefit of higher bandwidth and the availability of blended services, we will eventually see a decrease in costs."