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Broadband and 3G could off later than expected - reportdate: October 31, 2001 A report by Ernst & Young and BMI-TechKnowledge polling local decision-makers has found that both broadband and 3G cellular services could take off later than generally expected. Yet such services are seen as inevitable. "The Future Insight: Communications, Content and Commerce" report was triggered by comments that a similar global report was not applicable in the local context. E&Y says this drove in-depth interviews with 20 "CEOs and other thought leaders" from a variety of companies. The results are not encouraging for those looking forward to broadband soon. The majority of the group felt broadband will not be effectively rolled out for up to five years, even though Telkom is expected to launch a DSL service early next year. Factors such as very high costs, an unfriendly regulatory environment and lack of infrastructure were identified as substantial inhibitors. Yet many feel there is an underlying need for such services. "People don't know they need it, but when it catches, it will spread like wildfire," one CEO is quoted as saying. The group did not agree on who would drive the initial roll-out of broadband, and was about equally split between a push by the suppliers, demand by business and consumers, and a combination of supplier push and user demand. Wireless broadband or 3G is not expected any sooner than its fixed-line cousin. Most of the group expects large-scale 3G roll-outs only in three to five years, with one person predicting that SA could leapfrog UMTS completely and adopt a newer technology after that period. Only around 50% of the group believed that wireless access will be a significant broadband platform, with the rest saying mobile is likely to stay a narrow-band application medium. When broadband does become a reality, the majority think telecommunications companies will stand to gain most, with ISPs possibly seeing some benefit, but content providers standing little chance of gaining. What benefits there are to content providers seem set to flow into Johnnic's pockets. Most respondents identified the company as likely to survive as a content packager, with Naspers, the SABC and World Online ranking some way below it. However, a large portion of the respondents believes there is opportunity for a new player to mop up, or that the field is wide open for existing players. How these content providers are to make their money is not clear. About half the group believes a monthly subscription is the right way to go, but the same number identified pay-per-view as viable. Smaller groups thought bundling of services is possible, but sponsorships, micro-payments and advertising revenues are not considered likely sources. "[Subscription] will be the real business model in SA," one respondent said. "People will prefer this because they know what they are getting and providers are guaranteed of a consistent stream of revenue. Even the consumer would prefer this because it makes it easier for them to budget."
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