Fixed-line operators would have to invest in new high-speed technologies to maintain their share of the broadband market as faster and cheaper mobile broadband overtakes fixed broadband.
This is according to a report by Research ICT Africa, which stated that mobile broadband was the most popular, widely accessed form of broadband by the 20% of South African households that have Internet access.
The majority of households accessed the Internet through a mobile phone and through a third-generation (3G) mobile modem, while only 22% of households with Internet connectivity have an asymetric digital subscriber line (ADSL), owing to its slower speeds, more expensive basket prices and lower penetration.
“As elsewhere in Africa, mobile broadband has overtaken fixed broadband in South Africa in terms of subscribers, price, and speed of service,” the report stated.
While the pricing ease of setup and prepaid charging options of mobile connectivity were more appealing than fixed-line Internet access, many corporate groups, critical public-sector services and other users preferred fixed line networks owing to its more reliable and stable connectivity.
But fixed-line broadband operators would continue losing customers while being outpaced by the mobile speed offerings of the much faster 3G, long-term evolution and fourth-generation networks unless the operators moved to invest in high-speed and reliable technologies such as very-high-bit-rate digital subscriber line, or VDSL, and fibre-to-the-home.
“Poor broadband penetration levels in the country are an outcome of high prices. The high prices and poor quality of ADSL services reflect the absence of competition in this segment of the broadband market, in contrast to the more competitive mobile segment of the broadband market,” Research ICT Africa pointed out.
Although mobile broadband pricing was lower than mobile voice in South Africa, which was deemed to be among the most uncompetitive worldwide, there remained fee disparities between postpaid and prepaid, and fixed line prices were nearly double the price of mobile broadband.
On average, it cost about R112.40 a month for a 1 GB package on prepaid mobile broadband, while postpaid for the same package fell to R59.50.
For a 5 GB mobile broadband deal in South Africa, you would pay R218.20 on a contract and R237.40 on prepaid.
ADSL cost about R425.30 a month for 5 GB – higher than many African countries that did not have the economies of scale South Africa did in fixed-line infrastructure.
Uncapped on fixed line could reach R405.30, compared to mobile broadband’s uncapped offering of about R328.20.
The cost drivers underlying South Africa’s high fixed-broadband prices needed to be identified and a regulatory impact assessment on the cost of communications undertaken.
Research ICT Africa stated that policy and regulation changes would enable the nation to combat cracks in fixed-line and mobile broadband.
“Achieving an enabling policy and regulatory framework conducive to investment, the rationalisation of existing infrastructure and the coordination of infrastructure planning going forward is a key challenge for countries, such as South Africa, wishing to develop their societies and economies and become globally competitive,” the report said.