New Telkom ADSL IPC price cuts – what you can expect

On 1 May Telkom reduced the price of many of its wholesale products, including Wholesale Fibre Broadband Access, IP Connect, Resell DSL, and SAIX dedicated access offerings.

Internet service providers which buy wholesale ADSL bandwidth using the company’s IP Connect service enjoyed a price reduction of between 1.4% and 63%.

The price reduction, however, is not straight forward. To qualify for a big discount, an ISP had to double its previous capacity.

This means that an ISP will have more capacity, but it will pay Telkom more.

Unless an ISP was prepared to go the route of doubling its capacity, the discounts were not substantial.

While Telkom’s new wholesale ADSL, VDSL, and fibre rates will benefit consumers, immediate price cuts are not expected.

What we can expect from ADSL ISPs

MWEB CEO Derek Hershaw said they did not see any significant price cuts from Telkom. “We’re paying Telkom pretty much the same as before,” said Hershaw.

Cybersmart CEO Laurie Fialkov said they have committed to pay 15% more to get double the bandwidth. “So in effect we will be paying more for IPC than what we were,” he said.

The per-Mbps price for bandwidth is less, but Fialkov said they do not see a real saving until they can use the extra bandwidth.

“As we start to use the extra bandwidth, we will use the additional savings to continue to build our Lightspeed fibre network.”

Vox Telecom’s head of carrier and connectivity Shane Chorley said that, like Cybersmart, they have increased their IPC spend to take advantage of the double-capacity deal from Telkom.

To make use of this additional bandwidth, Vox Telecom may design new products or grow their customer base.

Afrihost director Greg Payne said they have not received the new pricing yet, but hope to soon.

“Once we are on the new rates, we hope to offer a combination of better prices on certain products and improved service levels on all products,” said Payne.

Openweb CEO Keoma Wright said they have not finalised pricing with Telkom yet. “This is currently in its final stages,” said Wright.

He said Openweb has already increased its overall network capacity by 25%, and will use the wholesale savings to further increase capacity.

“Dependent on the final savings, we will also consider increasing value on our current Premium packages,” said Wright.

Telkom Internet said it received the same price reductions as all other licensed operators for DSL and IPC bandwidth, for the same capacity purchased.

“Telkom Internet continues to review ways of improving customer experience and increasing customer value,” said the company.

Web Africa’s head of connectivity products Greg Wright said their wholesale ADSL price cuts have not come to fruition yet.

“We’re in talks with our upstream provider and hope to conclude a deal soon,” said Wright.

Crystal Web said that they too have been in discussions with their upstream provider and have indicated that they would take up additional capacity.

“We are concerned that Telkom have framed the move as a simple ‘price cut’, especially when there is a legacy of price mismatching from Telkom on essential building block products such as IPConnect,” Crystal Web said.

“A more gradual approach or requiring providers to commit to a non-reduction in spend for a period of time would have been significantly less disruptive and probably have been more welcomed by all of the providers,” it added.

The following table provides an overview of where South Africa’s top ADSL service providers stand on the Telkom IPC discounts.

ISP plans after Telkom wholesale price cuts
ISP Price change Plans
Afrihost Has not received wholesale price cuts yet Will use savings to improve service levels, and pass some savings to subscribers
Axxess No feedback No feedback
Crystal Web Has not received wholesale price cuts yet Will develop plans as clearer information becomes available
Cybersmart Paying 15% more for double the bandwidth Will use additional bandwidth per-Mbps savings to build its Lightspeed products
Internet Solutions No feedback No feedback
MWEB Minimal wholesale price cut No immediate changes
Openweb Has not received wholesale price cuts yet Will use discounts to increase capacity, and possibly increase value on premium packages
Telkom Internet Received the standard Telkom IPC discount Reviewing ways of improving customer experience and increasing customer value
Vox Telecom Paying 15% more for double the bandwidth Looking at ways to use the extra bandwidth and pass benefits to subscribers
Web Africa Has not received wholesale price cuts yet Decision on how the discount will be used will be made later

Update: Comment from Crystal Web added.

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New Telkom ADSL IPC price cuts – what you can expect