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!

Poison Ivy kicks the bucket

Yes this is technology related news in South Africa. Ivy Matsepe-Casaburi died last night in a Pretoria hospital. She was 71 years old. Ivy was appointed the Minister of Communication after the 1999 elections.

Zapiro’s classic “Poison Ivy” Cartoon

While she was said to be a wonderful person with a happy cheerful attitude, she is perhaps the greatest reason why South Africa is currently suffering from poor internet connectivity and high prices. She prevented a competitive industry from forming when South Africa needed it the most. She constantly made decisions that was to the advantage of Telkom, in which the government is a majority shareholder.

After years of incompetence, Altech took her to court last year, seeing as she did not honour her promises in letting Value added networks build their own networks. She made the promise in 2004, and finally the industry toppled her. Now any VAN can build their own network, not thanks to her, but only 5 years later.

Her performance as a communication minister has been abysmal, and for some reason she was never taken out of her post. The fact of the matter is that she should have never, ever been in charge of communications. Its just another sad case in SA politics where the wrong person got the job. Its not about what you know, but whom you can help out (in this case Telkom).

While it is sad that she has died, and I feel sorry her family and friends, Toby Shapshak might have stated the point better than anyone:

“I am deeply sorry for her family and friends and offer my condolences. A death in the family is a painful thing.

But in the ten years she was Communications Minister she has wrecked a decade of unnecessarily high telecoms costs on this country’s economy, strangled any kind of meaningful internet industry from developing and irreparably hurt South Africa’s global competitiveness. All this while making the country’s citizen’s pay – literally – for Telkom’s ineptitude and inexplicable protectionism of what should be a cheap utility, not a profit centre for government coffers.”

Well said.