- February 14, 2019
- Posted by: Myles Freedman
- Category: More Industry Insights
In SA, commercial rollout of 5G network technology will take a little longer than initially anticipated.
This is according to Saurabh Verma, head of ICT for Frost & Sullivan Middle East and Africa, presenting the business consulting firm’s 2019 predictions for the local ICT market yesterday.
Locally, data-only network Rain plans its own 5G rollout in SA sometime this year, while mobile operators MTN and Vodacom continue to move towards a 5G launch in SA.
Although telcos are conducting trials and looking at deploying 5G, Verma believes it still has a long way to go, especially from a business and utilisation perspective.
Given the current scenario in SA, the country is still fine with 3G, he notes. “Expensive data packages and delays in spectrum release are hampering subscriber base growth for 5G. While mobile operators are ready to develop 4G networks and deploy 5G services, 3G will be the dominant technology over the next three years.”
Verma points out the key trend around 5G adoption is happening in some of the mature markets because they have a strong ecosystem. “5G is all about use cases and identifying the right kind of use cases to really deploy 5G technology. Unless you have that, it will be a difficult conversation for the CFO or CEO to justify that kind of investment to the board.
“5G is not just the next generation of telecoms infrastructure; it is more about the ecosystem. Unless you go and collaborate with ecosystem partners, you will not be able to find the right use cases for 5G. Yes, 5G will solve a lot of problems in terms of delivering superior connectivity, speeds and lower latency but just looking at the investment, which is three times what it was for 3G or 4G, will be a challenge.”
On the same page
Sabelo Dlamini, senior research and consulting manager at IDC Sub-Saharan Africa, shares a similar sentiment as Verma, predicting 5G deployment will take off slowly.
Dlamini was speaking at the IDC Directions event held last night in Woodmead, Johannesburg.
According to Dlamini, spectrum uncertainty will persist in SA this year, and potentially pose a challenge to commercial 5G rollout. “The ECA Bill has been withdrawn and I think that will add some time in terms of the release of 4G spectrum. The auction that has been promised is 2019 for 4G spectrum and 2020 for 5G, but now it seems as if government is rethinking their allocation model, so that is likely to take a bit of time.”
Dlamini notes there have been a lot of discussions about 5G with no true commercial launches.
“Most of the operators have publicised that they have launched 5G but those can’t be counted as true 5G launches because the solutions and services are not available in stores.
“In 2019, we believe there will be network subscriptions and end-user devices available to the general public. Internationally, we expect to see one or two operators launching 5G. This won’t be a full portfolio of 5G but will only focus on enhanced mobile broadband. 5G has three legs: enhanced mobile broadband, hyper-reliable low latency and enhanced machine-type communication.
“We are yet to see the hyper-reliable low latency and enhanced machine-type communication legs of 5G, which are unique differentiators of 5G. We are going to see commercial deployment of 5G but it won’t be the full bouquet of 5G.”
Telecoms sector on the rise
Frost & Sullivan predicts SA’s telecoms sector revenue will reach R149.5 billion in 2019.
Overall, the local ICT market will reach around R305 billion, which is almost a 3% growth rate compared to last year, according to Verma.
The telecoms sector is expected to contribute 49.6% to ICT growth, while the cloud services market will contribute the least at 0.6%.
The business consulting firm believes telcos will strengthen digital content offerings, including over-the-top messaging, video-on-demand, pay-TV and triple-pay services. “They will also actively acquire and partner with IT service providers to strengthen their in-house resources and capabilities to compete in the ICT services ecosystem.”
Verma highlights telecoms predictions are slightly optimistic, but warns these may be hampered by the elections this year. “This is an election year and we will see how it pans out, but we hope the changes brought on by the elections will be positive.”
Appetite for data centres
According to Frost & Sullivan, multi-tenanted data centres will drive growth in data centre revenue in the local market.
The firm reveals data centre revenue contributes 8% toward the overall ICT industry and is estimated to reach R8 billion in 2019 with a growth of 10.6%.
There has been a hive of activity in SA’s data centre market.
Last month, Teraco announced an agreement with Berkshire Partners, which will see the Boston-based investment firm acquire a majority stake in the local data centre provider.
Despite missing its own deadline to launch data centres in SA by the end of last year, Microsoft confirmed it will now launch its data centres in the country this year.
In November 2018, Huawei announced it would open its first public cloud data centre in Africa, in Johannesburg this year, making Huawei Cloud services officially available in SA. Amazon Web Services (AWS) will also bring its data centres to SA, launching its AWS Africa (Cape Town) infrastructure region in the first half of 2020.
Frost & Sullivan states: “While a 1.8% growth in data centre’s revenue is expected in 2019, the growth of data centre services via cloud will take longer than expected due to consumer protection regulations and the fact that large enterprises’ transition to cloud is hampered by legacy infrastructure.
“A potential business model would be for cloud services to target SMEs as they have the potential to improve efficiencies and reduce costs.”
Leading the pack
Frost & Sullivan believes South African start-ups will lead the innovation in industrial Internet of things (IOT), artificial intelligence (AI) and cross-industry integration.
“With start-ups focusing on innovative IOT solutions to reach 6.2 million in M2M subscriptions, non-voice services, especially mobile data (3G and 4G), will continue to drive industrial IOT market growth in 2019.
“Telecommunications providers will become end-to-end solutions providers, growing beyond offering connectivity services to provide sensors, hardware, software, platforms, cloud, analytics and security.”
Verma adds: “In terms of finding new revenue streams, IOT is one of the key areas that most telcos are betting big on. We have seen examples where telcos have actually gone and acquired some of the local start-ups that are developing new technologies purely on the IOT platform.”
Dlamini concurs and points out there is big growth in IOT application within the consumer security space. “Innovative technologies like AI and IOT will be driven by the SMEs because they have much quicker turnaround time compared to bigger telcos.
“We are seeing big growth areas in the IOT sector. The big telcos don’t seem to have the bigger pie in this space. The SMEs are the ones that are much closer to the end-users and they understand detailed use cases in solving their problems. It’s one of the areas where the telcos might have to partner with the small companies that might be able to understand the business better.”
Frost & Sullivan also predicts AI-powered business applications will increase productivity and efficient customer support and services, and digital transformation to improve customer experiences, while fintech firms will continue to enjoy a mostly good relationship.