Busting through SA’s last broadband bottlenecks

Submarine connectivity accounts for around 90-95% of the distance a byte of information travels, yet is only a fraction of the total cost of a service to the consumer.

June 14, 2012

“Whilst we have seen spectacular growth in submarine capacity over the last 2 years, this has not been the case downstream with the backhaul and last mile infrastructure players. As a result there is a disconnect between the ample supply of affordable international connectivity to the shores, and the supply of affordable bandwidth to both rural and city based end consumers inland,” Baigrie says.

Submarine connectivity accounts for around 90-95% of the distance a byte of information travels, yet is only a fraction of the total cost of a service to the consumer. Backhaul and last mile connectivity on the other hand is scarce and as such is priced at a premium, traditionally providing healthy margins for operators and infrastructure providers who have these assets.

The upside to the higher margins being offered to terrestrial backhaul players is that this promotes competition. With the inevitable arrival of competitors, there will be increased supply of fibre, and as such further competitive pricing reductions ensuring the end user reaps the benefits. This will ensure that busy routes will be priced more affordably in the next 12 months. However this story changes for those in less densely populated areas where the monetary return on investment for rural fibre initiatives is harder to achieve.

Here Government needs to continue to facilitate and provide incentives for operators to invest in, enter into private-public partnerships or use vehicles such as state-owned enterprises (SOE) to get backhaul and last mile infrastructure built, Baigrie adds. Whilst this is being done by a handful of SOEs, the most effective means is to incentivise the private sector.

The final and arguably most crucial leg is the last mile. Last mile connectivity comes in two forms, either through a fixed line such as copper or fibre into homes and offices or over the air from mobile operator base stations to mobile devices. South Africa, being a mobile centric internet market is critically dependent on the latter. “With the influx of affordable and open access ‘smart’ handsets and devices African’s have leapfrogged the fixed line era and substituted it with mobile connectivity. The result is a strong dependence on our mobile operators and their networks,” says Baigrie.

Mobile networks are dependent on available and allocated spectrum to deliver internet over the air and to utilise new technologies such as LTE or 4G. Spectrum is a rare commodity and the Government and Regulator have key roles to actively optimise the country’s use of spectrum and allocate it fairly and effectively. We are seeing positive private sector engagement here in supporting the crystallisation of the Regulator’s approach and this issue is being further addressed through initiatives such as the migration from analog, spectrum heavy, television signaling to a digital television service, freeing up bands for reallocation amongst operators.

“The good news is South Africa is moving in the right direction and we need to remind ourselves how far we have come since SEACOM arrived in 2009, where the price per MB on a cellphone was over R2 and uncapped internet was both literally and figuratively a pipe dream. Today that price per MB is at the 10c mark and uncapped lines are available from a host of providers for a few hundred rand a month,” says Baigrie.

“There is a mixed array of communication in the press as to the state of South Africa’s internet, but from our side the picture is looking good for the end-consumer, and with continued engagement from industry stakeholders, the Government and the Regulator we see 2013 being a landmark year in affordable connectivity for all South Africans,” concludes Baigrie.