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Telecommunications Infrastructure in South Africa

    • Technology, Media and Telecoms - General

    12-03-2012

    South Africa, the country that invented touchtone dialling, boasts an outstanding telecommunications infrastructure and a diversity of print and broadcast media. With a network that is 99% digital and includes the latest in fixed-line, wireless and satellite communications, South Africa has the most developed telecommunications network in Africa. Telecommunications is one of the fastest growing sectors of South Africa's economy, driven by rapid growth in mobile telephony and broadband connectivity.

    Regulation

    The Electronic Communications Act, 2005 seeks to remove policies that hinder the development of cross-sector applications, services and businesses. The Act enables the sector to reflect the integration of telecommunications with information technology (IT), broadcasting and broadcasting signal distribution. It also empowers citizens with better access to knowledge and information. The Telecommunications Amendment Act, 2001 has enabled the Department of Communications to liberalise the South African telecommunications market, increase competition and, as a by-product, stimulate the sector to bring down the costs of communications and remove constraints on growth.

    Two of the main regulatory bodies in the telecommunications sector in South Africa include Universal Service and Access Agency of South Africa (USAASA), and the Independent Communications Authority of South Africa (ICASA). USAASA was established in terms of Section 58 of the Telecommunications Act, 1996. The main role of the agency is to promote universal service and access to ICTs services for all South Africans. It also facilitates and offers guidance in evaluating, monitoring and implementing schemes, which propose to improve universal access and service. In addition, it is involved in setting up telecentres, which provide ICT services, especially in rural areas, on a cost-recovery basis. ICASA is the regulator for the South African communications, broadcasting and postal services sector. ICASA was established by an Act of statute, the Independent Communications Authority of South Africa Act of 2000, as amended. Its mandate is spelled out in the Electronic Communications Act for the licensing and regulation of electronic communications and broadcasting services, and by the Postal Services Act for the regulation of the postal sector. Enabling legislation also empowers ICASA to monitor licensee compliance with license terms and conditions, develop regulations for the three sectors, plan and manage the radio frequency spectrum as well as protect consumers of these services.

    Mobile communications

    South Africa is one of the fastest growing mobile communications markets in the world. As of 2009, there were over 46.4 million mobile users in South Africa, ranking the country 26th in terms of subscriber numbers. Growth in South Africa's mobile market is particularly strong, standing at 50% per annum and making the country's GSM market the 4th fastest growing worldwide. In recent years, South Africa has witnessed tremendous growth in the cell phone industry. South Africa has five operators, namely Vodacom, MTN, Cell C and Virgin Mobile. In 2010, Telkom also entered the mobile market with its own offering, 8ta, which will run off MTN's network infrastructure until Telkom rolls out its own base stations. There are also two mobile virtual network operators (MVNOs), which are cellular phone companies that operate in partnership with an existing mobile company, whose infrastructure they also use. Both existing MVNOs operate in partnership with Cell C: Virgin Mobile which has been operating since 2006, and has recently secured investment from a Bahamas-based investment company, while energy drink manufacturer Red Bull entered the market in 2011. South African mobile companies are also making inroads internationally, with MTN now having well over 100million subscribers in more than 20 countries in Africa, Asia and the Middle East.

    Fixed-Line Telephony

    In 2009, South Africa ranked 34th in the world in terms of fixed-line telephony, with over 4.3 million fixed-line connections. Fixed-line telephony is still dominated by Telkom, which is listed on the JSE and majority-owned by the Department of Communications. Telkom's monopoly in running fixed-line services came to an end in 2006, when the country's second fixed-line operator, Neotel, began its operations. Majority-owned by India's Tata Communications, Neotel offers telephony and data services using CDMA technology. The introduction of number portability means that customers can switch between Telkom and Neotel, as well as between mobile networks, and retain their existing numbers. The Independent Communications Authority of South Africa has been working to bring down the costs of telephony by regulating mobile termination rates (the amount that operators have to pay for using another operator's network).

