Broadband price freeze imminent

Monthly ADSL access charges to be axed as Icasa slaps Telkom on wrist for its broadband service.

South Africa’s high-speed Internet (broadband) users connected through Telkom, who have been subjected to among the highest tariffs on the globe according to numerous studies, will soon see prices for the service slashed dramatically.

This comes as telecommunications watchdog Icasa says it plans to abolish the monthly access charges levied by the fixed-line operator for its high-speed Internet (broadband) services.

This is one of the many recommendations that the regulator made in its 48-page findings and recommendations document on its enquiry into Telkom’s provision of asymmetrical digital subscriber line (ADSL) services, published in the July 27 edition of the government gazette.

Icasa received the complaint about the pricing and service levels of the products from Rudolph Muller, the founder of website MyADSL, in February 2004. After the regulator received no less than 446 written submissions about the services, the protracted investigation culminated in four days of public hearings where disgruntled individual users, industry bodies and Internet service providers (ISP) aired their concerns.

Icasa found that many of Telkom’s justifications for its practices did not hold water. It has decided to flex its regulatory muscles and institute a raft of regulations that will see Telkom having to lower the price of service, loosen restrictions on monthly usage and make sure it maintains minimum levels of service. It says it will “embark on a regulation-making process within four weeks … to ensure provision of a consumer-relevant, cost-effective and affordable service.”

Charges to tumble

The access charges for Telkom’s three residential ADSL services – HomeDSL 192, 384 and 512 – currently range from R329 to R680, and as of August 1 will come down to between R270 and R477. Besides this charge, users pay a R92,28 monthly line rental, and once-off costs for the modem and installation (around R400).

The regulator is proposing that a once-off charge be levied for access at the inception of the service, and that thereafter, “charges be restricted to line rental only”.

Given that Telkom has around 70 000 subscribers using its ADSL services, this will equate to a substantial, multi-million rand reduction in Telkom’s monthly revenues.

Taking off the cap

The much-contested three-gigabit monthly cap that Telkom imposes, lamented by many as being too low to allow for true broadband applications such as streaming audio and visual (multimedia) data, is also to be reviewed and brought in line with less restrictive and cheaper services offered in other countries.

The authority believes “that regulation is required to increase the cap on ADSL services in line with international standards. The exact threshold will have to be considered in the course of the relevant public process. It is important however to emphasise that 3Gb appears wholly inadequate for the needs of subscribers by international comparison.”

At the hearings, Telkom argued that using the ADSL service for multimedia functions constituted an abuse of the service. Icasa says this is not legally justifiable.

Guaranteed services levels

The definition of what broadband actually is varies; while some say that 128kilobits per second is the minimum speed which can be defined as a broadband connection (about twice the speed of a 56kbps dial-up connection), others argue that this is still narrowband, and that 512kbps should be the minimum. The upstream speed on Telkom’s HomeDSL192 product does not qualify as broadband at 64kbps.

On page 31, Icasa says it “accepts and adopts the definition used by the International Telecommunications Union (“1,5 or 2 megabits per second”), the Telecoms Regulatory Authority of India (256kpbs minimum) and the British regulator, Ofcom (128kpbs guaranteed minimum).

Says Icasa: “Telkom’s suggested, [guaranteed] minimum speed is 156kbps, which is not broadband.”

Other findings

Icasa inteds to ensure that when the cap is reached, people should be allowed to top up and/or purchase extra bandwidth at a rate charges per megabit downloaded instead of having to buy another user account.

Also, surfing local sites will no longer count towards the cap, as, says Icasa, “this has an indirect effect on the hosting and increased use of local websites”.

Icasa will suggest the inclusion of information on the number of users sharing bandwidth – known as contention ratios – to protect consumers. Internationally, the ratios are publicly available. Telkom has refused to provide this information, saying it is confidential. The more users there are, the cheaper the service. Typically, the ratio for a more expensive business service is 20:1 (20 users sharing bandwidth), while for residential users this is 50:1.

Regarding port prioritisation: Telkom argued that this was needed to throttle peer-to-peer traffic and prioritise http traffic. Icasa says there “should be no discrimination between users of broadband as far as costs and priority are concerned.”

In order to introduce more adequate competition to Telkom, the regulator is revisiting its enquiry into the undersea fibre-optic cable that brings international bandwidth to SA, to which Telkom controls access. Icasa says this will be completed by the end of the year.

Access to the local loop that actually takes Internet to homes is another area that needs to be liberalised in order for more players to enter the market and thus result in lower prices. Icasa says that the convergence bill deals with the issues of demonopolising facilities.

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Broadband price freeze imminent