Broadband. Rudolph Muller. MyBroadband.co.za
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1 Broadband Rudolph Muller MyBroadband.co.za
2 Outline What is broadband and why is it so important The local broadband environment and broadband growth Broadband and the call centre industry Broadband growth and bandwidth demand Broadband and economic growth
3 What is Broadband? High-speed transmission. The term is used to define the speed of communication lines or services and most commonly refers to T1 (1.544 Mbit/s) rates or better, even though the actual rate may be much lower or higher, depending on the application. A way of transmitting large amounts of data, voice, and video that is greater than telephony networks. Google Definitions
4 Why is broadband so important? Broadband is Fast Fast access makes new content delivery and new services possible. Online video streaming (YouTube or series like Heroes), large file downloads (P2P), VoIP and the likes. Broadband is Always On & Flat Rated Users must have complete freedom to surf the net, download movies or songs, play online games, chat with friends using VoIP technologies or become involved in social networking sites without being concerned about high Internet fees. Unless all of the components of a broadband service are present, it can be seen as a crippled service which reduces its positive impact on Internet usage and the service as a whole.
5 Local Broadband
6 Local Broadband Comparison International Trends Local Situation Affordable prices Unlimited usage High speeds High speed ADSL, Cable and FTH Very high prices Restrictive caps Average to slow speeds Slower, low usage wireless connections becoming popular
7 ADSL PRICING: Cost & Speed Cost (ZAR 00) & Speed (Mbps) Speed Cost India Canada China-HK US Portugal UK Morocco Argentina New Zealand Australia Egypt Chile South Africa South Africa
8 ADSL Pricing (Cost/MB/Mbps) South Africa-Telkom Morocco-Meraka Aus tralia-bigpond UK - BT
9 Broadband Penetration Rates Norway Finland Sweden Canada Belgium United Kingdom Luxembourg France Japan United States Australia Austria Germ any Spain Italy New Zealand Portugal Ireland Hungary Czech Republic Poland Slovak Republic Greece Turkey Mexico South Africa Switzerland Korea Denmark Netherlands Iceland Source: OECD OECD Broadband subscribers per 100 inhabitants, by technology, Dec DSL Cable Fibre/LAN Other OECD average
10 The Good News
11 2006Q Q1 2003Q3 2004Q1 2004Q3 2005Q1 2005Q3 2006Q1 2003Q SA Broadband Growth
12 SA Broadband Growth Q1 2003Q3 2004Q1 2004Q3 2005Q1 2005Q3 2006Q1 2006Q Q1 Telkom ADSL Vodacom HSDPA MTN HSDPA iburst Sentech MyWireless
13 2004Q1 2004Q3 2005Q1 2005Q3 2006Q1 2006Q Q1 2003Q3 2003Q ADSL versus Wireless ADSL Wireless
14 Local Broadband Breakdown Telkom ADSL Vodacom HSDPA MTN HSDPA iburst Sentech MyWireless
15 Mobile Broadband Pricing (Cost/MB) Vodafone UK O2 UK Vodafone Aus Vodacom HSDPA iburst Vodafone NZ Sentech MW MTN HSDPA Vodacom HSDPA
16 Excellent Mobile Broadband Growth SA is one of the leading countries worldwide when it comes to mobile broadband growth Vodacom & MTN are early technology adopters, and SA serves as a testing ground for various new systems in the mobile broadband space Local users are early adopters of new mobile technologies This all means that the local wireless broadband space, both in fixed environment and a mobile space has a very bright future
17 Pricing Effect on SA Broadband High pricing of fixed line broadband (i.e. ADSL) and relatively low pricing of mobile broadband means that local broadband consumers choose between ADSL or mobile service as a primary service Internationally, mobile broadband simply can not compete against fixed line services on either price or speed Very skew broadband subscription rates in terms of fixed line versus wireless. Internationally: 95% + fixed line services Locally: closer to 55 % - 45 % - predicted that wireless services will overtake ADSL in 2007 in subscriber numbers
18 Why don t we see massive online growth in South Africa? Very low broadband penetration rates. Coupled with that most broadband subscribers were already high-end Internet users, and simply migrated to a better technology Local broadband services have restrictive usage limits which equates to nearly the same thing as paying per-minute dial-up rates which inhibits leisure Internet usage Low speeds, limited bandwidth allowances and high hosting costs means that we do not see too many Web 2.0 services in South Africa. We are We are not not YET YET seeing the the significant impact of broadband uptake in SA in SA as with the rest as of with the the world, rest of but the it world, IS coming! but it IS coming!
