The key issue for the continent is whether the operators buying the bandwidth will sell it to their customers at much cheaper prices. If operators pass on these savings to their customers, then the individual user market (in the home and through mobiles) will grow rapidly. Without this happening, growth in the broadband market will be marginal.
According to the Balancing Act Forecasts, international bandwidth from sub-Saharan Africa has increased from 11.3Gbps in 2006 to 17.5Gbps in 2007 to 26.1Gbps. Overall international African bandwidth (including North Africa) was 96.3Gbps in 2008. The use of international fibre increased as an increasing number of regional inter-connections came on-stream.
The biggest driver of bandwidth growth is broadband connectivity. Although voice demand is growing as prices fall, most of the new demand has been compressed, therefore using more or less the same capacity.
With only modest annual price erosion on retail broadband prices, broadband penetration will only grow marginally. With a "step-change" in broadband pricing where operators pursue a "low price, high volume"
strategy, penetration in individual countries will increase by between 0.2% to 3.8%. The difference in the overall subscriber numbers between these two scenarios according to Balancing Act is enormous: a "low price, high volume" strategy produces almost five times as many subscribers as the much more cautious approach of sticking with high prices.
One of the drivers of broadband growth will be Pay-As-You-Go (PAYG) fixed and mobile internet. At present, mobile broadband is still quite limited in terms of price and availability, but making higher capacity data available on a PAYG basis immediately lowers the entry barrier of a monthly subscription price and will stimulate casual and low volume usage.
The international fibre projects scheduled to land in Africa in 2009 and 2010 are as follows:
But even this is not a complete list as there are other projects like the Infinity cable project that are still seeking finance. In addition, a company backed by Google, HSBC and Liberty Media called O3B will launch a constellation of low-orbit satellites in late 2010. These will also provide capacity to operators at prices comparable to the new fibre cables.
According to Russell Southwood, one of the authors of the Balancing Act Voice and Data Forecasts: "Individual broadband subscribers in Africa will grow substantially in number if the operators adopt a 'low price, high volume' strategy. A combination of the reach of existing networks, existing individual communications spend and the impact of lowering barriers to use through Pay-As-Go approaches all point in this direction."
The third edition of the Balancing Act Forecasts includes all North African countries as well as those countries from sub-Saharan Africa.