South African mobile market celebrates

The South African mobile telecommunications market – users, operators and service providers alike – has much to celebrate on World Telecommunications Day this year with the fruits of deregulation finally blossoming across the industry.

However, many challenges lie ahead for the country’s operators and service providers in an increasingly competitive market, that’s according to Tim Walter, General Manager for Product and Marketing at independent telecommunications service provider, Nashua Mobile.

He says that the South African mobile industry has completely transformed the telecommunications market over the past 15 years by bringing voice telecommunications within reach of a vast portion of the country’s people.

“That is an achievement to celebrate on World Telecommunications Day, but we cannot afford to be complacent,” says Walter. “The mobile industry still has much work to do in terms of driving telecommunication costs down and in terms of making the Internet accessible to more people.”

Walter says that South Africa’s mobile industry has nearly saturated demand for voice services in the addressable market, with SIM card penetration of more than 114%. In the next phase of its development, it will need to look to the mobile broadband space for growth.

“We see tremendous scope for the mobile industry to help boost Internet access from its present penetration of about 10%. Mobile could eventually do for Internet access in South Africa what it did for basic voice services – make it a mass market service within nearly everyone’s reach,” says Walter.

Despite the opportunities for mobile operators and service providers in the data market, Walter notes that there will be many challenges in the years ahead.

The South African telecommunications market is going through some major shifts, partly due to new legislation such as the Electronic Communications Act that have swept away many of the regulations and laws that have protected incumbent operators in the past.

There is now increasingly vigorous competition in markets such as national backhaul links and international cables where there was little or none before. For example, players like Dark Fibre Africa are ringing South African cities with fibre-optic cable, others are rolling out fixed wireless solutions such as WiMax and the arrival of Seacom has started to bring international bandwidth prices down.

Says Walter: “Fiercer competition is turning connectivity into a commodity and margins are becoming thinner, meaning that it is harder to compete on price.

“Government and the regulator are also pressurising operators to bring their tariffs down, as was made clear in the Department of Communications’ recent interventions aimed at bringing mobile interconnect fees down.”

“Mobile service providers and operators will need to think about how they will improve customer service and package their basic connectivity with value-added services to remain competitive in that environment,” Walter says.

Another challenge for the mobile market lies in investing enough capacity to support growing demand for mobile data services. As more and more users upgrade to smartphones and buy cellular data cards, and start to use more applications and services, today’s networks and technologies are coming under increasing pressure.

“However, Nashua Mobile sees a rosy future ahead for mobile data, given that all the operators are making substantial investments in their infrastructure and have clear migration paths to technologies of the future, such as long-term evolution (LTE). We’re expecting to see the mobile Internet market eventually follow the ADSL market and become a fiercely competitive space where users are spoilt for choice,” concludes Walter.

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South African mobile market celebrates