WA response to pricing reductions

[martin]

I fully appreciate the fact that you're courting 'the mainstream' as you put it - you're a business and you want to make profit. But you are starting to sound a whole lot more like some of the bigger ISP's out there and that's your right because it is of course ultimately your choice to decide in which direction to take your company. It's just that in reading your response, a lot of the things you state simply come across as justifications instead of honest explanations and your tone in general is just a little too patronising for me.

I guess what I'm trying to say is it's a little disingenuous to try and come across like a Mom 'n Pop grocer while you're erecting the Pick 'n Pay signboards in the background.

 

[Moederloos]

Well, WA can do what they want - and if they want to target another demographic, so be it.
Me? I will move over to Afrihost.

 

[who.is.michael]

...

Come RPM, don't tease - give us a clue...

 

[icyrus]

I see most ISPs still live in their own little biosphere where selling something you have no intention of delivering is not only accepted but actually vaunted.

 

[DefecteD]

Come RPM, don't tease - give us a clue...

Yeah, a clue would be great!
Should i wait to sign with axxess and there uncapped solution??? ??? ??

 

[who.is.michael]

...where selling something you have no intention of delivering is not only accepted but actually vaunted.

elucidate please.

 

[DefecteD]

wamatt started this thread , lets hope he stays active on it and responds!

 

[icyrus]

elucidate please.

I was referring to the idea of overselling that a lot of ISPs subscribe to. Plainly, selling 3GB a month to someone who habitually only uses half of that but not allowing their unused data to carry over.

 

[Zyzzyva]

I was referring to the idea of overselling that a lot of ISPs subscribe to. Plainly, selling 3GB a month to someone who habitually only uses half of that but not allowing their unused data to carry over.

Everyone oversells. It's the best tool isp's have to lower prices, and it hurts no one. Without it you would be paying much much more.

http://blog.dreamhost.com/2006/05/18/the-truth-about-overselling/ <---- classic(old) blog post explaining why.

 

[Gaz{M}]

Don't worry, WebAfrica or any ISP. I trust you know who your customers are and what they need and to what portion of the market they contribute. If a few people looking for discount gigs or cheap uncapped accounts give you or any ISP a hard time, then that is expected. These users are not really profitable anyway? Correct?

The bulk of internet users are still homes and families needing a gig or 2 or 3. Trying to make margins on high cap or uncapped accounts for people running their own digital wine cellars is not really what an ISP should focus on.

 

[icyrus]

Everyone oversells. It's the best tool isp's have to lower prices, and it hurts no one. Without it you would be paying much much more.

http://blog.dreamhost.com/2006/05/18/the-truth-about-overselling/ <---- classic(old) blog post explaining why.

I understand the business model just fine thanks, but let's not give credence to the line "it hurts no one" though. The truth is that in this model some people get what they pay for and some don't.

The appeal of the cost-benefit ratio of this model depends entirely on one's position in the system.

 

[TheGuy]

Don't worry, WebAfrica or any ISP. I trust you know who your customers are and what they need and to what portion of the market they contribute. If a few people looking for discount gigs or cheap uncapped accounts give you or any ISP a hard time, then that is expected. These users are not really profitable anyway? Correct?

The bulk of internet users are still homes and families needing a gig or 2 or 3. Trying to make margins on high cap or uncapped accounts for people running their own digital wine cellars is not really what an ISP should focus on.

But Myadsl represent a huge part of the IT industry in general and I think a lot of their success came from word of mouth that was spread from this forum. Now they are saying they don't need the people who originally supported them. This is just not good business practice.

I do a lot of ADSL installations for private clients and i won't recommend Webafrica after all this. The whole thing just left a bad taste in my mouth.

 

[HavocXphere]

Good response. Can't be easy dealing with the uproar.

where selling something you have no intention of delivering is not only accepted but actually vaunted.

Thats disingenuous. e.g. Shop offers 5 apples for R10. Customer only takes 2 apples. Now somehow you want to make the customer's actions the shop's fault. They can't force the customer to take all 5 apples.

I was referring to the idea of overselling that a lot of ISPs subscribe to. Plainly, selling 3GB a month to someone who habitually only uses half of that but not allowing their unused data to carry over.

Overselling favours the heavy users. So unless you are "someone who habitually only uses half" you are actually benefiting from overselling. i.e. You are getting the "oversold" price but getting all the GB.

Sure ISPs can add carry-over. But then you can't have "oversold" prices because everyone is using 100%, so you're back to square one.

You either get carry-over or you get oversold prices. The two are mutually exclusive.

 

[Abe]

I understand the business model just fine thanks, but let's not give credence to the line "it hurts no one" though. The truth is that in this model some people get what they pay for and some don't.

It basically allows for cheaper cost / GB prices across the board, including those that don't use up all of their bandwidth.

We are basically sitting on about 4GB left on our 10GB account with WA at the moment. I don't begrudge WA the bandwidth we will "lose". Am I also not going to rush out and download some cr.p off the internet just to use up the remainder. I would probably be in the same boat if I had won one of the 30GB accounts. There are some months where we need patches/updates which will take us over the 10GB. Overselling allows us to get the package cheaper so its good for us too. I am not saying that I am happy with their new prices because I am not and have cancelled our 10GB bundle because it does not make financial sense. I am just saying that overselling never "hurt" us and we often have space left over at the end of the month.

