Drop in local data tariffs to give consumers more cash for flash
AN EXPECTED drop in data and voice tariffs in South Africa is boosting consumer purchasing power in other information technology (IT) areas, such as devices and software, Gartner says in a new report.
A cut ordered by the telecom industry regulator in South Africa has sparked controversy in the industry. Funds saved from the call tariff cut are now projected to be used for other communications purposes, analysts say.
South Africa was projected to spend as much as R276.6 billion on IT this year, a 4.3 percent increase on the previous year, Gartner said, further highlighting that most IT segments “are on track to achieve growth” this year.
The Independent Communications Authority of South Africa (Icasa) has directed mobile operators to lower call termination rates. This is expected to result in a lower mobile voice tariff.
It is against this backdrop that Gartner analysts said: “The price of communication services, including voice and data services for fixed and mobile delivery, (will) continue to drop, which enables spending to be allocated to other IT categories.”
According to the Icasa, the new call termination scaling will result in a “charge for terminating a call on mobile and fixed location” at 12 cents and 8c respectively from October 2018 to September 2019, and at 10c and 5c for October 2019 to September 2020.
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Although the lowering of call termination rates will be welcome news for consumers, Telkom has said this move could force it to cut jobs and funding for service expansion into rural areas.
“If the termination rate on a fixed line is cut to 3 cents, it will be a calamity for the business and we will be hard-pressed on jobs and certain services,” said Telkom chief executive Sipho Maseko at a news conference in Johannesburg yesterday.
In line with the declining voice and data tariffs, Gartner said overall spending on communications services was projected to represent 43 percent of the country’s IT spending.
“South Africa is playing technology catch-up. After years of neglecting basic data centre requirements, the country’s IT leaders are now drawing attention to their data centre system spending,” said John David Lovelock, an analyst at Gartner.
The increase in data server system spending this year stems from requirements to overcome a large corporate technology deficit and to modernise data centres, explained Gartner. Spending on IT devices and software in South Africa will increase by 0.9 percent and 10 percent respectively this year.
However, low cloud adoption and under-utilisation of strategic consulting and implementation services is seen occasioning a “slow pace” in digital transformation in South Africa overall.
The resumption of operations by Chinese telecom equipment firm ZTE is also expected to be a boon for the South African tech industry. ZTE has said that a recent ban imposed on it by the US, which had led to the suspension of business operations across the world, had been lifted.