The Internet in South Africa

1
The Internet in South Africa

• The end of the road or
• the start of the next wave?

2
Why the internet is important

• It is strongly associated with economic growth
  and job creation
• It is an important tool for business across
  distances
• It is a key tool to raise the competitiveness of
  value chains
• New types of business opportunities are enabled
  through removal of distance, e.g call centres and
  other back office operations
• It has a major role in social development (e.g.
  health and education)
• It is a key mechanism to increase democracy and
  improve government services

3
And Africa?

• Two contrasting extreme views
• leapfrog the Internet can render historical
  backwaters hugely better off and can help them
  skip stages of development
• versus
• dig it allthe view that developing countries
  have become a plaything for developmentalist
  techies with new toys

4
Who is right?

• Leapfrog?
• Tourist bookings with SMEs in rural Tanzania
• American insurance companies with back office
  operations in Ghana
• French digitising translation in Morocco
• CAD offices in Senegal for Europe
• Digital mapping in Dar es Salaam for companies in
  California
• VOIP call centre for US clients in Togo
• A tele-hospital in Gambia

5
Who is right?

• The Dig-it-all divide?
• Gap between the hype of the technology and how it
  can be used by people in poverty
• Dot.forces descended on Africa, but
• Telecentres are lying fallow
• Infastructure is built with no content or
  services
• Internet in some schools, but teachers cant or
  wont use it
• In the absence of other services, how much of a
  priority can ICTs be?

6
The Internet has disappointed

• The crash of the dot.coms contributed to the
  NASDAQ losing 2/3 of its value
• The telecommunications debt crisis stems in good
  part from lower than anticipated usage for data
  exchange through the internet
• Social services like health and education have
  developed fully-fledged systems far slower than
  expected
• A big disappointment is the failure of the net to
  empower small businesses

7
Why did the net disappoint small business?

• It was thought that the net would allow B2B and
  B2C access for small businesses
• That the net would reduce inequalities between
  small and big businesses in regard to marketing
  and sales (remember the IBM ads?)
• That the net would open access

8
Why did the net disappoint small business?

• BUT
• The net favoured big business in B2C because
  importance of credibility trust brand
• The net did not help small businesses in open B2B
  systems for similar reasons
• B2B dominated by large companies using closed,
  tightly knit communities

9
Growth in Internet Usage is Slow in SA

• Only about 3.5 million terminals (compared with
  17m telephone terminals)
• Only about 30 of businesses have Internet access
• E-commerce transaction growth is much slower than
  expected
• Public service usage is growing slowly
• Quality content for wide markets is yet to arrive
• The cost and bandwidth of telecommunications has
  been an inhibitor
• Access to suitable telecoms is a factor in the
  rural areas

10
But there are important positive factors

• The major telecoms operator is now launching ADSL
  services
• A second fixed line network operator will
  introduce further competition in data
  distribution
• Digital TV and other interactive multimedia will
  broaden usage
• Other devices are increasingly delivering the
  Internet

11
Other important positive factors

• Role of internet in value chains, especially in
  export sectors (findings of diffusions study)
• The SMEs in under-serviced areas could provide
  more services
• Government Gateway project and Golaganang
  project
• Introduction of an Education Rate in terms of the
  telecoms act

12
Government Initiatives

• The Cabinets Microeconomic reform strategy
• Integrated Manufacturing Strategy Knowledge
  Intensive Manufacturing
• The Presidents Commission for ISAD and the
  International ICT Commission
• E-strategy Task Force in terms of the ECT Act\
• Specific supply side programmes

13
Integrated Action Plan
14
Role of ISPs in the new wave

• How to serve new markets
• schools
• small businesses
• private individuals
• How to pass on savings to new customers
• How to help customers access relevant content