My take on Seacom, and SA’s future broadband scenario

About a week ago I went up to Mtunzini to visit the cable station that recently finished contruction. Seacom is a underwater fibreoptic cable which is being installed along the coast of east Africa, which is tremendous boost for all the countries affected. When it comes to internet bandwidth, Africa has always been left behind, thanks to monopolies and poor legislation with devestating effects on its economies and quality of life. I might sound dramatic, but if one takes into account that the digital divide is currently increasing at a exponential rate, it is not far fetched to once again call us the “dark continent”.

South Africans are not much better off either. Our primary source of international bandwidth is supplied by the very limited SAT3 connection, which is currently around 130Gbs, which is also divided to major operators such as Telkom. This leads to very low bandwidth actually reaching end users – in fact, in 7 years in which ADSL has been available in SA, the standard “package” is still a 3 Gigabytes capped connection with a slow 384kbps line. This is not however what the rest of the world calls “broadband”.

True broadband is at least 4Mbps and is theoretically uncapped. True broadband is the ability to use the internet without taking amount of consumption into account. US citizens are used to using services like hulu instead of having to subscribe to 100′s of channels. Once we have this attitude we can call what we have “broadband”. Seacom might not be that enabler, but it sure does get us one step closer.

Seacom will boost our bandwidth from 130Gbps up to 1.28Tbps. This increase in bandwidth will theoretically make it much cheaper for service providers to buy wholesale bandwidth. These cost savings can then be passed on to the consumer, and make it much cheaper to transfer large amounts of data. Due to past monopolies, SA ISP’s had to use Telkom’s infratructure for its network, which led to very low margins and high costs for end users. Due to legislation passed last year, any ISP with necessary capital can now build their own network infrastructure.

Now it is important to remember that “cheaper” internet in SA does not mean that the base cost of having “fast” internet will suddenly drop to a R100. No, there are still businesses that are built up around a revenue model that relies on customers spending more than R300. If the price is suddenly R50, those businesses will fold, regardless of how cheap bandwidth might be.

Instead, what we might be seeing in SA over the next year (Seacom goes live in about a month) is a dramatic increase in the amount of “capped” data we can get for the same amount of money. Instead of spending R400 total for a ADSL line and 3GB data, the same user might now get 5GB or (hopefully) 10GB. A big problem currently is that networks in SA is currently unable to properly use all the extra bandwidth. Telkom cannot easily jump above the 4Gbs it currently offers, due poor quality cables. But Neotel and a few cellular operators have started investing in land based fibre cable, right to the curb in some areas. This means that these players might be the first to actually be able to use the wave of extra bandwidth. MTN and Vodacom have also started to enable 7.2 Mbps HSDPA on its network, which theoretically means that if you wanted the fastest broadband line in SA, you have to go 3G.

So what does Seacom mean for SA end users in the near future? In my opinion, a few things will happen. First (the next 6 months) I believe networks will first try to get maximum profits while bandwidth is suddenly cheap. This will lead to increasing pressure from end users, and then we can wait for a ISP to offer a “disruptive product” which will cause all subsequent offers from ISP’s to drop tremendously in price. The fact of the matter is that ISP’s in SA have always been used to low profit margins, and they can easily adapt their businesses to once again operate on those margins once bandwidth is cheap. It will only take time.

This is truly an exciting time for communications in SA – we are currently in a perfect storm of situations which can contribute to a sudden reconnection to the world.

Want more info on Seacom? Read some of my fellow SA digirati’s comments on Seacom:

The Digital Edge Podcast (you might hear me talk to him in there as well…)
DChetty – Seacom, What Now?
From The Couch – David Perel
Tech Start News - J Bagley
Charl Norman

Good meeting you guys!

Seacom – you cannot come soon enough, and hooray for competition!

With the advent of Seacom taking up our minds in the next 6 months, companies finally have to start competing properly. One major problem that Seacom is creating is that the current broadband offerings in SA is all on at least 24 month contracts, which means that anyone who buys the service now will hear a few months from now how the prices are dropping or the caps are being raised for new customers only.

It is for this very reason I just keep on buying prepaid data bundles on my 3G phone. At least I have the choice to stop paying should something better come along.

Today Vodacom announced that from 1 April 2009 all 3G contracts will be automatically enabled to use 3.6Mbps HSDPA transfer speeds. In the past, users had to pay R49 extra per month just for the speed. This is very good news, especially to people who use newer high end phones like iPhones.

“From 1 April 2009, all Vodacom customers will be able to connect to the Vodacom network to the HSDPA 3.6 service with a HSDPA 3.6 capable device, at no extra charge”

The disadvantage is of course that your data cap can now be reached all the sooner. Seeing as the pipe is bigger, you might be tempted to download more seeing as it is so much faster now. This is where MTN (and the wonderful thing we call “competition”) comes in. Rumour has it that MTN is starting to offer roll over data bundles, so that a user can carry over data he has not used from one month to the next. (Update: This was confirmed at midnight! So all MTN users can now carry over unused data, amongst other great new features)

If all this innovation comes quickly enough (I just need cheaper bundles!) I might actually never switch from 3G. On the other hand – it is only a little more than a 100 days before Seacom is active.

Let the price war begin!