ADSL prices are likely to remain stable in the short term, until there are more significant changes in the wholesale ADSL market. This is according to South Africa’s largest ISPs.
“Once all of Telkom’s line speed upgrades are completed (scheduled for the end of November) and operators can see what the actual impact is on their networks, there may be some further fine-tuning, but I doubt that this will result in anything like the sort of activity we have seen in the last few months,” said Hershaw.
Cybersmart CEO Laurie Fialkov agreed: “I am not so sure there is much more room for further price reductions. If you exclude the cost of the telephone line rental [paid to Telkom], the current ADSL pricing is not that different from overseas costs”.
Telkom needs to come to the party
ISP CEOs were unanimous in their call for Telkom to drop their ADSL rental charges, reduce ADSL wholesale costs further, and introduce a naked ADSL service.
Hershaw called for another 30% reduction in the cost of IPConnect (IPC) – the wholesale ADSL service which Telkom provides to ISPs.
Fialkov agreed with Payne, explaining that the major cost barrier for ADSL is Telkom’s high analogue line rental and ADSL access charges. “This makes ADSL, specifically the entry level products, less appealing than 3G and other wireless offerings,” said Fialkov.
“As ISPs we can chop and change our prices all we like, but when our entry level customers have to fork out over R150 for a slow speed ADSL line before paying us R29 for a couple of gigs, it is pretty obvious where the problem lies,” said Wyatt-Gunning.
The call for naked ADSL from ISPs is also continuing. “The telephone line cost is supposedly there to subsidize the ADSL line rental. From our side, we would rather pay an inflated ADSL rental and not have to bundle the telephone line,” said Fialkov.
Despite the strong call for naked ADSL, MWEB’s Hershaw said that he thinks “we are still a long way off from Naked ADSL, unfortunately”.
Fialkov added that free and open peering can also assist in driving down the cost of ADSL bandwidth.
“There are still some ISPs – most notably IS, Telkom and MTN – that will not peer. These three companies make up over half of our local bandwidth, and it costs us a lot of money to get content from them. If there was no cost to get bandwidth from them, we could further reduce the cost to our consumers,” said Fialkov.