Internet access spending to soar
Mobile access via devices will form the bulk of the expected growth, writes Thabiso Mochiko
CONSUMER spending on internet access in SA is expected to reach R59.6bn a year by 2017, up from R19.8bn in 2012, according to a recent PwC report on entertainment and media.
CONSUMER spending on internet access in SA is expected to reach R59.6bn a year by 2017, up from R19.8bn last year, according to a report on entertainment and media released recently by PwC.
The South African internet market is dominated by the mobile segment due to increased investment in cellular coverage by mobile operators and decreasing tariffs.
As a result, mobile internet access will form the bulk of the expected growth, and growing mobile internet penetration will help to drive growth in other segments. Most people access the internet using their mobile phones. As a result, mobile internet access extends access to entertainment and media beyond the home, allowing consumers to access content wherever and whenever they want, states PwC.
Mobile internet growth is mostly driven by the affordability of the services and higher levels of usage on mobile devices than on devices such as laptops, says PwC.
Internet access via mobile devices comprised 89% of the internet access market and 81% of its revenues in 2012.
Increased internet access will remain a significant force behind the major growth in the South African entertainment and media
SA’s internet advertising market is growing at nearly twice the global rate, the report states
industry, reflecting greater use of broadband devices and smart devices, according to PwC.
Vicki Myburgh, entertainment and media industries leader for PwC Southern Africa, says the access consumers have to enter- tainment and media content and experiences is being democratised by the expansion of access to the internet and the explosive growth in smart devices.
PwC says the internet access market will change dramatically in a variety of ways over the next five years and survival will depend on scale, which will require operators to collaborate more.
“Working with the government, regulators and content providers will also be vital.
“But those that succeed stand to gain a slice of a very large business,” the PwC report states.
In SA, slow regulation processes have negatively affected SA’s broadband deployment. However, the government is addressing some of the policy and regulatory issues as it has an ambitious plan to provide broadband access to every citizen by 2020.
“There is a strong belief that internet access matters. Both the government and consumers are increasingly seeing broadband as a vital utility that enhances lives, society and the economy as a whole.”
A report from the secretariat of the Broadband Commission, done in collaboration with Ericsson, shows that while national broadband plans increasingly recognise broadband’s role in socioeconomic development, much more needs to be done to support this “invisible technology”.
A regulatory environment that encourages widely accessible and affordable broadband deployment is the only way to realise its potential to advance sustainable development — for example, through proactive policy on spectrum and the protection of inventions, the report states.
It recommends that the governments create a streamlined and enabling regulatory environment for the broadband era that hastens the removal of barriers to market entry for broadband uptake. Broadband internet is seen as a driver of innovation. It supports the delivery of healthcare and financial inclusion, through mobile banking and mobile money in many countries.
According to the PwC report, the growth of internet access has also seen spending on advertising increase. PwC predicts that total spend on internet advertising will reach R3.7bn by 2017 from R1.2bn. SA’s internet advertising market is growing at nearly twice the global rate, the report states.
Mobile advertising, which includes all spending on mobile phones and tablets, excluding text message advertising, will see its share of internet advertising increase from 16% last year to 26% in 2017.
Internet advertising growth will be pushed along by the growing broadband penetration, declining broadband prices and the availability of devices.
According to PwC, South Africans and Africans in general are more “predisposed to receive advertising on their phones than their global peers”.
Social media platforms have also contributed to the rise in advertising revenue as those platforms have been able to monetise their content.