Telkom’s uncapped ADSL: Will it make a difference?

RYK VAN NIEKERK: We now speak to Arthur Goldstuck, of World Wide Worx, about Telkom’s new uncapped ADSL service for business customers. This follows an introduction of an uncapped ADSL service for consumers a few weeks ago. Arthur, good evening, this announcement should have made many business owners say, eventually and thank goodness. Will it make a big difference in the market?

ARTHUR GOLDSTUCK: Good evening, Ryk. I think it will make a difference but it’s going to make more of a difference in terms of persuading other service providers to move their pricing as well. At the same time we have to understand that this is part of quite a long-term shift in pricing in general in the broadband market. It’s not the last price drop we will see. It’s not the last creative bundling and packaging of broadband services we’ll see. If you look at the massive amount of data coming into the country in the coming year and then the huge build out of fibre networks over the next two years, we have to understand that we’re actually in the middle of a process. So, this is not an end and this is not the final goal or the finishing flag in the race in terms of who’s the winner, we’ll see a lot more movement.

RYK VAN NIEKERK: But MWeb was the first company to offer an uncapped offering and this Telkom, especially at the higher level of the service, a ten megabit line, is significantly cheaper than the MWeb product.

ARTHUR GOLDSTUCK: The reason I believe that Telkom can make this kind of offer and MWeb will probably respond and come in as a competitive offer because up to now they have had the cheapest uncapped broadband for businesses, is that their typical target market is not the kind of user who’s going to blow that download cap sky high. What you’ve seen with consumer ADSL is that guys have tried to push it to its limits, downloading hundreds of gigs of data and essentially becoming file sharing gurus, and trying to beat their last record, and that kind of thing. The business user, typically, simply doesn’t want to be limited in how and when they use the internet and how intensively they use it for when they need it. But they’re not paying this kind of price because they want to go file sharing. That’s why it’s possible and feasible and why the price will come down even further in due course.

RYK VAN NIEKERK: Telkom is currently rolling out ADSL services quite aggressively and there are very attractive deals at the moment, doing the rounds. The economy begged for these services a few years ago but Telkom just didn’t comply. Is this too little too late or can we still catch up with other countries?

ARTHUR GOLDSTUCK: No, not at all, it’s never too late, it’s always too little but if you look at their premium uncapped service, for example, R2359 for up to ten megabits per second downloads and uncapped in terms of the amount of data you can download that’s suddenly become very attractive for the heavyweight business user, who’s got maybe ten computers in the office linked to the same ADSL connection. Two years from now that price could even be half of what it is or even lower because what will happen is that pricing will start being based on the networks that the service providers themselves have got at their disposal. So, for example, if we have local loop unbundling, which means that the service providers will have access to Telkom exchanges and they themselves can lay down ADSL lines or connect ADSL users, they’re going to come up with their own price propositions. In other words, they look at what it’s costing them and what they can afford to offer in the market and at that point you’re probably going to see a further reduction in prices. So that’s maybe a year or two down the line but it’s part of the same process and you have to start somewhere with bringing the prices down and starting with Telkom is the logical starting point. It was quite absurd that it took a customer of Telkom to start moving the pricing a year or two ago.

Arthur Goldstuck
Arthur Goldstuck - World Wide Worx

RYK VAN NIEKERK: This also opens the door for the infamous cloud, where a lot of business solutions are hosted and businesses can get access to solutions more easily and, theoretically, cheaper. Do you think that industry will develop quite quickly following this uncapped access to the ADSL services?

ARTHUR GOLDSTUCK: I think the cloud is going to be driven from two sides, from the corporate side in terms of the enterprise cloud and often there you talk about the private cloud. From the other direction, being the consumer, and there you talk about what’s called the public cloud. So, the consumer will more and more start using cloud services as the bandwidth becomes more plentiful, as speeds go up and also as costs come down. I don’t believe that the small business market at this stage is a primary driver of the cloud market. This does make the cloud feasible for smaller businesses but they’re caught in the middle of the two converging forces. Gradually consumers will push them into the cloud from below and corporates will push them into the cloud from above but this in itself isn’t enough to push the small business environment or the SME sector into the cloud.

RYK VAN NIEKERK: The proposed deal with Korea Telecom is an interesting one; do you think it will have a big impact on the business customers of Telkom? Are we going to see some new innovative services?

ARTHUR GOLDSTUCK: That’s an exciting one. I think Telkom has a fairly good handle on the business market and on business services. Where they’ve been falling down for the past decade is in meeting the needs currently and future needs of the consumer. That’s where Korea Telecom or KT, as they are now known, really comes into it’s own, they are the organisation that’s primarily responsible for turning South Korea into the world’s broadband leader. They’ve become almost the by word in true broadband. So, if you can bring that mentality into Telkom that that’s where you want to take the consumer that will certainly transform Telkom and the way it provided services to the consumer and ultimately also the way it’s perceived by the consumer. Right now Telkom is a grudge purchase for your average user of their ADSL or fixed line services. In future it might become a trusted and approved brand, and it will even become a cool brand but only if it has the courage to take the route that Korea Telecom has taken.

RYK VAN NIEKERK: That was Arthur Goldstuck, CEO of World Wide Worx.

Source: Moneyweb

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Telkom’s uncapped ADSL: Will it make a difference?