June 17 2009 may be a watershed date in South Africa’s, and even Africa’s, economic history. That is the date set for the Seacom cable to become operational.
The significance of the cable has already been outlined by a number of people, but it bears repeating. Currently, South Africans are dependent on the SAT3 cable for broadband connection to the rest of the world. This single cable is insufficient for the country’s needs, and is currently controlled by a consortium that has used its monopolistic position to keep prices high.
East Africa has no cable at all at the moment. Users there are entirely reliant on satellite, which is slow and expensive.
The Seacom cable offers the opportunity to change all that. It will link South Africa, Madagascar, Mozambique, Tanzania and Kenya to India and Europe at greater speeds and at significantly lower costs.
Seacom has already outlined what sort of pricing it will offer, and the savings to South African users are expected to be between 70% and 80%. Seacom will be offering a 9.6 Gigabit per second (Gbps) wholesale connection at R267 per Mbps (megabit per second) per month. The SAT-3 cable currently costs between R3 500 and R11 000 per Mbps per month.
It’s important to understand that Seacom’s impact will go far beyond allowing us to surf the web at high speed. The current lack of bandwidth in the country has stifled innovation and prevents companies from taking advantage of business opportunities.
For instance, local online digital media companies are unable to keep up with the advances of their foreign counterparts, as they are simply unable to create applications that require a large amount of bandwidth. Their competitors in places like the US are however free to innovate as bandwidth is not a limiting factor.
Frost & Sullivan has also found that many local online marketing and advertising companies are currently exporting more services than they sell locally. This is not only because the client base in international markets is bigger, but because companies there have an understanding of the capacity of the internet and the ways in which tools such as search engine optimisation can promote their online presence. South African businesses are yet to fully utilise the marketing power of the internet because bandwidth has limited the scope of what they can do.
The lack of bandwidth in South Africa has also inhibited the ability of local ICT companies to deliver services and support to foreign clients. This particularly true in the software development and online digital media sectors, as companies are unable to meet the needs of clients working in high bandwidth environments. South African companies have shown an incredible ability to innovate and offer niche solutions to sectors such as retail and banking, but they have been restrained by their bandwidth limitations.
It is fair to say that the more bandwidth people have, the more they need. South Africans are not realising the full benefits of Web 2.0 developments because they don’t have the bandwidth to engage fully in activities like file sharing and video streaming. Once we start using those sorts of platforms, our demands for more bandwidth will increase exponentially as we look to do more and engage more with the possibilities of the medium. The business opportunities for companies in this sector are potentially enormous.
Bringing down the cost of bandwidth will also decrease the cost of technologies such as unified communications. This will allow South Africans to engage in the sharing of information in more convenient ways and allow new business opportunities for companies offering voice, data and video services.
While this is all promising, there is one caveat. Seacom alone is not a magic wand that will suddenly transport Africa across the digital divide. For users to be able to take advantage of the cable, the infrastructure to connect them to the cable has to be secure and in place. There has already been a significant amount of activity from companies like MTN and Vodacom to ensure that they have the infrastructure to take advantage of the increased demand Seacom will create. However, much still needs to be done to ensure that the benefits reach all South Africans, particularly those in rural areas where infrastructure is poor to non-existent.
At a recent cabinet meeting, government recognised that expediting the roll-out of wireless broadband infrastructure had become imperative. Wireless broadband is essential for improving access for facilities in rural areas such as schools, clinics and courts.
Some analysts have pointed out that the economics of the digital age are not those of scarcity. Bandwidth is a resource that is potentially so abundant that it may, before long, become free. Until now, South Africans haven’t been able to think in anything near those terms, but Seacom is potentially the start of a new wave of thinking in Africa, in which we can start to see things in terms of abundance, not the scarcity that has plagued the continent for so long. It’s time we no longer thought in terms of our limitations, but rather our possibilities. And in the digital age, those are endless.
Lindsey McDonald, Moneyweb
01 September, 2008 12:52:00
Filed under: Industry News, Seacon, South Africa
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