Thursday, July 22, 2010

Undersea cables and Wimax to propel Africa's broadband growth, research finds

Driven by improvements in the terrestrial backbones and last-mile networks, the new undersea cables surrounding Africa will boost the broadband penetration rate from 3.2 percent in 2010 to 6.8 percent in 2015, according to a new report from Pyramid Research.

New Undersea Cables Help Boost Africa’s Broadband Prospects analyses the factors related to the new undersea cables that will be instrumental in the growth of broadband adoption and revenue in Africa, specifically how variations in the state of domestic terrestrial networks in the regions where these cables land can impact potential operator revenue and broadband penetration rates among end users.

The 17-page report provides scenarios of how the AME markets can grow in terms of broadband adoption and revenue under different prices and different market reactions to price reductions.

New undersea cables will drive the growth of total broadband users in Africa from 40 million in 2010 to 92 million in 2015 at a CAGR of 18 percent, while revenue will increase at a CAGR of 16 percent in the same period to US$20 billion, notes Kerem Arsal, Analyst at Pyramid Research. During the forecast period, WiMax will take center stage in the coverage for the last-mile access and its access lines. "We predict that WiMax will grow at a CAGR of 30 percent between 2010 and 2015; we also foresee similar trends in mobile broadband, particularly in the data cards/modems," says Arsal.

"Many African telecom markets have the potential to improve their poor broadband penetration rates and limited revenues and transform their competitive structures," Arsal claims, "however, there is still much work to be done by the players across the telecom value chain if they wish to take full advantage of this opportunity." Tiered pricing strategies designed by undersea cable operators for smaller capacities and shorter durations, such as that announced by EASSy (Eastern Africa Submarine Cable System), will improve competitiveness in the AME region. Growing broadband access will also need end-user devices that can exploit the available bandwidth.