Broadband Cable Internet Access To Grow Due To Decreased Prices In Africa

The price of broadband cable internet access is about go down in price.  The lowering of the price will have a significant impact on business in Africa.

Businesses across Africa are expecting a revolution in Internet access, technology and costs as a result of the rush of new undersea cables connecting the continent.

According to the Telecoms Trends in Africa 2010 report, released by World Wide Worx and Database 360, more than 90% of business decision-makers across Africa are expecting prices to drop and competition to increase dramatically.

The survey, conducted among 1100 Internet-using small, medium and large businesses across 20 African countries, also revealed that most African countries remain heavily reliant on slow or expensive forms of connectivity, such as dial-up and satellite.

However, they were beginning the move to broadband.

“Our interviewers encountered tremendous enthusiasm for the Internet in all countries we surveyed,” said Louise Robinson, Managing Director of Database 360.

“There is little doubt that, in this new connectivity era, the very nature of most businesses is changing.”

Database 360 operates a call centre in Cape Town, from which the respondents were interviewed telephonically. The study was compiled and the data analysed by World Wide Worx, South Africa’s leading independent technology research organisation.

“ADSL is fast becoming the standard form of business Internet access across Africa – more than 40% of businesses in these 20 countries are using it,” said Arthur Goldstuck, MD of World Wide Worx.

“However, we can see the limitations of existing infrastructure from the fact that satellite connectivity remains a key part of the mix.”

More than one in five respondents said they were using satellite connectivity, with a similar number planning to add it to their options.

“Satellite is the most expensive means you can possibly use to access the Internet,” said Goldstuck.

“The continued appetite for it tells us that, even though there is an expectation for better and cheaper connectivity, the reality on the ground remains one of limited infrastructure.

“Moreover, once businesses go online, the Internet becomes increasingly more vital to their survival, and having a backup form of access becomes increasingly more important.”

“It’s amazing to see how the level of Internet usage shoots up wherever the new undersea cables have landed and fibre optic networks have linked the cables to urban centres.

“The East Africa countries, especially, are taking to social networking as a business tool to a greater extent than almost anywhere else in Africa,” Robinson added.

The survey highlights Kenya and Uganda as the biggest African users of social networking for business.

Along with its direct and positive impact on GDP, research has repeatedly shown that increased broadband penetrationleads to significant job growth. It is conservatively estimated that increased broadband penetration in Latin America from 5.5 percent to 7.7 percent generated 378,000 new jobs(pdf).

Other proven economic effects of broadband include trade creation and facilitation, lower costs for international communications and greater access to foreign markets. Broadband can also help countries attract, train and retain a valuable “creative class” of workers, and the presence of broadband leads to new business models and new business opportunities to employ those and other workers. Mobile communications in general, and broadband in particular, have an especially strong impact on the economies of rural areas, which are home to nearly three out of four of the world’s poor.

Expanding broadband networks to rural areas leads to new opportunities for nonagricultural employment, better-paying agricultural jobs and greater overall productivity. Access to broadband also fosters small-business growth, allows citizens in remote areas to work from home, provides greater access to crop market prices and enables rural businesses to compete more effectively in world markets.

Broadband has generally been adopted more slowly and has not had a measurable impact in improving economic productivity. In these countries, while it may simply be a matter of time before the productivity benefits of broadband are fully evident, governments should take a more active role in helping to speed up broadband adoption and in helping businesses and consumers make deeper and more economically effective use of broadband.

There is a significant role for “demand side” policies which create incentives for, or lower the costs of, adopting broadband and computing technologies. Governments and businesses could look at providing training in using broadband and raising awareness of the potential benefits to firms and consumers from being able to effectively use broadband and Internet technologies. Such policies may speed up the adoption and increase the effectiveness of broadband deployment in countries which were lagging on these measures. However, they may also be useful in addressing the “digital divide” that exists within all societies and which also includes a divide in user skills and savvy between different segments of the population.

Many countries are looking at how to provide universal access to broadband as an assumed driver of economic productivity.  The lesson for policy makers is that there needs to be a greater focus on the users of future broadband infrastructure, enhancing the “demand side” of broadband access. Specifically, for broadband to become a more effective productivity enhancement tool, countries need to invest in improving overall IT skills and in lowering the costs to businesses of adopting technology and restructuring business models around technology.

“Useful connectivity” depends not just on the number of people connected to a network or infrastructure, but how well those connected people utilize the network or infrastructure. Although it is convenient for governments and the telecommunications industry to focus on the “supply side” (access) of the broadband industry, ultimately policy makers cannot ignore usage, skills and technological savviness among businesses and consumers.

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