Who's Bandwidth?

[Charlie.]

Tell me if I'm being an idiot but...

I buy "SAIX" bandwidth at R70.00 per GB (shaped) from Web Africa. I have the choice of buying IS bandwidth, if I want it. Most ISPs seem to offer these two services at similar prices, although Web Africa are the cheapest that I have found.

As far as I know, the SAIX bandwidth uses Telkom's national network and SAIX's international link, but SAIX are actually Telkom, so Web Africa is just reselling Telkom. IS uses IS' national net and SAIX international link (although I have heard rumours about an IS satellite link...) so a *large* amount of that service is also Telkom.

Is this right?

Is my belief that all our "Internet Service Providers" are just resellers of Telkom correct? Am I completely off track?

If not, then WHY THE FCK do we keep seeing news articles about how much "competition" there is in the ISP market? Why do we cheer when "TelkomInternet" looses market share to other companies selling the same service? Why are we force-fed drivel about how some new reseller is going to kick Telkom into touch by reselling Telkom's own service?

If they're all middle-men and resellers of the SAME SERVICE, they're part of the problem, not the solution.

 

[PostmanPot]

Who is bandwidth? Not sure

SAIX is Telkom yes, although they would never admit it.

But I'm not actually sure if IS uses Telkom local? They must if Telkom owns the infra and the local loop?

 

[squirrel]

Tell me if I'm being an idiot but...

I buy "SAIX" bandwidth at R70.00 per GB (shaped) from Web Africa. I have the choice of buying IS bandwidth, if I want it. Most ISPs seem to offer these two services at similar prices, although Web Africa are the cheapest that I have found.

As far as I know, the SAIX bandwidth uses Telkom's national network and SAIX's international link, but SAIX are actually Telkom, so Web Africa is just reselling Telkom. IS uses IS' national net and SAIX international link (although I have heard rumours about an IS satellite link...) so a *large* amount of that service is also Telkom.

Is this right?

Is my belief that all our "Internet Service Providers" are just resellers of Telkom correct? Am I completely off track?

If not, then WHY THE FCK do we keep seeing news articles about how much "competition" there is in the ISP market? Why do we cheer when "TelkomInternet" looses market share to other companies selling the same service? Why are we force-fed drivel about how some new reseller is going to kick Telkom into touch by reselling Telkom's own service?

If they're all middle-men and resellers of the SAME SERVICE, they're part of the problem, not the solution.

As far as I know IS make no use of any SAIX bandwidth, so I think you're wrong on that (at least on the international link). Yes, all SAIX-based ISPs buy their bandwidth from Telkom, but they buy it at a cheaper price. So if you buy from WebAfrica, only R50 odd rand goes to Telkom as opposed to Telkom receiving the whole amount. Another thing is some ISPs like MWeb offer the exact same thing as WebAfrica but is R30 more a gig. That is why we pick one ISP over another. At least that's how I understand everything. Hope that helped. Maybe someone can explain in more detail

 

[Pilgrim]

Well, If you look at the wholesale price of bandwidth you will see that ISPs have very, very small margins.

Imagine for a moment a world where your only ADSL ISP is telscuminternet. There is no way that 1gig will cost R70 then.

But yes, in the end telscum owns the gate to the rest of the world, the SAT3 cable.

Until Neotel steps up and sells bandwidth at reduced prices telscum will continue to rape us.

One last thing: Have you heard that telscum want to release a product where ISPs can do fault handling on your ADSL line. Sounds good but all this means is that the ISP will now carry the cost of helping the client sort out broken telscum lines while telscum still charge the ISP for use of that line...

 

[HelloThere]

So if you buy from WebAfrica, only R50 odd rand goes to Telkom

Probably more like R10... They all trying to scam us.

 

[Oupoot]

In essence, the ISPs buy wholesale bandwith from Telkom (SAIX) at same agreed rate and supply their service over Telkom infrastructure to homes. The price ISPs pay to Telkom is for accessing the local network, i.e. making use of Telkom's national infrastructure (such as sending data from Jhb to Durban to CPT), and via SAT3/SAFE, the international network.

The ISPs retail price is the wholesale price plus some markup to cover their costs and make their profit. The market is similar to various cafe's buying their produce at the wholesalers (e.g. Metro Cash & Carry) who bought their goods from the producers (or their agents). As a customer, you hardly know the "supply chain" for any particular product bought in a cafe. The difference between the retail trade and ICT is that there are plenty of wholesalers in the retail trade (i.e. there are plenty of Cash & Carry's in any given city), so retailers can choose where to buy. But local ISPs have no option but to buy from Telkom. And Telkom abuse this position by charging excessive wholesale rates to ISPs as well as charging additional costs to customers for ADSL, i.e. line rentals. This is likely to change rapidly in 2008 with Neotel coming "online" and MTN and Vodacom laying their own infrastructure, so in most cases we as customers wont know what infrastructure is used in providing us with internet connectivity to local and international servers, only that there is some "competitive" market providing that backbone.

Unfortunately, until SEACOM and EASSy become operational, we are reliant on SAT3/SAFE, where Telkom sets the price, or alternatively through satelite links (most of which Telkom also controls) for our international connectivity. Luckily, Neotel now has right of access to SAT3/SAFE, but it would not surprise me if they agreed on the price with Telkom (to maximise the profit for both companies).

The point is to make a distinction between infrastructure and services, as well as wholesale versus retail services. While there are many ISPs in the retail market, there are virtually no competition in the wholesale and infrastructure markets.