A recent Cisco report has revealed that the worldwide shift from feature phones to smartphones, a revival in laptops with tablet-like capabilities, as well as expanding machine-to-machine applications are key factors supporting the increasing smart traffic trend.
According to the latest annual update of the Cisco Visual Networking Index Global Mobile Data Traffic Forecast for 2014 to 2019, the ongoing adoption of more powerful mobile devices and machine-to-machine (M2M) connections combined with broader access to faster cellular networks are key contributors to significant mobile traffic growth. In 2014, 82% of South African mobile data traffic was “smart” traffic, with advanced computing/multi-media capabilities and a minimum of 3G connectivity, but that figure is expected to rise to 98% by 2019.
The worldwide shift from basic-feature phones to smartphones – combined with the continued growth in tablets, a resurgence in laptops with tablet-like capabilities, as well as expanding machine-to-machine (M2M) applications – are key factors supporting the increasing smart traffic trend.
“The remarkable uptake and adoption of mobile devices will be a key contributor to the country’s transformation, impacting industries like education, healthcare and government services therefore reaching all aspects of the society. The ongoing adoption of more powerful mobile devices and wider deployments of emerging M2M applications, combined with broader access to faster wireless networks is not limited to South Africa but across Africa as a whole. The findings of Cisco’s Mobile VNI 2015 comes as no surprise given the phenomenal growth of mobile traffic. This mobile-friendly environment will give service providers in South Africa a new landscape of challenges and opportunities to innovatively deliver a variety of mobile services and experiences to consumers and business users as the Internet of Everything (IoE) continues to take shape,” says Vernon Thaver, Chief Technology Officer, Cisco Systems South Africa
Key Highlights from South Africa
In South Africa, mobile data traffic is expected to grow 11-fold from 2014 to 2019, a compound annual growth rate (CAGR) of 63% – two times faster than expected fixed IP traffic growth. This will be driven by the projected 48.2 million mobile users (88% of the population) by 2019, up from 43.4 million in 2014.
· Data explosion: South African mobile data traffic will grow 2 times faster than fixed IP traffic from 2014 to 2019, and will account for 32% of South African fixed and mobile data traffic by 2019, up from 13% in 2014.
· Smarter connections: In South Africa, 62% of mobile connections will be ‘smart’ connections by 2019, up from 21% in 2014.
· Smarter traffic: In South Africa, 98% of mobile data traffic will be ‘smart’ traffic by 2019, up from 82% in 2014.
· More traffic: Mobile traffic per South African user will reach 7,217 megabytes per month by 2019, up from 710 megabytes per month in 2014, a CAGR of 57%.
Key Mobile Data Traffic Drivers in South Africa
From 2014 to 2019, Cisco anticipates that South African mobile traffic will grow at 63% CAGR. Trends driving mobile data traffic growth include:
· More mobile users: By 2019, there will be 48.2 Million mobile users (up from 43.4 Million in 2014), a CAGR of 2.1%. The number of mobile-connected devices will grow at a compound annual growth rate of 6% from 2014 to 2019. In 2014 there were 43.4 Million mobile users, nearly 82% of South Africa’s population, up 5% from 41.2 Million in 2013.
· More mobile connections: By 2019, there will be approximately 112 million mobile-connected devices. In 2014, 6.9 million smartphones were added to the mobile network and there were 84 million mobile-connected devices in 2014.
· Faster mobile speeds: The average mobile connection speed will grow 2.1-fold (16% CAGR) from 2014 to 2019, reaching 3,639 kbps by 2019.
· More mobile video: By 2019, mobile video will represent 71% of South African mobile data traffic (compared to 51% at the end of 2014).
Impact of Mobile M2M Connections (and Wearable Devices) in South Africa
M2M refers to applications that enable wireless systems to communicate with similar devices to support global positioning satellite (GPS) navigation systems, asset tracking, utility meters, security and surveillance video. Wearable devices are included as a sub-segment of the M2M connections category to help project the growth trajectory of the Internet of Everything (IoE).
· In South Africa the number of wearable devices will reach 2.4 million in number by 2019, up from 0.6 million in 2014, at 30% CAGR.
· In South Africa, traffic from wearable devices is expected to fuel 20-fold growth in mobile traffic from wearable devices between 2014 and 2019.
· In South Africa the average wearable device will generate 391 megabytes of mobile data traffic per month by 2019, up from 73 megabytes per month in 2014.
Growth of Mobile Cloud Traffic in South Africa
Cloud applications and services such as Netflix, YouTube, Pandora, and Spotify allow mobile users to overcome the memory capacity and processing power limitations of mobile devices.
· In South Africa, mobile cloud traffic will grow 12.7-fold from 2014 to 2019 at 66% CAGR.
· Cloud applications will account for 89% of total mobile data traffic by 2019, compared to 80% at the end of 2014.
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VoD cuts the cord in SA
Some 20% of South Africans who sign up for a subscription video on demand (SVOD) service such as Netflix or Showmax do so with the intention of cancelling their pay television subscription.
That’s according to GfK’s international ViewScape survey*, which this year covers Africa (South Africa, Kenya and Nigeria) for the first time.
The study—which surveyed 1,250 people representative of urban South African adults with Internet access—shows that 90% of the country’s online adults today use at least one online video service and that just over half are paying to view digital online content. The average user spends around 7 hours and two minutes a day consuming video content, with broadcast television accounting for just 42% of the time South Africans spend in front of a screen.
