Cost of broadband

THE cost of broadband connectivity in SA is likely to come down by 10% to 20% a year, but will never be as low as in countries like the UK and US, regardless of the level of competition in the market.

For one thing, the UK and US are a lot closer to the main activity of the internet than SA and they have a much larger market of potential broadband users.

“The size of the market will always influence cost,” says Douglas Reed, CEO of Vox Telecom. It will also influence the level of investment in broadband infrastructure, because operators are not going to dig up pavements or build additional radio towers without a potential return on investment.

He says an ADSL connection, that can be installed on existing copper-wire telephone lines is still the best option for broadband connectivity in terms of speed and consistency.

However, fixed-line infrastructure is limited in SA and it is unlikely that more copper and fibre will be laid between the operators’ backbone networks and the home, as has happened in developed markets.

Wireless infrastructure is less costly to install, but the wireless services on offer from iBurst and Neotel are not significantly cheaper, says Reed.

He says one of the factors inhibiting the take-up of ADSL and wireless broadband connectivity is that users need a PC.

“There are only about 2million PC internet users in the country and we need to get to 20-million to bring prices down significantly.”

Reed says multifunctional mobile phones that have 3G, Wi Fi and WiMAX capabilities could boost broadband internet users in the local market, but again this will depend on cost.

He says the high cost of broadband is adding to the burden of costly voice communication costs. Faced with this challenge, operators and service providers are introducing innovative ways to help customers reduce the overall cost of telecommunication. For example, Vox has launched a new voice service for consumers and small businesses that works with an ADSL line and a wireless phone, and reduces call costs by 10% to 20%.

He says customers are issued with a Vox number that can be used to phone any fixed-line or cellular subscriber on any network. They can also use the wireless phone to connect to the Telkom network in the conventional way. “In some cases it will be cheaper to use our network and in others it will be cheaper to make a call through Telkom.”

Broadband cost discussion