The fact that other fibre-to-the-home providers are significantly cheaper than Telkom at a wholesale level will hurt Telkom, and may force Telkom’s hand to reduce IPC prices.
This is according to Marius Olivier, head of XDSL’s commercial business and former Telkom Wholesale manager.
Telkom’s wholesale FTTH model is similar to DSL, where service providers purchase IPC capacity to provide data products to their clients.
Olivier said most ISPs that offer DSL and FTTH products on Telkom’s network have, on numerous occasions, requested lower IPC rates to enable growth in the fixed-broadband market.
He said the number of fibre operators in the market that build their own fibre infrastructure is growing.
The fact that many of these operators cross-connect with ISPs at Teraco at significantly reduced rates will negatively impact Telkom.
“For as long as IPC pricing remains at the high per-Mbps rates they are now, ISPs will be very hesitant to purchase additional IPC bandwidth, if at all,” said Olivier.
He said ISPs will continue to resell fibre-to-the-home and fibre-to-the-business from other carriers like Vumatel, Link Africa, and MetroFibre Networx.
“Telkom was moving in the right direction last year when they provided a double-up option on IPC bandwidth, with an associated 15% increase in the ISPs’ IPC spend.”
He said only a few ISPs took advantage of the offer, though, as the window of opportunity was limited to three months.
“Many requests to Telkom [Wholesale] (now Openserve) to open up the window of opportunity again has fallen on deaf ears,” said Olivier.
“Telkom would most certainly do themselves a favour if they significantly reduce their IPC rates to enable ISPs to resell Telkom’s DSL and FTTH services.”
Olivier said Telkom must reduce IPC rates if its wants to remain a significant player in the fixed-broadband space.
“Should they not reduce IPC prices, Telkom will most definitely feel the burn of reduced uptake and lower fixed-broadband revenues.”
“Let’s hope they make the right decisions in line with the government’s broadband plans for the country.”