SEACOM pricing – how much does it really cost

[Gatecrasher]

The R30.00/GB is calculated with a contention ratio of 1:1. Normally the ratio is around 20:1 so it would be R1.50/GB. With a ratio of 30:1 the price would be R1.00/GB. Much cheaper than we're paying for right now. Add in costs and a profit margin of 100% and R2.00/GB is reasonable at a contention ratio of 30:1.

Not so, because you can't sell 20x or 30x 331Gb on a single 1Mbps pipe. Your service would be shocking. and your customers would burn down your business. The average Joe with his 3gb would only reach 1/20th or 1/30th of his cap. The real price is much higher than R30/gb, because the 331gb used in the calculation assumes that the pipe is being utilized at 100%. That is very unlikely.

The two killers in the STM-1 calculation are

Seacom Lease R737 446 (Which is similar to Telkom's SAT-3 of R800 000)

and

Local Transit R755 000.

On the IRU model, the Seacom cost for STM-1 drops to +-R500k including maintenance, if the cost of the pipe is fully expensed over 5 years, which is more reasonable than 20 years. So ISPs buying their pipes should be able to provide the bandwidth somewhat cheaper. I think there is a lot of room for these prices to fall further given that the limited price savings to local consumers is unlikely to spark a huge increase in demand. We are going to see some very empty cables unless prices fall a lot further.

And of course the real killer is the Local Transit of R755 000 (R5 000 per month per 1Mbps). This is where we are all being seriously ripped off. This is where the regulator should be stepping in and slicing away the fat.

 

[guest2013-1]

Just a quick note to TeleGuru:

In South Africa we have capped, shaped and contented bandwidth. Even unshaped bandwidth is contended & capped but comes at a premium.

So to be clear on that, we do understand the difference between capped. However, we stuck with 1:1 contention ratio for the sake of keeping things simple and the fact that Seacom is usage based.

Trying to convert the usage based figures into those we've grown accustomed to is what we're doing. People want to know "how much per gig" and I'm pretty sure ALL companies will still have the "per gig" pricing model for the future as long as Telkom has it's grip on the LL.

The math gets a bit complicated (for me at least) when trying to work out contention ratios (which would bring down the true cost per gig) as well.

We assume the usage would be maxed out 24/7 which, pointed out by Seacom CEO, isn't always true. Thus, only speculation from our side as to how much it would cost... as indicated by him, it would probably be even cheaper because it won't be fully utilized.

With Seacom we're seeing usage based pricing, not capped based pricing, which would possibly indicate something interesting to happen in the future. Especially with Internet Solutions busy testing it and already having the Uncapped Express+ accounts, I won't be suprised if the usage limits during business hours will be lifted (or increased substantially) or even the price being cheaper at the end...

 

[Seamus6917]

At this point a part of me is thinking this is surely a lost cause...

For Brian... (There is a face-to-face apology owing to you if I am wrong).
I have seen so much BS about Seacom by now that I could easily envisage Zoe D. Catz as being the author or your post.

Smoke and mirrors... And not even enough honour for the prestige...

 

[Empiricism Philosopher]

@ Seacom CEO or informed persons I was wondering, is there money to be made if you would build us the last mile cables too our homes as well?

Dark Fiber Africa seems to being the metro and intercity connections.

What cables too end users do they have for people in the USA that is cheaper than copper, easy and fast to set up? I am asking as you are the cables expert and in this industry.

Seeing that you are in good relations with our industries now?

Thank you.

 

[Tns]

Relative to this article; how?

From Seacom to providers' PoP can totally bypass Telkom's network.

From ISP to consumer - that's another matter...

and who's infrastructure are mostly in use? mmmm?

 

[klasvaakie]

To be honest...cheaper bandwith being sold to resellers (IS and others etc.) basically means just one thing. Profit margins will go up when prices stay the same. There is actually no need for caps...it's to have a higher profit margin...and lets face it...were getting bent over backwards and TBH, we deserve it...we actually buy this crap...in three years I am moving to germany and good riddance...I will be done with telkom, I will be done with all these bs isp's and I will be done with paying through my nose and then complaining about it. Personally...and any isp who is reading this...I know u can actually give us affordable ADSL coverage without a cap...but lets face it...u wont because it would mean a smaller profit margin

 

[ChrisMos]

I wonder if it will be possible to force ALL role players, to the last km, to publish their pricing breakdown to reveal the true situation why we are still paying these exorbitant prices (both GBs per month as well speed). SEACOM appears to be the only truly transparent organisation so far.

I wonder if Telkom will be prepared to this or are they afraid to reveal this information?

Perhaps we can use the Access to Information Act to force everyone participating?

 

[Lightscribe]

Your posts seem quite imprecise and confused and hardly very "expert". Maybe if you were to give us a proper analysis, specifying who is paying whom when you refer to "costs" and referring to your sources of information, we could make more sense of what you are saying. For starters, as you seem to admit in your last post, normally bandwidth ( elsewhere ) is sold in speed-of-connection per month, not by how much you choose to ram through said connection.

I remember doing a brief analysis of the costs of the international connections, converted artificially into "cost per GB", and came to the conclusion that Telkom's cost was between R4-R7 per GB or somewhere around there IIRC, fully connected to overseas backbones. Yours is about R28, which looks way too high. Remember, the true "cost" is not the exorbitant fee demanded by Telkom in its position of govt.-entrenched monopoly, so as to rape the South African consumer to bolster the exchequer and provide fatcat salaries and cars for layers and layers of incompetent management appointed for political expediency.

 

[SaiyanZ]

A couple of questions after looking at SA's ISP costs:

1. How do overseas ISP's offer uncapped 8mbps lines for R350, line rental included?
2. What is the difference overseas in terms of the ISP's costs?

 

[Weasley]

A couple of questions after looking at SA's ISP costs:

1. How do overseas ISP's offer uncapped 8mbps lines for R350, line rental included?
2. What is the difference overseas in terms of the ISP's costs?

Telkom and there ipconnect thing