ADSL IPC price cut desperately needed

Lower ADSL IPConnect charges are desperately needed to make it possible for ISPs to drop prices and develop better ADSL services

By - January 17, 2012
Telkom ADSL

South Africa’s ADSL ISP executives are all calling on Telkom and ICASA to slash IPConnect (IPC) prices as a matter of urgency.

MyBroadband recently asked the country’s prominent Internet Service Providers (ISPs) what can be done to boost ADSL in SA, and the feedback had a common theme: lower IPC prices.

Call for lower IPC rates

MWEB CEO Rudi Jansen told MyBroadband that the biggest cost driver for ADSL is the cost of the IPC. “Reduced IPC pricing is essential,” said Jansen.

“The cost of the ADSL line rental is a big factor, and between that and the cost of the IPC, Telkom receives the bulk of an ISP’s revenue when they bill a customer for an ADSL connection and internet access. These Telkom costs need to be better regulated,” said Jansen.

Derek Wilcocks

Derek Wilcocks

Internet Solutions CEO Derek Wilcocks says that lower IPC prices are needed to ensure the future sustainability of uncapped ADSL.

Neology CTO Roelf Diedericks also called on Telkom to lower IPC costs. “Telkom is starting to become a really good wholesaler, their systems and technologies are reliable, but the IPConnect pricing is still a killer.”

Cybersmart MD Laurie Fialkov said that in addition to lower IPC prices he would also like to see a naked ADSL service. MWEB’s Jansen shares Filalkov’s call for a line rental free ADSL service (known as naked ADSL).

Fialkov said that industry speculation suggests that ISPs will only see a “5 – 10% discount on IPC this year” – definitely not enough to make much of a material difference to service providers.

ICASA on the case

Lower IPC prices forms part of ICASA’s framework for introducing Local Loop Unbundling (LLU), but the absence of concrete deliverables and the regulator’s lackluster performance history means that ISPs are not too excited about this.

Wilcocks said that he “sincerely hopes” that we will see lower IPC pricing from Telkom and bitstream services as required by ICASA’s LLU plans this year, but warns of a lack of details.

“While LLU is scheduled to happen in 2012, we still don’t have a finalised timeframe or approved framework. It can’t come soon enough though, as this is the single biggest factor holding back the growth of ADSL in South Africa,” said Wilcocks.

Jansen said that ISPs are “in the hands of ICASA, but I certainly hope that IPC pricing will reduce for a start”.

“ICASA are doing some good work and they need to build further momentum now to bring about change,” said Jansen.

Roelf Diedericks

Roelf Diedericks

Diedericks is less complimentary toward the regulator. “Government should just fold ICASA back into a department inside the DOC. ICASA’s ability and function is completely useless at this point, and they have never been ‘Independent’ as their name implies in any case,” said Diedericks.

“It would befit the DOC better to just appoint a good team of bureaucrats to run the ICASA function within the DOC with a law mandating a specific process, such as public hearings, before implementing regulations.”

“ICASA’s ‘learnt helplessness’ has caused most of our current regulatory failures, simply because the big telcos’ lawyers taught ICASA that they are incapable of ever really doing anything, and if they did do something that they would get sued. Thus ICASA ended up being too nervous to do anything.”

“ICASA is a waste of time, money, fresh air and the taxpayers’ money,” Diedericks concluded.

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