Johannesburg - The number of broadband users is expected to rise to 870 000 in the next five years from 40 000 last year on the back of price reductions for high speed internet access, according to a report by information technology research firm BMI-Techknowledge (BMI-T).
Residential broadband connections will grow by 40 percent a year to 348 000 in 2009, while business connections will expand by 60 percent a year to 522 000 in the same period.
Tertia Smit, an analyst at BMI-T, said rapidly falling broadband prices would have a significant impact on the rate of penetration of broadband in the market, "but the flip side is that the overall market will remain relatively backward compared with developed countries in the short to medium term."
Companies competing in the wireless broadband market include Vodacom, MTN, Wireless Business Solution and Sentech.
The report, which focuses on wireless internet deployment and broadband access, forecasts that there will be about 4.4 million third generation (3G) cellphone users in South Africa in 2009.
3G technology enables users, among other things, to access the internet, send and receive e-mails and SMSs and make video calls.
Vodacom launched 3G seven months ago and boasts a subscriber base of more than 14 000. MTN launched its 3G services last month.
Smit said the aggressive push by cellular operators Vodacom and MTN into the broadband wireless data space would create an additional dynamism in terms of fixed-mobile convergence.
The report states that wireless connectivity will also be stimulated by corporate adoption of mobile services and new entrants into the wireless market, leading to more competitive pricing.
BMI-T estimates that entry-level prices for broadband connection will drop by 50 percent within two years.
Internet access revenues, excluding installations, are forecast to grow from about R2.5 billion in 2004 to about R5.8 billion in 2009.
BMI-T estimates that the largest share of broadband internet revenue by the end of the forecast period will come from asynchronous digital subscriber lines, an internet access protocol using fixed lines. Businesses would contribute about 60 percent of the forecast revenue
But, despite price and performance improvements and accelerated growth over the next five years, Smit warned that unless service offerings reached higher levels, South Africa would remain in the doldrums relative to developed world standards.