Openserve killing ISP profits with IPC charges

Jamie McKane

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Openserve killing ISP profits with IPC charges

Openserve’s IP Connect (IPC) prices are so high that many South African Internet service providers (ISPs) are losing money on these fibre clients.

This is the word from many of South Africa’s largest ISPs, who spoke to MyBroadband about Openserve’s excessive IPC prices.
 

Gaz{M}

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Before anyone get's too excited, remember that ISP's don't buy e.g. 1Mbps IPC to give you 1Mbps ADSL. There is a oversubscription of 20 to 50 times.

So in actual fact, that R135/1 Mbps IPC amounts to enough bandwidth for 20 to 50 Mbps of actual broadband access.

In other words, if you have a 10Mbps fibre service, the IPC is only costing the ISP around R70/m
 

system32

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Before anyone get's too excited, remember that ISP's don't buy e.g. 1Mbps IPC to give you 1Mbps ADSL. There is a oversubscription of 20 to 50 times.

So in actual fact, that R135/1 Mbps IPC amounts to enough bandwidth for 20 to 50 Mbps of actual broadband access.

In other words, if you have a 10Mbps fibre service, the IPC is only costing the ISP around R70/m
For ADSL the legal maximum was 1:20 - not sure if same with Fibre.

Anyhow, does not justify the cost if IPC which is much higher than local traffic.
 

Gaz{M}

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For ADSL the legal maximum was 1:20 - not sure if same with Fibre.

Anyhow, does not justify the cost if IPC which is much higher than local traffic.
Sure, costs are relatively expensive, but think about what you are getting as an ISP: Access to every single broadband connection in the entire country, at a single point of entry to your network.

With other interconnections, you as the ISP must provision fibre interconnects to multiple handover points all over the country, and still pay for backhaul to your network. You are also only getting access to one fibre provider's network per interconnect. So let's say that you want to interconnect with 10 fibre networks. You probably need between 30 and 50 interconnects all over SA. And that is to access only their customer bases on fibre.

I'm not even mentioning ADSL here. There the costs of building/operating are sky high compared to fibre.
 

Gaz{M}

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That's absurd.
Think about what you are getting. Don't get over stressed about only the price.

For international bandwidth, you are buying access to a SINGLE CABLE at a single point. It only goes to one country.

You are not getting access to millions of broadband connections all over South Africa.
 

Polymathic

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Make like their struggling to the public while ruthless murdering the competition behind closed doors
 

Sl8er

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Oh look. Telkom at it again.
Next thing we're going to read about how they need a bail out from government.
Came here to say this! :laugh:

In 5 years time we'll be reading about how OS is losing customers and complaining about how other FNO's have an unfair edge, all while scratching their heads wondering how this could have happened.

Fcking losers.
 

RandomGeek

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It's because in any area where Openserve doesn't have competition they can charge what they want and get away with it. It is just too expensive in most places for a second fibre provider to enter the specific area, trench and provide related infrastructure.

And yes I am on OpenServe :-/
 

Daruk

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It's because in any area where Openserve doesn't have competition they can charge what they want and get away with it. It is just too expensive in most places for a second fibre provider to enter the specific area, trench and provide related infrastructure.

And yes I am on OpenServe :-/
The same people who claim MTN and Vodacom have a monopoly and they can't survive? Never!

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websquadza

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Before anyone get's too excited, remember that ISP's don't buy e.g. 1Mbps IPC to give you 1Mbps ADSL. There is a oversubscription of 20 to 50 times.

So in actual fact, that R135/1 Mbps IPC amounts to enough bandwidth for 20 to 50 Mbps of actual broadband access.

In other words, if you have a 10Mbps fibre service, the IPC is only costing the ISP around R70/m
It doesn't really work that way anymore, your internet would be unusable otherwise (you would just sit in queues and drop packets). ARPU (Average Rate Per User) is more important in this regard. So you take an ISPs peak data volume, divide it by the number of clients you have running and you get an ARPU (this is a generalisation). Any ISP who oversubscribes this will get packet loss - which isn't great. I'm not going to share ARPU values on fibre, but I can tell you they're much higher than 2 Mbps and steadily increasing as users consume more data.

Take 2 Mbps @ R135 - it costs your ISP a minimum of R 270 to purchase your bandwidth back from Openserve. Add line rental, transit costs, support costs and more and you get an idea of the extent to which your ISP is subsidising an Openserve service.

Sure, costs are relatively expensive, but think about what you are getting as an ISP: Access to every single broadband connection in the entire country, at a single point of entry to your network.

With other interconnections, you as the ISP must provision fibre interconnects to multiple handover points all over the country, and still pay for backhaul to your network. You are also only getting access to one fibre provider's network per interconnect. So let's say that you want to interconnect with 10 fibre networks. You probably need between 30 and 50 interconnects all over SA. And that is to access only their customer bases on fibre.

I'm not even mentioning ADSL here. There the costs of building/operating are sky high compared to fibre.
I can assure you that it is cheaper for an ISP to operate a presence in all 3 regions, including power and cross connects, as well as sufficient national capacity, than it is to aggregate 1 Gbps of Openserve to a single point. National Long Distance capacity is currently about 10 - 15 times cheaper than IPC. Remember also, Openserve's R135 rate is only if an ISP connects in all 3 regions. If you're only in 1 you pay about 50% more. And your users take the latency penalty.
 

RandomGeek

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Gaz{M}

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The question remains - why do it if you don't make any money? Or worse, lose money? :unsure:
 

Danie_V

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Two points here:

1. I'm assuming Telkom as ISP also pays 2000% higher rates to OpenServe - otherwise that would be unfair.
2. It is true that OpenServe is installing in areas where other fibre providers are just not installing as there is no payback for them - we struggled over a year to get enough people in our community to sign up for a fibre porovider to install - we never reached 50% of the number needed so if OpenServe had not installed by us, we'd still not have fibre as it is not a well off suburb.
 
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