Uncertainty over lower international bandwidth prices from Telkom

Telkom recently announced that it has lowered its international bandwidth rates, but uncertainty prevails over this announcement.

The current broadband providers were approached regarding these price reductions, and not one of these providers could clearly confirm a cut in their wholesale international bandwidth rates. International bandwidth costs currently account for a substantial portion of the total cost of provisioning a broadband service in South Africa, and lower rates will result in lower broadband prices and improved broadband offerings.

Internet Solution’s Mark Strathmore said that they purchase bandwidth from Telkom under the cover of separate agreements and the discounts alluded to in the press do not necessarily apply in the context of these agreements. He pointed out that he may have more clarity on this in the near future.

Strathmore said that international bandwidth savings will definitely be passed on to consumers, either in the form of higher usage allowances or price reductions.

“Alternatively, the reductions may enable us to bring new permutations of our services to market. A further alternative would be to use the discounts to purchase additional international bandwidth and thereby increase throughput rates for our customers,” he said.

iBurst said that they are currently negotiating reductions but that they are “tied into 3year deals, therefore the reductions will only benefit us in mid-2008.” “As soon as we receive price reductions in bandwidth we will pass on as much as possible to our customers,” iBurst said.

Telkom did not want to comment on their reductions on international bandwidth rates.

The company did however say that it notes that the Minister of Communications has invited public comment on proposed policies and policy directions [regarding equal SAT3 Access] drafted in terms of sections 3(1) and (2) of the Electronic Communications Act of 2005, as gazetted on 25 May 2007.

“Telkom will prepare its response to this issue and all other issues addressed in Gazette 29923 accordingly,” it said.

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Uncertainty over lower international bandwidth prices from Telkom