This document discusses broadband connectivity in Cape Town, South Africa. It outlines the importance of broadband, what broadband connectivity entails, the costs to connect users in Cape Town, and how Cape Town is connected to the world, Africa, other parts of South Africa, and within itself. The implications for business in Cape Town are also addressed, including opportunities that connectivity provides as well as threats from low-cost competitors.

1. Connecting Cape Town
Brian Pinnock
Monday, April 19, 2010

2. Agenda – Connecting Cape Town
• What is broadband connectivity exactly?
• What it costs to connect a broadband user
• Connecting Cape Town to the world (and Africa)
• Connecting Cape Town to South Africa
• Connecting Cape Town to itself
• Implications for Cape Town & business in Cape Town
2 © Copyright Dimension Data 2010 19 April 2010

3. Introduction – Why is broadband connectivity important?
• Broadband Projects 1% extra GDP
• Digital cities initiatives worldwide
• E-Government enablement
• Foundation for virtual working
• Foundation for virtual services
• Enabler – business, education,…
3 © Copyright Dimension Data 2010 19 April 2010

4. What is broadband connectivity exactly?
• Fibre Optic Cable
• International
• National
• Metropolitan
• Other last mile
• Copper
• Wireless
4 © Copyright Dimension Data 2010 19 April 2010

5. What it costs to connect a user from Cape Town
ISP Operations 6%
IPC 12% International
Bandwidth 12%
Last Mile Bandwidth 70%
5 © Copyright Dimension Data 2010 19 April 2010

6. Connecting Cape Town to the World
International traffic flows 2009
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7. Connecting Cape Town to the World
Global Undersea Cable Systems 2010
8 © Copyright Dimension Data 2010 19 April 2010

8. Connecting Cape
Town to the world
• Many cables planned
• Both East and West
coast
• Land locked countries?
• Operating models are
key

9. Connecting to Africa is slow
The “African” issue
• North African reasonable
• Central Africa terrible
• High latency = satellites
• High latency reduces your
options (especially voice
services)

10. Connecting Cape
Town to Africa
• Many terrestrial cables
planned
• Mostly East coast
• Last mile still a problem

11. Connecting Cape Town to South Africa
• Legacy network
Telkom
• NGN
• Major centers connected
Neotel
• Duopoly pricing
• Neotel, MTN , Vodacom & SANRAL cost sharing joint venture
Joint Venture • Own use priority
• Spare capacity to sell
• Fiber systems from Transtel & Eskom
Broadband
• Carrier of carriers
Infraco
• Sentech or saviour?
Implications for • Short term – major centers vs. small towns
business • Medium term – competition may drive prices down further
14 © Copyright Dimension Data 2010 19 April 2010

12. Connecting Cape Town to itself (Last Mile)
• Built, lit and operating
Ethekwini Metro
• +-1/3 of incumbent operators pricing
Johannesburg • POC phase complete
Metro • Not operating yet
• Physical fiber rollout at an advanced stage
Cape Town
• Switching centres go live in July
Metro Broadband
• Unclear on costing/pricing model and final ETA unknown
• Dark Fiber Africa – Internet Solutions (IS Fiber)
Other Metro
• Incumbent telecoms operators – Metro Ethernet
Broadband
• SANREN
Last Mile • Wireless (3G, 4G, CDMA, WIMAX)
Competition • Copper (Local loop unbundling)
15 © Copyright Dimension Data 2010 19 April 2010

13. Implications
Threats Opportunities
• International connection
Competition
• National backbone connection
needed
• Last mile connection most important
• Offshoring -Legal, financial, contact centres, creative industry
Opportunities • Expansion into Africa
• Attract talent – work from anywhere for anyone
• Low cost geographies taking jobs from Cape Town
Threats • Low cost competitors selling services into Cape Town (Google)
• Digital ghettos
16 © Copyright Dimension Data 2010 19 April 2010

14. Connecting Cape Town
Brian Pinnock
Monday, April 19, 2010

15. Diginet Price Trajectory
18 © Copyright Dimension Data 2010 19 April 2010