broadband in south africa the roadmap to growth

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Broadband in South Africa:

The Roadmap to Growth

Africa Com

Carel Booysen

Executive: Business Broadband Portfolio

2013

1. The effect of broadband and the Internet on innovation and growth

2. How does South Africa rate on innovation?

• Infrastructure

• Human capital

3. Challenges of Broadband in South Africa

4. National Broadband Policy

5. Public and private sector partnerships

6. Telkom response

7. Human capital and personal digital readiness

8. Digitisation trends and the future

Agenda

1. Enable access to a global platform of knowledge that accelerates and enables further

invention and innovation

• Best and brightest ideas

• Known to billions of people

• “Global knowledge bootstrapping”

2. Exponentially increase the ability of people to create, exchange, debate, ideas and

knowledge – the building blocks for innovation

• Debate and paradigms can spread around the world in days

• Viral spread of the best views and ideas

3. Paradigms that made mobile technology accessible to the developing world, like

prepaid, can be used to address other critical development needs

• Mobile payments

• Prepaid electricity

Source: Global Innovation Index 2012, Chapter 9

Why the Internet and Broadband transformed innovation

Correlation of Fixed Broadband Penetration and Country Competitiveness

The Internet globally creates more SME jobs than it destroys

Source: McKinsey, 2011

SMEs using Web technologies extensively are growing more quickly

South Africa’s ranking on Global Innovation Index

Source: Cornell University & INSEAD, 2013

Factor (out of 84) RSA Rank

ICT access 86th

ICT use 86th

Government’s online service 81st

E-participation 79th

Pupil-teacher ratio, secondary 107th

Tertiary education 141st

Gross tertiary outbound enrolment 135th

Overall ranking: 58th out of 142.

Infrastructure

Human Capital

Affordability

Coverage

Speed & Performance

The challenge of Broadband in South Africa:

2013/11/14 8 © Telkom 2013 | COO MyBroadband Conference 2013 | COO

9

Note: 1Based on census information from 2007

South Africa

Lesotho Cape Town

Johannesburg and Pretoria

• Mid and high income areas are highly concentrated in few urban and suburban areas • 59% households represent 83% of total income • Value and Population concentration make the case for infrastructure roll-out very challenging

Low income areas Low-mid income areas Mid income areas Mid-high income areas High income areas

Source: Telkom Internal

Economic vs Geographical Challenge: <2% of SA’s area concentrates 50% of population and 77% of national income


Source: World Bank, Eurostat, DMMA

Source: Digital Media and Marketing Association, South Africa

x SA has less than half the relative internet access than the OECD average (±75%)

But there has been a recent acceleration and the gap will close as OECD saturates and new technologies proliferate in SA

Internet Access: SA vs. OECD

Government’s broadband and ICT aspiration

Government’s stated commitment is to achieve 100% broadband access and 1 million linked jobs by 2020

• SA places 70th in the WEF ranking of 144 countries on Broadband readiness

• Increasing broadband can have a material impact on economic growth. The World Bank estimate that 10% increase leads to 1-1.4% increase in GDP.

• If done effectively, broadband penetration could have major impact on productivity, growth, and employment.

• National Broadband Policy: South Africa should have a target of universal broadband, offering a minimum download speed of 100Mbit/s to four-fifths of the population, by 2030

• Icasa is required “to ensure the rapid assignment of high-demand spectrum required to extend the wireless component of the open-access broadband network by mid- 2014”.

But also diverse Interests Public Sector – Policy Objectives & socio-

economic development

Private Sector – Commercial Objectives & ROI for Shareholders

Th

e D

igita

l D

ivid

e

Private sector ROI unattractive. PPPs drive progress

Private sector ROI often very long term - Investment stimulation &

incentives helpful

Private sector ROI attractive: prevailing regulation/policy

effective

12

Public and private sector partnerships are critical

Diverse strengths Public Sector – Legitimacy, strategic agenda,

ability to align various levers of influence; different ROI criteria, some delivery capacity

Private Sector – Delivery capacity, innovation, technical know-how

Telkom’s key network transformation focus areas


FTTH (100+ Mbps)

FTTC (up to 40 Mbps)

Local Exchange Upgrades (10 Mbps) LTE Access and

Satellite repositioning

Improved Aggregation and better Customer Experience

Access Agnostic Core and IMS capability

Evolved from Gbit/s to Tbit/s with enhanced resilience and manageability

World wide reach with superb capacity and resilience

Building a Service

Oriented Architecture (SOA) for

NG Products

and Services

State of the Art

Network Operations

Centre

Technical testing

South Africa’s ranking on Global Innovation Index

Source: Cornell University & INSEAD, 2013

Factor (out of 84) RSA Rank

ICT access 86th

ICT use 86th

Government’s online service 81st

E-participation 79th

Pupil-teacher ratio, secondary 107th

Tertiary education 141st

Gross tertiary outbound enrolment 135th

Overall ranking: 58th out of 142.

Infrastructure

Human Capital

Age

Education/skill

Access We need digital access to become familiar with and engage with the digital realm. Access includes connection, device and affordability

“Youth” or “Gen-Y” are overwhelmingly more comfortable, participative and productive in digital environments

More educated people are more able to engage with and adapt to digital worlds

Hypothesis

% Population (or Staff) with access to the Internet

% population or customer base or staff 24 years old or younger

% customer base or staff with at least secondary education*

* Considered Literacy but too broad; HDI but includes inappropriate factors

Possible Measures

What influences personal digital readiness?

A Possible Model for Personal Digital Readiness

Age

Ed

ucati

on

/skill L

evel

≤ 24 Yrs ≥ 25 Yrs

Secondary

School +

Not

com

ple

ted

Secondary

Scho

ol

Pace-setters

Hopefuls Digitally Disempowered

Cautious Rationals

With Access

Digitisation Big D

ata

Mobility & UC

Change in Competitive Imperatives

Broadband and the Internet enables digitisation trends

17

Dig

ital

an

d

soci

al

me

dia

Broadband

and Internet underpins

Some Gartner predictions for the future

Source: Gartner Group, 2013

• By 2020, the labour reduction effect of digitalization will cause social unrest and a quest

for new economic models in several mature economies.

• By 2017, over half of consumer goods manufacturers will employ crowdsourcing to

achieve fully 75% of their consumer innovation and R&D capabilities.

• By 2020, enterprises and governments will fail to protect 75% of sensitive data, and will

declassify and grant broad/public access to it.

• By 2020, the majority of knowledge worker career paths will be disrupted by smart

machines in both positive and negative ways.

• By 2020, consumer data collected from wearable devices will drive 5% of sales from

the Global 1000 companies

broadband in south africa the roadmap to growth

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