ADSL price cuts: New player shakes things up
Over the last few weeks numerous Internet Service Providers (ISPs) have announced ADSL price cuts, with data pricing dropping to as low as R14 per GB. Many of these price reductions were made possible by ISPs either developing their own ADSL infrastructure, or partnering with new wholesale players.
Previously Telkom/SAIX and Internet Solutions dominated the ADSL wholesale environment, and with most ISPs simply reselling data provided to them by these two wholesalers there was not a big difference between the various ADSL retail offerings. Thing are however changing fast.
The landing of SEACOM brought much more affordable international bandwidth to the country, and by using Telkom’s IP Connect (IPC) product ISPs are starting to make the most of the more competitive local telecoms environment.
Numerous ISPs including Cybersmart, Web Africa, FNB Connect and G-Connect are using their own IPC and ADSL network to develop innovative services at lower costs, but a group of ISPs have opted to partner with network specialists for their ADSL needs. Two of the new breed of telecoms companies launched recently are IPINX and Africa.INX.
Africa.INX calls itself ‘South Africa’s first Independent Network Exchange’, and promises to bring Internet access to the market at rates never seen before in South Africa. “Our business model is based on buying in bulk at the best prices, keeping red tape and overheads to a minimum, but without compromising on network and service quality and selling to ISPs equally at low margins,” Africa.INX says.
The price, per Mbps for Telkom’s IPC as well as for local and international bandwidth, decreases significantly with higher capacities, and it therefore makes sense for smaller ISPs to ‘club together’ to increase capacity and hence get better prices.
IPINX goes one step further by offering ISPs product development and backend support to limit the need for smaller service providers to invest in expensive infrastructure and billing systems. And the IPINX business model seems to be attracting a lot of attention.
IPINX has two anchor clients – Sainet and iBurst – and says it is currently inundated with new providers keen to sign up to use their offerings. According to IPINX they increased their IPC capacity five fold since launching a few weeks ago, and the strong growth is set to continue.
Bandwidth and peering
IPINX has access to 155 Mbps international bandwidth via SEACOM, with some redundancy via SAIX/SAT-3. The company is also making the most of ISPA’s Johannesburg Internet Exchange (JINX) for its local bandwidth requirements.
IPINX currently has 30 Mbps of local transit capacity through SAIX, but is also peering with local telecoms providers to freely share traffic. IPINX, through its partner Neology, has over the last week started peering with some of South Africa’s largest ISPs, including MWEB, Vox Telecom, iBurst and TENET.
Peering is one of the best ways to decrease the price of local bandwidth, and the results can be seen in Sainet’s recently launched split-billing ADSL data bundles. Earlier this month Sainet launched its ‘split-billing’ ADSL service at R59 for a 2 GB account, equating to R29.50 per GB. The benefits of more affordable local bandwidth however mean that the price can be as low as R10 per GB depending on their local and international bandwidth usage ratio.
Only the beginning
Good news for consumers is that the recent developments in the ADSL market – which include significant per-GB price cuts and affordable entry-level uncapped products – appear set to continue.
EASSy is gearing up to start offering commercial services in August this year, promising to put further price pressure on international bandwidth in South Africa. In the local bandwidth department projects like the Neotel/MTN/Vodacom national fibre network and Broadband Infraco will also bring additional local transmission capacity and lower prices to ISPs.
And there are even rumours that Telkom is planning improved pricing on their IPC products, something which may coincide with its planned IP Stream product aimed at the wholesale ADSL market. This will further enable ISPs to cut their data rates and develop more affordable ADSL services.
ADSL wholesale pricing << discussion
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