Uncapped ADSL: is Telkom misguided?
Telkom has been investigating the viability of an uncapped ADSL product, but the company recently revealed that they will not be launching an uncapped product any time soon.
Dr. Brian Armstrong, Senior Managing Executive for Enterprise Markets at Telkom, told MyBroadband that they researched the feasibility of an uncapped ADSL solution, but found that there is not sufficient demand for an uncapped ADSL solution.
Armstrong highlighted that only 3% of their current 9GB ADSL subscribers exceed their data cap, which tells them that the current account sizes are adequate for most of their subscribers.
Armstrong added that they do not want to create a product where a large group of their subscribers are subsidizing a small group of high end users.
Misguided Telkom?
Telkom may be misguided. It should come as no surprise that most people don’t exceed their cap as they are penalized heavily (losing international connectivity with high top-up rates) if they do so.
The strong uptake of MWEB’s uncapped ADSL solutions further shows the pent-up demand for uncapped services, and shows that people will use the extra bandwidth if it is available to them.
MWEB CEO Rudi Jansen last year said that the excitement and uptake of its uncapped ADSL products showed the massive pent-up demand of uncapped services, and that anyone who thinks that one can go back to a ‘capped world’ is completely misguided. “You can never go back. You can never offer an inferior service,” said Jansen.
“Uncapped has changed the market forever and once you have launched it, it is impossible to imagine a world without it. Now our users can do what the rest of the world does online,” said Jansen.
Axxess Marketing Director Franco Barbalich says that they are seeing strong growth in both capped and uncapped products, and that uncapped ADSL is definitely needed in the local market.
“Consumers and businesses want accounts which they can use if and when they want to, not only when they have cap available,” said Barbalich.
Afrihost CEO Gian Visser agrees with Barbalich, saying that “without question there’s a very strong demand for uncapped ADSL in South Africa.” Visser added that they have also 
noticed a shift back from uncapped ADSL to high end capped, unshaped products.
“Capped and Uncapped ADSL are two very different products and some clients who want to be guaranteed maximum speed for all their GBs no matter the time of day have migrated back to our high cap products,” said Visser.
Cybersmart MD Laurie Fialkov said that while the demand for uncapped products has dropped, it remains high.
“Now that people know it is not really uncapped, but subject to a fair usage policy and is on average slower than capped products, the demand for uncapped ADSL has dropped. Having said that, the demand for uncapped products remains high, even among the low usage users,” said Fialkov.
Vox Telecom’s Clayton Timcke in turn said that while the thought of fixing a monthly budget and getting as much as you want is appealing, the reality is that uncapped does not provide the same quality of service as a capped offering.
“Factors such as contention ratios and fair usage policies mean that the service is only suited to certain environments/applications,” Timcke pointed out. “The majority of consumers want a high-quality service that is reliable and offers consistent speeds. The uncapped service will always have heavy users who are subsidised by the rest of the subscribers and the service provider. This coupled with the fact that demand for bandwidth increases exponentially every year will aggravate this factor.”
IPINX CEO Marius Oberholzer agrees with Timcke: “There is a strong demand for bandwidth, but I would not refer to this as demand for uncapped. Uncapped in South Africa refers to contended and substantially shaped access and not true broadband.”
“In South Africa we are currently experiencing a driving force for market dominance by various players where the uncapped ADSL offering is used as a benchmark tool to reach such goals,” argues Oberholzer. He predicts that the demand for Broadband will most likely shift from ‘price differentiation’ to ‘product differentiation’ in the future, driven by quality and service levels, but not exceeding price benchmarks by high margins.
Most industry experts agree that both capped and uncapped ADSL products have a strong future in South Africa – satisfying the demand for a range of products from both the consumer and business markets.
Uncapped ADSL: is Telkom misguided? << Comments and views
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