Telkom ADSL pricing model slated
Telkom’s ADSL pricing model, where a subscriber has to pay analogue line rental, ADSL access and ISP bandwidth charges, has long been a bone of contention among broadband consumers in South Africa.
This issue raised its head again at the recent Techcentral Broadband Debate where panelists pointed out that Telkom’s high access and wholesale ADSL costs (aka IPC costs) remain the biggest hurdle in driving ADSL prices down.
Afrihost CEO Gian Visser said that it costs any 4 Mbps ADSL subscriber R544 on Telkom line rental and DSL access alone which contributes to making true broadband unaffordable for many people irrespective of ISP bandwidth rates.
Internet Solutions MD Derek Wilcocks added that Telkom does not only cash in on ADSL access and analogue line rental, but also on all bandwidth that ISPs sell to their subscribers.
According to Wilcocks around 40% of the total ADSL bandwidth cost is related to Telkom IPConnect (IPC) charges, something which is widely seen as a significant hurdle to reducing ADSL bandwidth rates.
Wilcocks added that there is a lot of ‘smoke and mirrors’ regarding the true cost of Telkom’s IPC service, and questioned why there are fairly linear cost increments for a service where there is no significant real-term cost increase for higher bandwidth demands.
From the arguments tabled by Visser and Wilcocks it may seem that Telkom is stubbornly keeping prices artificially high and charging ‘double line rental’ through its ADSL access and analogue line rental charges, but ICASA councilor William Stucke said it is not as simple as it may seem.
Stucke said that a consumer actually pays for three portions and services from Telkom for any ADSL service: the physical copper line, a voice service and a data service. Stucke further pointed out that the true cost of providing a subscriber with a copper line is around R300 per month, well above the retail cost of R131 per line.
This cost deficit is typically recuperated through the call charges to subscribers, and this may be one of the reasons why Telkom is reluctant to launch a ‘naked ADSL’ service which does not include a voice offering as well.
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