After years of slow growth and outright despair at whether broadband would ever take off on the African continent, research suggests that the market is inching ever closer to a tipping point, according to US-based Reportlinker.com professional search engine..
“As submarine cables find their way along Africa’s coastlines, the continent is slowly, but inevitably emerging from what we have long referred to as the Dark Ages of African bandwidth, an era of bandwidth bondage of sorts, characterized by excessively high prices, near-zero broadband penetration rates and self-defeating regulatory models,” the firm said.
In report titled ‘The Future of African Broadband: Economics, Business Models and the Rise of 3G – Premium Pack’ the search engine said: “The African bandwidth revolution is nearly here, with all its implications for subscriber growth, social transformation business models and investment opportunities.
As it pertains to market upside, economic model issues, and the investment case for broadband in Africa, the engine’s analysis has found that there is strong demand for broadband in Africa, if the price is right.
Also, the analysis found that longstanding supply bottlenecks were being slowly, but surely removed; last mile competition was an increasing reality, wholesale segments were being liberalized, and wireless technology has improved enough to provide alternatives to wireline broadband.
“We estimate the number of broadband subscriptions in Africa at about 7.6m at the end of 2009, up nearly 60 percent from 2008 levels. Subscriber growth has been remarkable in many respects; over the past three years to 2009, African broadband has grown at a compound rate of 80 percent, faster than even mobile subscriber growth (though from a smaller base),” the report said.
But, the professional search engine affirmed that it was indisputable that Africa’s broadband growth is still primarily driven by North Africa and South Africa.
Outside of the two areas, the other areas of growth are in countries it referred to as “Volume” markets.
Their contribution to overall broadband subscriber growth has increased steadily, from only about 10 percent in 2007 to 20 percent by the end of 2009.
Broadband usage by speed has been evolving as well. Only about a third of African broadband subscriptions were 1Mbps and above in 2008; by the end of 2009, that number had risen to 55 percent, most of which were mobility-based.
“We expect the African broadband subscriber market to treble in size between 2009 and 2015 to about 25m, buoyed by the mix of demand and supply catalysts,” said the report, while in revenue terms, the firm estimated Africa’s Internet retail revenue at about $4bn in 2009.
“We see a direct, unmistakable correlation between bandwidth wholesale and retail prices. The challenges created by the dramatic increase of mobile data traffic will be a reality in Africa too.”
The analysis sees the potential for network issues and the subsequent deterioration of customer experience as the biggest risks to mobile broadband subscriber and revenue projections.
Nonetheless, it argued that African broadband would succeed because it will be prepaid and metered.
“The broadband revenue case is solid, in our view; our research points to substantial prop-up potential on the revenue side. Current monthly broadband average revenue per data user is up to 10 times higher than voice average revenue,” the study added.