Cheaper and speedier Internet connection has arrived in South Africa and consumers are already benefiting from the lower costs.
However, the much-anticipated data wars that could take the worldwide web into townships and rural areas would only take place after the 2010 World Cup, said technology experts.
"One expects to see growth in townships throughout South Africa as demand grows because of lowers costs," said Suveer Ramdhani, the spokesman for Seacom, the company whose 15 000km fibre-optic undersea cable links southern and east Africa, Europe and south Asia.
Continues Below↓"We need prices to come down because if they remain high, there is no incentive for consumer to use the services."
Seacom is the first operator using the cable to provide broadband to east African countries which used to rely entirely on expensive satellite connections.
Ramdhani said the wholesale cost of links to individual company exchange servers - giving access to internet and e-mail - had dropped by 90 percent since 2007, with the cost now R800 000 a month for a link, compared to R1.8 million two years ago. "Prices have come down and consumers certainly are benefiting," he said.
He added that the expectation was strong within Seacom for its cables to ensure that people are connected in townships like Khayelitsha in Cape Town, Soweto and Umlazi or KwaMashu in KwaZulu-Natal, which have been ignored by traditional players, even Telkom.
Seacom's entry into South Africa was expected initially to kickstart a mini-price war that would escalate after the 2010 World Cup when the country's bandwidth requirements, as required by Fifa would have been fullfilled.
An internet expert, who did not want to be named, said bandwidth requirements for 2010 were already taken for use. "When the soccer ends, there will be a data glut, and see real price drops," he said.
Arthur Goldstuck, the head of world wide worx, the internet research firm, said data prices have come down at a supplier level and have yet to be passed onto consumers. "Over time we will see data become cheaper," he said.
On Monday, Muku Sharma, the head of consumer and channel sales at Neotel, announced that the company had launched its own data card, NeoGo, offering customers up to 50 percent more data within bundle, with an out of bundle rate of 8 cents per MB, which is significantly lower than current offerings in the market.
"The NeoGo Data card with its large data bundle at a competitive price is just what the consumer needs and we don't hide our out of bundle rate which at 8 cents per MB redefines market pricing for data cards," he said.
Vodacom and MTN levies R2 a megabyte out of bundle rate.
However, industry experts believe that the barrier to Neotel still lies in the access cost, i.e. the subscription to the service, and while they may have opened the way for more viable broadband services they could struggle because of coverage and signal strength.
Some have labelled the failure by Vodacom and MTN to target the low-end of the market as "information apartheid" since the clients at the top of the usage list are raking in the profits for them.
However, the Seacom cable has given way to optimism that the internet will grow in areas it has not reached. Hillel Shrock, a director at Internet Solutions (IS), said the South African broadband market was changing.
"Seacom is an important milestone for the local telecommunications industry as it is the first time that South African service providers, other than Telkom, will be able to make a long-term investment in the provisioning of high speed, high capacity international connectivity," he said.
Tim Walter, the general manager: product and marketing at Nashua Mobile, said Seacom would be good news for consumers and businesses because it will, over time, help to drive down international bandwidth costs for internet users.
"Up until now, most of the country's international bandwidth through the Sat-3/Safe cables has been controlled by the incumbent operator and slow satellite connectivity was the only real alternative.
"Now, other networks and service providers have an alternate source for international bandwidth that they can turn to."
Internet expert Steven Ambrose said the arrival of Seacom would bring more capacity to the continent, but little relief for the general public. "Internet is not going to get significantly cheaper in the short to medium term. We are predicting a 20 percent value change this year, and potentially another 20 percent to 30 percent next year," he said.
Ambrose said the cost per gig of data used would drop while the actual overall cost in rands and cents will not change substantially.
"However, the big change we will all want is a low/reasonable cost package with no cap or at the very least a large 20 to 50 gig cap for around R300. This will not happen until 2011 at best," he said.
