ADSL price cuts passed on to consumers
SEACOM became operational in late July, and while the effect of cheaper international bandwidth was slow to filter down to consumers, the last few weeks have seen numerous ADSL bandwidth price cuts which were directly related to the new cable system.
While SEACOM was welcomed for bringing competition to SAT-3, the lack of built-in redundancy as seen with SAT-3/SAFE has been fingered as one of the reasons why SEACOM’s effect may not be as pronounced as initially expected.
Redundancy lifts input costs
Vox Telecom was one of the first Internet Service Providers (ISPs) to reduce ADSL pricing after SEACOM became operational when they cut the price of their Vox Telepreneur ADSL offering to R50 per GB. Since then many ISPs have come in at lower rates, but the pay-per-use price from Vox remains competitive when compared with larger service providers.
Vox Telecom Managing Director Doug Reed said that while a saving of around 25% facilitated by cheaper international bandwidth via SEACOM has already been passed on to consumers, the company remains committed to a good quality of service which needs redundancy.
Reed said that while SEACOM bandwidth alone can be used for a very competitively priced service, Vox Telecom is backing up any SEACOM bandwidth with 25% SAT-3/SAFE capacity and vice-versa. This significantly increases the input costs for their ADSL offerings, but Reed said that this is needed to guarantee customers a guaranteed quality service.
Full redundancy coming
SAT-3/SAFE’s monopoly has been broken in South Africa, but SAT-3 remains the only high-capacity submarine cable system on the west coast of Africa. This means that most telecoms companies will purchase capacity on both SEACOM and SAT-3 to ensure redundancy while at the same time make the most of more affordable SEACOM bandwidth.
WACS, an undersea submarine cable planned for the west coast, is however set to land in mid-2011, competing directly against SAT-3 and providing an alternative to SAT-3 to back up any SEACOM circuits. This, coupled with EASSy’s landing in mid-2010, is expected to have an even bigger effect on international bandwidth prices in South Africa than SEACOM’s launch.
ADSL price cuts – discussion
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