How do mobile and fixed broadband stack up in South Africa?

Policy Brief 2: South Africa, 2013

While South Africa ranks poorly on prepaid mobile prices compared to other African countries, it does better on pricing of mobile broadband data. But while South Africa performs well on high-usage mobile data packages for both prepaid and postpaid mobile baskets (and for lower-use post-paid), the prices for lower–use prepaid mobile, where affordability is most likely to be an issue, remain relatively high. ADSL across the board also is high. Further, unlike in more developed nations, where fixed is the predominant form of broadband access in South Africa, mobile broadband is pre-dominant – it is also, unlike in those markets, both cheaper and faster than fixed. However, wireless is inherently less stable than fixed broadband technologies such as XDSL and fibre and the implications of not having ubiquitous, reliable always on high-speed connectivity for the economy and global competitiveness are serious.

Highlights:

1. Mobile broadband is cheaper and faster than fixed-line broadband. Unlike in mature markets in the North, mobile broadband is cheaper and faster than fixed broadband in South Africa, though the nature of wire-less means that its broadband performance is inherently less stable than fixed.
2. Lower prices for contracts than prepaid. At a national level, mobile broadband contracts are cheaper than prepaid options. When compared to other African countries, South African prices of prepaid and postpaid mobile 5GB baskets, and postpaid 1GB baskets, rate well for affordability, prepaid 1GB baskets do not rate well.
3. Broadband provision is where the competitive pressure amongst mobile operators is focused. Consumers are benefitting from stiff price competition in the mobile broadband market. Mobile operators seek to attract, lock in, and retain data customers through attractive high-usage and contract data packages.
4. Fixed-broadband offerings neglected in favour of mobile. While prices for fixed-line ADSL (chiefly delivered by Telkom) have come down, they are not nearly as competitive as the mobile broadband services offered by Telkom’s mobile arm, Telkom Mobile, which is also much faster.
5. Will fixed-line operators survive the competition in the broadband market? Fixed-line operators need to invest in the new technologies, such as VDSL and fibre-to-the-home, required for reliable, critical services – a key policy challenge if fixed broadband is to stand a chance against mobile broadband.