Below cost ADSL
The broadband market is becoming increasingly competitive and some ISPs have started to sell ADSL services for prices below cost in an attempt to gain market share.
Nashua Mobile recently announced that they have extended their R 139.00 one price ADSL offer to last the next twelve months. This offer provides users with DSL 384 access and 1 GB of bandwidth per month.
This is currently the lowest price for an ADSL service, which combines the ADSL access and ADSL ISP portions, and is most likely sold way below cost. Telkom’s DSL 384 access only portion retails for R 152.00, higher than Nashua Mobile’s combined price ADSL service which includes 1 GB of unshaped bandwidth.
Nashua Mobile is however not the only company selling ADSL connectivity below cost.
SAOL recently launched their own DSL 384 offering with 1 GB of unshaped blended bandwidth, a free router and 20 GB of local bandwidth for R 138.00 per month. The price of R 138.00 holds for the first 12 months of a 24 month contract after which subscribers will pay R189 for the remainder of the term.
SAOL also launched a static IP ADSL solution aimed at small businesses offering 15 GB of usage for R 499.00 per month. This service carries a R 1500.00 installation fee, but this price includes the cost of the router.
“In our model everyone pays for what they use, so the guesswork is taken out of the equation and as a result the offering comes in more than 50% cheaper than any other fixed IP solution available today,” says Laurie Fialkov from Cybersmart which recently acquired a controlling stake in SAOL.
Cybersmart has long sold its 3 GB DSL 384 accounts below wholesale cost, and the SAOL offering seems to be an extension of their business model and system.
‘Below cost’ ADSL products may be an indication that some ISPs are confident that the cost of bandwidth and general price of ADSL is set to drop, and is willing to subsidize subscribers in the short term for long term gain and increased market share.
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