NETWORK ACCESS (Stage 2)

Information Infrastructure
South Africa currently has a strong telecommunication infrastructure in many areas which is solely provided by one company which is Telekom. This company is the only wire-line telecommunications provider in the entire country. A concern is that the country is lacking penetration into remoter regions leaving the country highly underdeveloped [7.4]. The number of main lines between 1998 and 2003 increased at a rate of about nine percent annually the progress has been limited in scope for the global telecom sector. An estimated 50 percent of available lines were located in capital cities, where only 10 percent of the population lives [7.6]. African leaders expect to raise teledensity to 10 percent by 2010, and they have determined that $11 billion U.S. dollars must be invested annually until 2010 in order to achieve this goal. This has allowed them to take full control of the monopolizing the countries telecommunications infrastructure but not ever grasping the densest sections of the country [7.14]. While Internet access is currently available in almost all capital cities, there are numerous shared Internet accounts, and a lot of citizens make use of public access services so it has been difficulty to get accurate data on internet penetration. There were about 12 million Internet users by 2003 which is low in the global scope, but this number still represents a large number of inhabitants for the area. The government has allowed for Telekom to control the market for a number of years which will continued through 2003 with the option to continue through out the year 2004 [7.13]. Telkom’s monopoly began after the ending of apartheid which opened up the country to a number of foreign investments primarily because government felt the need to bring foreign dollars to the country. South Africa had 40% of the countries telecommunications funneled through South Africa because of the most diverse and advanced economy in all of Africa [7.13]. There was a need for access to be met with only 1 line per 100 blacks and 60 lines per 100 whites, the low density sector had practically no access to the networked community at all. As South Africa was the leading country for U.S. exports a number of American companies began to establish business branches in the region for example some of the worlds largest telecommunications companies: Sprint, AT&T, Lucent, Motorola, Hughes, and Iridium to name a few. Telkom initially provided high prices for services with poor service to non-white sectors of the country doing something that was virtually unheard of in third world communities and that was losing customers. In the cellular infrastructure across the continent has seen an average growth rate of 65 percent overall from 1998 up until as recently as the last three years [7.14]. Africa is significantly behind the world average in mobile penetration, with penetration rates on the continent ranging from 0.1 percent to 68 percent, primarily below the 10 percent bracket globally.
A new initiative in Africa is the Regional African Satellites Communications (RASCOM) project; this aims to provide a continent-wide system of satellite communications that was started back in 1992 but not predicted to be fully available until sometime in 2006. I satellite has been launched the IS-907 which is the most powerful of satellites in the fleet to go out. This will provide 192kpbs and higher service to Africa and Europe by expanding the regions current infrastructure to other rural areas [7.14].

Internet Availability (Stage 2)

The current internet situation in South Africa is not were it should be in comparison to a majority of there global competitors. For the many internet users there a large majority of the access to the internet through internet cafes or Cyber cafés the pricing chart explain the way in which access is being used in the major cities of South Africa. The rural demographic is not able to access the web the same way in which those in developed cities may.
Internet Affordability (Stage 2)
Due to the lack of competition under the Telkom monopoly the charges for using internet service is extremely expensive. Connectivity is geared around a unified packet-based system [7.2]. The average total cost of using a local dialup Internet in South Africa is approximately double the price in the U.S. including all fees and line usage. The total cost encompasses the following:
• Cost of accessing internet infrastructure
• Internet service provisions
The types of services provided are broken into three specific categories:
• Dialup varying hours online
• Cyber cafe
• Organizational with permanent leased lines(cyber cafe excluded)


For leased line subscriptions there using a 128kbps line link with at least a 64kbps international bandwidth as a benchmark because in a majority of instances charges are bundled so there is only a single cost item levied for these types of users. The same method is also used for cyber cafe proprietors [7.8] The following chart illustrates the pricing comparison of dialup service in addition to Cyber cafe’s further.

South Africa has the lowest diffusion of the internet in the in the world. There are roughly 111 for every group of 10,000 people. There are only three-internet host which is extremely low considering that in the use there are over 220 host in Europe and over 1400 in the U.S. per 10,000 users, which is primarily related to the high cost of communication infrastructure throughout the continent with the limited penetration and unreliable connections. In the more developed areas where the infrastructure is fairly well developed, the cost of the internet is still as much as 100 times more expensive. The reason for which is because of policy restrictions and a monopoly structure that is seen in many communication sectors throughout the area.

Hardware and Software
Software- has a very limited opportunity for change due to the huge presence of the United States. For example 84% of the software coming into the country is imported from the United States giving the main portion of the market share to the U.S. The remaining 16% is broken up amongst Israel, France and Germany providing the difference for the country. Local software is reserved for only specialized applications that are mostly seen within the technology market [2.15]. Tariffs are also applied to software packages such as 14% value added tax or VAT on the values of the products but not duty is paid. Many companies have broken into the market through the process of mergers and acquisitions to a number of the local companies to get into the software market.
Hardware- is almost entirely supplied by the Far East countries in addition to a small portion being provided from France and Italy alike. Competition is a difficult battle for the local assembly operations. They must first compete amongst one another but also with the likes of the huge Far East suppliers and other multi-national suppliers that have migrated to South Africa. Unlike software there is a 6.5% import duty on hardware in addition to the VAT also valued at 14%. A total of 1.7 billion U.S. dollars spent on hardware between 2000 and 2001 and to date continue to grow in numbers rising 7.9% of the same year.