    Internet

    African Internet usage has trebled to more than 12 million since 2000. South Africa remains the continent's dominant Internet centre, with more than a quarter of Africa's users. Johannesburg-based companies are central to the Internet industry. Nine of the 12 major Internet service providers listed by the Internet Service Providers Association (www.ispa.org.za) are based in Johannesburg. The Johannesburg Internet Exchange is the larger of two national hubs that connect Internet service providers to a single network.

    Multiple new undersea cables are to come online in South Africa in the next year and a half, resulting in increased internet access at lower prices. The Seacom cable was launched in 2009, and is to be followed by the West Africa Cable System, the Africa Coast to Europe cable and the South Atlantic Express cable which, when combined, will boost South Africa's broadband capacity by a further 360%. Undersea cable systems in South Africa can provide terabits of bandwidth, and the bottleneck is now national backhaul capacity WACS (West Africa Cable System) is set to go live in South Africa in the second quarter of 2012, boosting South Africa's international bandwidth capacity with its design capacity of 5.12Tbps. Despite the fact that WACS operates on an upgrade policy, which initially allows only a limited percentage of the total cable capacity to be made available, it is still significantly boosting the bandwidth coming into South Africa.  With the launch of Seacom, followed by EASSy and inbound WACS, the bandwidth bottleneck in SA is no longer on the international leg, but lies with national backhaul capacity. A major constraint for WACS is the lack of competitively priced backhaul capacity from Cape Town to Johannesburg.

    Despite the increased availability of internet access in South Africa, interconnectivity costs remain near the highest in the world. The Department of Communications is currently investigating ways to decrease the costs of internet access and in doing so have briefed ICASA to come up with a programme to be presented to Parliament from its completed study on the cost to communicate.

    There are a few projects under way which may help to resolve the national bandwidth problem. NeotelVodacom and MTN have partnered and are busy constructing a national fibre network. FibreCo, a partnership between Cell CInternet Solutions and Convergence Partners, is also developing a long-haul terrestrial fibre optic network in the country. There is also InfraCo, who recently said that the company remains committed to fulfilling their mandate of bringing down national bandwidth prices in South Africa.

    Investment Opportunities in Broadband

    Based on the above developments, the Department of Communications aims to achieve 100% broadband penetration in South Africa by 2020. According to an OECD study released in December last year, South Africa's broadband subscription penetration is currently only around 1.6 subscriptions per 100 inhabitants. Research by the International Telecommunications Union indicates that for every 10% increase in broadband penetration, a 1.3% increase is achieved in the gross domestic product. The Government is currently aiming to create 160 000 jobs just through broadband by 2020 and has indicated that it will need to engage with the private sector and make a request to the National Treasury to acquire investments in the arena of R75 billion in order to reach its goal of 100% penetration of broadband.

    Government has indicated its support of the expansion of broadband use in the country as can be seen from the announcement made by South Africa's Department of Higher Education and Training last week in which it was revealed that R886 million will be invested in linking South African universities and public research organisations together, through a broadband connection with a minimum speed of 10 gigabits per second.

    Postal sector

    The Government-subsidized South African Post Office (SAPO) is required to provide a basic letter service that is reasonably accessible to all. SAPO delivers almost six million letters per day to 10 million addresses in South Africa. It has 2 550 outlets covering the length and breadth of South Africa. Annually, SAPO prints more than 384 million stamps and serves stamp collectors and dealers throughout the world. Several initiatives via SAPO have also resulted in bringing ICT services closer to the public.

    Radio

    There are an estimated 10 million radio sets in South Africa, with listeners many times that number, broadcasting a range of programming in all 11 of South Africa's official languages, as well as German, Hindi, Portuguese and the San languages of Xu and Khwe, with stations falling into three broad categories: public service broadcasting, commercial, and community radio stations.

    The country's public service broadcaster is the South African Broadcasting Corporation (SABC). While wholly owned by the state, the corporation is financially independent of taxpayers' money, deriving its income from advertising and licence fees in a ratio of four to one. The SABC's mandate is to provide both a commercial and public service, each administered separately, with commercial radio stations subsidising the public service stations. The SABC's national radio network is currently comprised of over 18 stations broadcasting in 11 languages, reaching an average daily adult audience of 19 million.

