Johannesburg - Telkom will need to take a machete to its ADSL pricing structure and radically improve speeds on the service within the next 18 months should it win a pay-TV licence.
In a briefing by Telkom Media (the Telkom division applying for the licence) COO Rikus Matthyser told journalists that the target price for the company's internet protocol television (IPTV) service was R320/month.
If telecoms watchdog Icasa sticks to its licence-issuing deadline of September this year - and Telkom Media begins broadcasting within nine to 12 months of being issued a licence - the broadband market could get very interesting.
In that R320, Telkom Media will have to build in the cost of the ADSL line that will connect the subscriber, the price of content, other operating expenses and some profit.
Substantially cheaper
Applying a little logic to the equation, this tells you that Telkom will have to offer its new media subsidiary an ADSL service that's substantially cheaper than anything on the market today.
This is in stark contrast to recent comments from Telkom's Steven Hayward who told an analysts briefing that the company had no plans to drop prices dramatically.
At present the cheapest ADSL offering from Telkom is it 384 kilobit/second (kbps) service that retails for R245.
For the new IPTV service to be financially viable, it would need access to the ADSL network at a cost substantially lower than the current price that the fastest service goes for now.
This is, however, only half the picture.
Fastest speeds ever seen
While Telkom would have to take a machete to its ADSL prices to make its new pay-TV offering financially viable, it needs to apply these prices to a speed of service that is not currently available locally.
Telkom Media would need access to an ADSL service running at between 10 and 20 megabits/second (mbps) - which is two and a half to five times faster than the fastest ADSL service currently offered by Telkom, Matthyser explained.
Also, this would not be the same ADSL service that is currently being offered, but instead, be the next-generation ADSL 2, and would have to have a guaranteed quality of service to ensure that the video being transmitted would appear correctly on subscribers' sets.
Considering that Telkom Media is an independent subsidiary of Telkom, these services would have to be offered at the same prices to other service providers using Telkom's network.
And even if the cost of this connectivity were half of the final cost to the consumer, it would still mean that Telkom would have to be able to provide a 10mbps service for the same price that it offers a 384kbps service today.
And this can only be good news for the consumer.