 

[rpm]

Yeah, a clue would be great!

I can not say more at this stage, but March is likely to be a good month for MyBroadband members And with all the low-cost ADSL bandwidth a few users may download some AV content, and we thought it may be a good idea to give away a Mede8er in March in a competition.

It is however not unlikely that there will be a good ADSL offer or two from ISPs made available exclusively to MyBroadband users

 

[Abe]

But Myadsl represent a huge part of the IT industry in general and I think a lot of their success came from word of mouth that was spread from this forum. Now they are saying they don't need the people who originally supported them. This is just not good business practice.

I don't think thats the case at all. They are saying that there are two different types of clients, mainstream and power users. Dropping the price too much for the power users can seriously hurt your mainstream business. The trick is to find a way to give cheaper bundles to power users without hurting your mainstream business too much. For Afrihost it's easy, they have no existing clients. For WA, dropping the price per GB by R10 (assuming that each of their 30000 clients uses 2GB) would be a R600000 drop in revenue. Thats big. You also don't want clients that drop you at the sight of a price that is R1 cheaper next door. You can't plan a business on that either.

 

[icyrus]

Thats disingenuous.

How is it disingenuous? It is exactly the reality of the situation.

e.g. Shop offers 5 apples for R10. Customer only takes 2 apples. Now somehow you want to make the customer's actions the shop's fault. They can't force the customer to take all 5 apples.

Analogies are pointless. I think it is fair to say we both understand the situation.

My position is merely that they are selling something that have no intention or capacity to provide.

I understand the reasons behind it, I just don't agree with it.

Overselling favours the heavy users. So unless you are "someone who habitually only uses half" you are actually benefiting from overselling. i.e. You are getting the "oversold" price but getting all the GB.

Sure ISPs can add carry-over. But then you can't have "oversold" prices because everyone is using 100%, so you're back to square one.

You either get carry-over or you get oversold prices. The two are mutually exclusive.

I understand all that, like I have mentioned, I just don't agree with it.

It basically allows for cheaper cost / GB prices across the board, including those that don't use up all of their bandwidth.

Actually, it allows for cheaper cost / GB for those who generally do use their allocation - subsidized by those who don't.

It is a common business practice but that doesn't endear it to me.

Edit: anyway, I think I am derailing this discussion which is unfair to WA so I'll leave it at that.

 

[murraybiscuit]

Afrihost have stated themselves it is a limited offer (according to Giaan the CEO, in numerous posts and on their own website). It is not sustainable. Even if they get it for cost, less 10%, you can't run an ISP on that GP. It doesn't exist anywhere in the world. These are the facts. Forum members are welcome to say "we dont care - blah blah". Fine and we hope you pick up some of our future specials at better rates.

"But they took the marketing budget to make it work. Its ingenious"

Those in the industry know that that statement is a nice story, but one would have to be very naive to believe it. Simply not true when one does the calculations

i got shot down in a thread the other day by somebody who did the maths and told me that afrihost initially ran at a loss until they had enough demand to purchase greater wholesale bw, which is why they can now offer the super special R14.50 offer from time to time (ie they are no longer running at a loss). he even called afrihost deceptive for continuing to tell this to consumers when it was no longer true.

i'm a bit confused. could somebody please definitively tell me which side of the story is true. either the forumite did the maths wrong or somebody else is. wish i could find that post...

 

[martin]

I don't think thats the case at all. They are saying that there are two different types of clients, mainstream and power users. Dropping the price too much for the power users can seriously hurt your mainstream business. The trick is to find a way to give cheaper bundles to power users without hurting your mainstream business too much. For Afrihost it's easy, they have no existing clients. For WA, dropping the price per GB by R10 (assuming that each of their 30000 clients uses 2GB) would be a R600000 drop in revenue. Thats big. You also don't want clients that drop you at the sight of a price that is R1 cheaper next door. You can't plan a business on that either.

And when it's R40 cheaper? That's a lot more of those R1's. I wouldn't abandon any ISP for a R1 difference in price because it's just not worth the extra hassle. When I save R40 per GB per month it's an entirely different matter. I only speak for myself here but I wouldn't be surprised if others feel the same.

 

[rpm]

I don't think thats the case at all. They are saying that there are two different types of clients, mainstream and power users. Dropping the price too much for the power users can seriously hurt your mainstream business. The trick is to find a way to give cheaper bundles to power users without hurting your mainstream business too much. For Afrihost it's easy, they have no existing clients. For WA, dropping the price per GB by R10 (assuming that each of their 30000 clients uses 2GB) would be a R600000 drop in revenue. Thats big. You also don't want clients that drop you at the sight of a price that is R1 cheaper next door. You can't plan a business on that either.

You make a good point. Let’s not forget the Web Africa’s entrance into the ADSL arena started in exactly the same way as Afrihost, and they have been providing quality ADSL services for years. I certainly welcome the new kids on the block with their cut-throat pricing, but they have to prove themselves still. But this is the beauty of competition: If they mess up, someone else will be glad to take over their customers