2011 to be a year of competition, consolidation.

7 February 2011

The Internet Service Providers’ Association of South Africa (ISPA) is projecting a year of heightened competition in the South African telecom market.

That will be good news for consumers of telecom services since prices of voice and data services will continue to fall, said Ant Brooks, General Manager of ISPA. Telecoms firms will also be forced to focus more closely on customer service and value-added products in a market where connectivity is becoming increasingly commoditised.

In addition to competition, telecoms tariffs will drop as a result of regulatory interventions such as ICASA’s moves around mobile termination rates. However, these reductions may not be realised in the short term as operators adjust the way they do business. Pressure on telecoms companies’ margins could spur some consolidation among smaller players in the market, Brooks said.

He also predicted that the telecoms industry will focus on infrastructure investment during the year ahead, especially on rolling out fibre-optic cable. Many competitors will start working together to roll out infrastructure to share costs.

Falling access costs and investments into infrastructure will create a wealth of new opportunities for the telecom industry and its customers. For example, cheaper and more abundant bandwidth will spur on adoption of cloud computing services, and we could also see triple-play services deployed to home users during 2011.

Many companies will also aggressively adopt fixed-mobile convergence services.

The mobile Internet will get a major boost from consumer uptake of tablet computers and netbooks, he added.

Brooks said that one major challenge that the industry faces lies in a shortage of telecom skills. In addition, telecoms companies face the challenge of managing their cost bases to ensure their profitability into the future.

ISPA believes that many of the regulatory building blocks for the South African Internet industry’s growth are now in place, with the exception of the spectrum allocations needed for wireless broadband services. Lobbying ICASA to accelerate the process of allocating this spectrum will be one of ISPA’s major focuses for the year. The organisation also plans to work closely with international ISP associations and local stakeholders to address global issues such as spam and child porn.