ADSL ISP Price War
The battle is on to see who can attract the biggest chunk of the approximately 70 000 ADSL subscribers in South Africa and it truly is a battle for only the fittest.
Subscribers looking for ‘high-cap’ accounts have an array of ISPs to choose from making the market aggressively competitive, something broadband customers are unaccustomed to seeing.
In early March this year ‘high-cap’ accounts became available to South Africans with AllYouCanEat entering the market first with their 30G offering.
Previously the only option open to users that needed more than their Telkom allotted 3G was to purchase multiple accounts in order to continue accessing international websites.
Various other providers like Internet Solutions (IS), DataPro and UUNet already had uncapped ADSL offerings at this time but their focus was on businesses, pricing these services out of the ordinary consumer’s pocket.
It was not long before other ISP’s like Axxess, Imaginet and Web Africa joined AllYouCanEat. Most of the ‘high-cap’ players priced their 30G offering around the incumbent AllYouCanEat’s R 580-00 per month.
This pricing structure was the de-facto standard for 30G accounts for a good few weeks but as is the nature of competition Web Africa made a break from the pack and reduced their price to R 500-00 per month.
Subscribers have since witnessed a healthy if somewhat unique, in the SA broadband market, price war.
The recent Telkom wholesale price to ISP’s has only added fuel to the fire with providers now able to reduce prices still further in an attempt to keep ahead of the game.
Observers can only congratulate Telkom on this bold move of offering ISP’s a means of offering ‘high-cap’ accounts. It has not only injected a bit of competition into the market but also provided subscribers requiring more bandwidth an alternative.
The price reductions for these ISP capped accounts are far from over. A more recent spate of reductions have resulted in a significant reduction in prices since the AllYouCanEat launch in March.
Last week Adept announced a drastic reduction for their 30G offering to R 408-00 per month. Hyperlink quickly countered with a cool R349-00 per month 30G service yesterday creating a furor of excitement on the MyADSL forum.
The MyADSL forums were buzzing as subscribers’ watched the prices fall. Users hung around the forum waiting for the next announced ‘treat’.
They were not disappointed. Within a few hours Axxess announced that they will match Hyperlink’s price.
Competition of this nature currently only takes place in the ADSL ISP arena and the benefits to industry and the consumer are self-evident.
South Africans and government can use this model as an example of how the broadband market should work. By stimulating competition issues like broadband penetration, a cost-effective pricing structure and quality of service are all taken care of.
Unfortunately the ADSL market is effectively still controlled by Telkom who hold the keys to the all important local loop.
Unbundling the local loop will open the market to more providers and the added competition will ensure that prices come down without the need for regulations or government intervention.
For now all the action is restricted to the ISP ‘high-cap’ offerings but the future looks bright with phrases like ‘unbundling the local loop’ and ‘increase competition’ on the lips of industry and government.
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