    During the apartheid era, South Africa had only two independent radio stations: Radio 702 and Capital Radio. With the deregulation and liberalisation of broadcasting in the late 1990s, the number of commercial stations operating outside of SABC control proliferated. In 1996, six lucrative SABC stations were privatised and the Government raised over R500 million as the stations were licensed to various black-controlled groups. In early 1997, eight new commercial radio licences were granted for broadcasting in South Africa's three biggest cities - Johannesburg, Cape Town and Durban.

    From 1994 onwards, South Africa's broadcasting authority processed hundreds of community radio licence applications from groups as diverse as rural women's co-operatives, Afrikaans communities and various religious bodies. The country now has over 100 community stations. Although community radio, by its nature, struggles to access advertising and other forms of financing, it is a crucial part of the South African broadcasting landscape, providing diversity for listeners and much-needed skills for the commercial radio sector.

    Channel Africa Network is the industry leader in radio broadcasting in Africa and comprises of four language services, reaching millions of listeners throughout Africa. Broadcasts are in English, French, Kiswahili, Portuguese, Chinyanja and Silozi. The network targets audiences in Africa and the Indian Ocean islands, and concentrates on providing programmes with African content. Community radio stations have a huge potential for the support of, among other things, cultural and educational information exchanges. These radio stations use all indigenous languages, ensuring that people receive information in languages they understand.

    Television

    South Africa has the largest television audience in Africa. There are more than four million licensed television households. The SABC's national television network comprises three full-spectrum free-to-air channels and one satellite pay-TV channel aimed at audiences in Africa. Combined, the free-to-air sound broadcasting stations broadcast in 11 languages and reach a daily adult audience of almost 20 million people via the terrestrial signal distribution network and a satellite signal. In October 1998, the country's first privately owned free-to-air television channel, e.tv, started operations. M-Net became South Africa's first private subscription television service when it launched in 1986. Today, it broadcasts its array of general entertainment and niche channels to subscribers in more than 50 countries across the African continent and adjacent Indian Ocean islands. MultiChoice Africa (MCA) was formed in 1995 to manage the subscriber services of its sister company, M-Net. It became the first African company on the continent to offer digital satellite broadcasting. In July 2008, MultiChoice launched high-definition television, the first in Africa. MCA is 100% owned by the MIH Group, which is listed on the JSE Ltd, the Nasdaq in New York and AEX in Amsterdam.

    The Department of Communications has recently announced that the public launch of the impending migration from analogue broadcasting to digital terrestrial television (DTT) in South Africa has been postponed to the third quarter of 2012. The Department has finalised the amendments to the 2008 Broadcasting Digital Migration Policy which will fast-track the finalisation of the DTT regulations by ICASA. The Department has finalised the Set-Top Box Manufacturing Strategy and the Scheme of Ownership Support Rollout Framework which are scheduled to be presented to Cabinet next month and once the South African Bureau of Standards has finalised the national DTT Standard for South Africa, the Government will issue the tender for the manufacturing and distribution of the set-top boxes. The cut-off date for migration was set as December 2013, which meant that as from January 2014 the only means to broadcast programmes on terrestrial frequencies would be digital (although the Department of Communications has recently speculated that this deadline will be extended as manufacturers will not be able produce the required number of set-top boxes in time). Over R1bn has been set aside by Treasury for the migration to digital television and is split between the commercial enterprise Sentech (R622m), the Universal Service and Access Agency of SA (USAASA) (R220m) and the SABC (R158m).

    Print

    Technically, South African local print media rates among the best in the world. South African publications like newspapers and magazines have held their own despite vast development of various new forms of media-delivery platforms via the Internet. South African newspapers and magazines are mainly organised into several major publishing houses: Media24 (part of Naspers, the largest media group in Africa), the Irish-based Independent News & Media (Pty) Ltd group, Caxton Publishers & Printers Ltd and Avusa Ltd. Other important media players include M&G Media Ltd; the Natal Witness Printing & Publishing Company (Pty) Ltd; Primedia Publishing Ltd; Ramsay, Son and Parker (Pty) Ltd and Kagiso Media. Since 1994, the major press groups have embarked on programmes to boost Black Economic empowerment in media ownership.

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