It is very possible that fixed broadband services in emerging markets are more expensive than in mature markets and are going to stifle growth – or certainly make it more difficult. So says Marek Dziembowski, a director of Antfarm, one of South Africa’s leading video streaming providers.
“Broadband is certainly picking up rapidly in emerging markets like South Africa – and new technology like the Seacom undersea cable are helping to bring this technology to the fore. But costs are still on the high side.”
According to research house Ovum – which studied broadband prices across 19 emerging markets, including South Africa, Nigeria and Colombia – growth in fixed broadband is being seriously held back by high prices. The study also found that South Africa was the most expensive.
In South Africa, which was the most expensive of the markets studied by Ovum, prices range from $1 443 per year for entry level DSL services to $6 000 per year for the high end options. In Nigeria, which has a GNI per capita of $1 180, entry level broadband services cost $1 211 per year.
“In some emerging markets, broadband pricing was double or triple the price of an equivalent service in a more developed market,” says senior analyst Richard Hurst. “In addition, lower GDP per capita in most emerging markets means that broadband is only available to the highest socioeconomic groups.”
Emerging markets are often characterised by limited fixed infrastructure, which has created  opportunities for wireless and mobile communications solutions. Ovum’s research revealed that HSPA services were the cheapest option for data-hungry consumers in emerging markets, although the performance limitations and lower allowances created a compromise when it came to the actual customer experience.
Commenting further, Dziembowski says that with the adoption of online video services and content on a more widespread basis by consumers and business, the seemingly high cost of emerging markets is a “painful issue”. `
“The problem is that people just seem to accept it on the whole. They are not complaining enough and there is a general complacency, with people kind of accepting that, hey, it is ok to live with the high costs. ICASA and the Department of Communication should step up to the podium and look long and hard at these costs issues.
“They seem to be dragging their feet on the more important issues. For instance, it took several years for ICASA to unbundle the local loop, which also allows for other companies to benefit, besides Telkom, and to provide the ‘last mile’ of communications.”
He says there has been a massive surge in Antfarm’s services recently. But this, he believes, should have happened five years ago “because incoming video content in a corporation can increase communication costs for businesses. Because of the increased cost, the general approach by business is to block most video streaming, because it is deemed too costly. This is naturally stifling growth”.
“By limiting access rates unnecessarily and actively sustaining excessive bandwidth pricing, telco operators and data carriers are effectively hampering economic, social and intellectual growth in emerging markets, thereby exploiting the increasing efforts and growing needs of less advanced nations trying to catch up and stay relevant in global markets.
“Poorer countries are being denied the many advantages and efficiencies enjoyed by wealthier nations with openly competitive and considerably less expensive Internet service provision.
“Instead of presenting a positive contribution towards improving people’s living conditions and potentials, these selfish profit gluttons are mindlessly draining what little financial reserves the poorest try retain in hopes of building a better future… word by word, minute by minute, byte by byte, silencing their voices as their airtime runs out, breath by breath.”