19 Internet / Broadband Trends We are sitting here
20 Broadband and the Call Centre Industry
21 Broadband and Call Centre Industry Overlapping interests: Lower bandwidth rates, lowering the operating costs of call centers More attractive overall telecoms environment Better telecoms infrastructure and services making innovation possible Tech savvy population Economic growth Innovative use of broadband VoIP solutions Virtual Call Centers: only thing needed is a PC with a broadband connection. Can theoretically employ people around the country or world
22 Bandwidth Growth
23 Broadband Growth & Bandwidth Demand Increased broadband penetration rates should translate into greater bandwidth demand, more supply and lower prices This is only partly happening, mainly because of the lack of competition in the wholesale bandwidth space Telkom expects their bandwidth demands to double each months. Vodacom saw a 100% increase in bandwidth usage after launching their lower prices HSDPA services earlier this year. In a competitive marketplace additional demand will generally lead to an additional supply and through economies of scale lower prices. In SA we have seen limited bandwidth supply increases and the accompanying lowering of prices. Similar to load shedding with limited electricity supplies in South Africa, broadband suppliers find ways to preserve bandwidth to protect their networks in a bandwidth starved environment.
24 Some ADSL Offerings since 2002 launch 2002: DSL 512 Kbps with 3 GB soft cap, unlimited local bandwidth 2005: Telkom introduces DSL 192 with 2 GB Cap 2005: Hard Capping introduced (no more additional local bandwidth) 2007: DSL 384 with 1 GB Cap
25 iburst 2005: Standard 3 GB service was default 2006: Launched smaller cap offerings, 210 MB igo Light 2007: INCREASES top-up bandwidth prices 2007: Launches affordable 40 MB package Will deplete total bandwidth allocation in around 5 minutes when getting advertised speeds
26 What we should see A more bandwidth rich environment Faster speeds Higher usage allowances Massive investments in telecommunications infrastructure Lower wholesale and retail bandwidth prices Why don t we see this yet? Monopolistic fixed line telecoms environment. There is investment in infrastructure, but only competition will drive prices down which in turn will drive up demand. In a more liberalized telecoms environment many companies may start to invest in infrastructure, creating a bandwidth rich environment lower prices.
27 Positive Bandwidth Developments Local bandwidth InfraCo State wholesale bandwidth provider will bring competition to local bandwidth space Neotel Through InfraCo and their own network will bring competition to inner and intra city wholesale bandwidth space Self provisioning of VANS Municipalities International bandwidth SAT-3 exclusivity agreement will be declared null & void in November 2007 SAT-3/SAFE landing stations declared essential facilities allowing Neotel to provide full circuit international bandwidth Various international submarine systems in the pipeline (EASSy, InfraCo etc).
28 Broadband as a facilitator of economic growth and outsourcing
29 Broadband & Economic Growth Unless you are connected to the world, you can not compete in the world World Class Broadband is a vital component of enabling South African businesses to become competitive in the global IT and business arena Broadband not only connects business to the world, it lowers operating costs and allows for innovative telecoms solutions Broadband has been identified as a key ingredient to economic growth by various studies, including our own Government: Now it is time to make it happen!
30 Broadband & Economic Growth High cost broadband availability constrains economic growth, depriving South Africa the opportunity to interact speedily and more effectively with the rest of the world. Broadband is viewed as a key driver of economic growth and wealth generation, and therefore it is essential for South Africa to gain access to universally available, reliable and affordable broadband Data indicates that there is substantial positive impact on employment in ZIP codes where Broadband has been deployed. Property values as measured by rental rates were almost 7% higher in communities where Broadband was available. Broadband also increased the growth in the number of businesses in an area by almost one-half percent. Communities with Broadband also attracted a larger number of businesses in IT intensive sectors.
31 Impact on Economic Variables in Broadband-Enabled ZIP Codes Employment (Jobs): Employment annual growth rate about 1% higher, Wages: No statistically measurable impact observed in data by Property Values: Housing rental rates over 6% higher in Business Establishments: Almost 0.5% higher rate of growth in the number of establishments, Industry Mix: Over 0.5% increase in the share of establishments in IT-intensive sectors, About 1% reduction in share of small establishments
32 CONTACT DETAILS Rudolph Muller
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