Consumers in South Africa spend nearly as much of their daily viewing time – 39% of the total – watching free digital video sources such as YouTube and Facebook as they do on linear television. People aged 18 to 24 years spend more than eight hours a day watching video content as they tend to spend more time with free digital video than people above their age.
Says Benjamin Ballensiefen, managing director for Sub Sahara Africa at GfK: “The media industry is experiencing a revolution as digital platforms transform viewers’ video consumption behaviour. The GfK ViewScape study is one of the first to not only examine broadcast television consumption in Kenya, Nigeria and South Africa, but also to quantify how linear and online forms of content distribution fit together in the dynamic world of video consumption.”
The study finds that just over a third of South African adults are using streaming video on demand (SVOD) services, with only 16% of SVOD users subscribing to multiple services. Around 23% use per-pay-view platforms such as DSTV Box Office, while about 10% download pirated content from the Internet. Around 82% still sometimes watch content on disc-based media.
“Linear and non-linear television both play significant roles in South Africa’s video landscape, though disruption from digital players poses a growing threat to the incumbents,” says Molemo Moahloli, general manager for media research & regional business development at GfK Sub Sahara Africa. “Among most demographics, usage of paid online content is incremental to consumption of linear television, but there are signs that younger consumers are beginning to substitute SVOD for pay-television subscriptions.”
New data rules raise business trust challenges
When the General Data Protection Regulation comes into effect on May 25th, financial services firms will face a new potential threat to their on-going challenges with building strong customer relationships, writes DARREL ORSMOND, Financial Services Industry Head at SAP Africa.
The regulation – dubbed GDPR for short – is aimed at giving European citizens control back over their personal data. Any firm that creates, stores, manages or transfers personal information of an EU citizen can be held liable under the new regulation. Non-compliance is not an option: the fines are steep, with a maximum penalty of €20-million – or nearly R300-million – for transgressors.
GDPR marks a step toward improved individual rights over large corporates and states that prevents the latter from using and abusing personal information at their discretion. Considering the prevailing trust deficit – one global EY survey found that 60% of global consumers worry about hacking of bank accounts or bank cards, and 58% worry about the amount of personal and private data organisations have about them – the new regulation comes at an opportune time. But it is almost certain to cause disruption to normal business practices when implemented, and therein lies both a threat and an opportunity.
The fundamentals of trust
GDPR is set to tamper with two fundamental factors that can have a detrimental effect on the implicit trust between financial services providers and their customers: firstly, customers will suddenly be challenged to validate that what they thought companies were already doing – storing and managing their personal data in a manner that is respectful of their privacy – is actually happening. Secondly, the outbreak of stories relating to companies mistreating customer data or exposing customers due to security breaches will increase the chances that customers now seek tangible reassurance from their providers that their data is stored correctly.
The recent news of Facebook’s indiscriminate sharing of 50 million of its members’ personal data to an outside firm has not only led to public outcry but could cost the company $2-trillion in fines should the Federal Trade Commission choose to pursue the matter to its fullest extent. The matter of trust also extends beyond personal data: in EY’s 2016 Global Consumer Banking Survey, less than a third of respondents had complete trust that their banks were being transparent about fees and charges.
This is forcing companies to reconsider their role in building and maintaining trust with its customers. In any customer relationship, much is done based on implicit trust. A personal banking customer will enjoy a measure of familiarity that often provides them with some latitude – for example when applying for access to a new service or an overdraft facility – that can save them a lot of time and energy. Under GDPR and South Africa’s POPI act, this process is drastically complicated: banks may now be obliged to obtain permission to share customer data between different business units (for example because they are part of different legal entities and have not expressly received permission). A customer may now allow banks to use their personal data in risk scoring models, but prevent them from determining whether they qualify for private banking services.
What used to happen naturally within standard banking processes may be suddenly constrained by regulation, directly affecting the bank’s relationship with its customers, as well as its ability to upsell to existing customers.
The risk of compliance
Are we moving to an overly bureaucratic world where even the simplest action is subject to a string of onerous processes? Compliance officers are already embedded within every function in a typical financial services institution, as well as at management level. Often the reporting of risk processes sits outside formal line functions and end up going straight to the board. This can have a stifling effect on innovation, with potentially negative consequences for customer service.
A typical banking environment is already creaking under the weight of close to 100 acts, which makes it difficult to take the calculated risks needed to develop and launch innovative new banking products. Entire new industries could now emerge, focusing purely on the matter of compliance and associated litigation. GDPR already requires the services of Data Protection Officers, but the growing complexity of regulatory compliance could add a swathe of new job functions and disciplines. None of this points to the type of innovation that the modern titans of business are renowned for.
A three-step plan of action
So how must banks and other financial services firms respond? I would argue there are three main elements to successfully navigating the immediate impact of the new regulations:
Firstly, ensuring that the technologies you use to secure, manage and store personal data is sufficiently robust. Modern financial services providers have a wealth of customer data at their disposal, including unstructured data from non-traditional sources such as social media. The tools they use to process and safeguard this data needs to be able to withstand the threats posed by potential data breaches and malicious attacks.
Secondly, rethinking the core organisational processes governing their interactions with customers. This includes the internal measures for setting terms and conditions, how customers are informed of their intention to use their data, and how risk is assessed. A customer applying for medical insurance will disclose deeply personal information about themselves to the insurance provider: it is imperative the insurer provides reassurance that the customer’s data will be treated respectfully and with discretion and with their express permission.
Thirdly, financial services firms need to define a core set of principles for how they treat customers and what constitutes fair treatment. This should be an extension of a broader organisational focus on treating customers fairly, and can go some way to repairing the trust deficit between the financial services industry and the customers they serve.