I don't understand what the "Access Line Deficit" is.
How come in Europe / USA / Korea (rest of the world) they don't have an "Access Line Deficit".
If I just have POTS, the POTS line connects me to the exchange and it cost's about R140.
Is this not the same cable that is used for ADSL?
The "IP Connect" cost that the ISP pays, connects ISP-data center to the exchange and my line.
Seems we are being triple billed for the same line
1) We pay for POTS line
2) We pay for ADSL line enablement
3) We pay for IP Connect line (via ISP)
Why is ADSL so expensive in ZA vs rest of the world?
It's not the cost of international bandwidth - it's because Telkom is killing us with:
a) POTS rental +
b) ADSL Enablement +
c) IP Connect.
The Line Access Deficit challenge is a standard issue for ownership and management of any network every where in the world. Telkom however has a double problem: (1) government interference and objectives have increased the deficit because of (unsatisfied) universal service obligations and poor technology use and planning; (2) Telkom have dismally failed to devise competitive market relevant strategies to maximize revenue on their infrastructure. Basically the LAD is the difference between the cost of a particular line or set of infrastructure and the revenue generated from that line in its own right.
Now lets accept Telkoms line access costing as correct (which they aren't because of Telkom inefficiencies) all that is being said is that Telkom can rent a line between the local exchange point and customer premises for R300 a month and that if an ISP installs access equipment at the exchange (and pays rental for the facility) they can rollout naked DSL. There will be no LAD on that particular line because Telkom claims that the cost of the cable unplugged from its DSLAM (and backhaul network) is R256 per month.
Now by providing non-discriminatory access licence holders will be able to introduce their own products and services to customers knowing full well that their cost to Telkom is R300 per line from exchange to customer premises and that they have to do their own provisioning to the exchange (or buy connectivity from somebody, possibly Telkom), for example a 10Mbs uncapped unshapped service with VOIP options for R1000, and Telkom gets R300 and there is no LAD, but Telkom has lost a high revenue customer and thats what irks them. Chances are that LLU will be meaningless for 1Mbs and below ADSL customers but remember Telkom's presentation says that DSL rental is only R174 which isn't the case for the "Fastest" guys and as things scale up their profits go. So yes Telkom is likely to be able to provide the best product for entry home users seeking to spend less than R600 per month whilst the ISPs wont touch that section of the market BUT if Telkom plays the game properly they will leverage this market to aid their convergence systems. What Telkom needs is proper planning and leadership.
The question of what price Telkom should make basic line rental is one which needs to be determined according to a price which would be profitable to maintain the line. The simple reality is that a little old lady having a voice line who makes no calls may generate quite a bit of revenue for the telecommunications operator simply because of the termination fees made from the calls made by business clients and her children to her. In this case what is happening is that inbound call termination revenue is satisfying the line access deficit cause by a difference between the line rental and the cost to operate the line.
A similar situation exists with a network connection used exclusively for the internet: assume that the total cost for an ISP to get data "streamed" to your house is R1000 per month (providing you with a 1Mbs service on a 1:20 contention ration), the ISP might actually look at bringing their price down to R850 per month because more clients give them negotiating power for peering arrangements and to provide hosting services. Essentially ISPs can generate considerably more revenue through providing hosting services than servicing end users but without end users the Internet is meaningless. Ultimately websites have to generate revenue for their operations which generally comes from the end user (advertizing, subscriptions for services etc ...) some of this revenue is used to pay for connectivity which frequently subsidizes user access, but it works. I doubt that the projections that the internet will ever become free - as in no subscription cost for end users - are correct but the point is consumer grade consumer focused internet can be reduced to be pretty close to a free lunch (just remember you are buying drinks).
And here comes the kicker, if communications companies interlink and provide proper clearing and peering and build ecosystems for connectivity the costs of providing services decrease while profitable operations increase.
There are so many opportunities for Telkom in the South African marketwith 50 million people clamering for more connectivity and an economy which is in less of the gutter than many others. Telkom simply needs to figure out how to use its considerable asset base properly and nationalized central planning mentality is not it, opening up and building markets and letting the invisible hand do its thing which is exactly what facilities leasing does will.
