Telkom ADSL IPC price cuts simply not enough: ISPs

Telkom will reduce its wholesale ADSL (IP Connect or IPC) cost by 15% on 1 February 2014, but many Internet Service Providers (ISPs) said that the price cut is not large enough.

MWEB ISP CEO Derek Hershaw said that, together with Internet Solutions, they formally engaged Telkom requesting a 50% reduction in IPC costs.

“Although not directly part of this engagement, I spoke to a number of other ISP’s who shared our concerns on this and fully supported our request for a price reduction,” said Hershaw.

Afrihost CEO Gian Visser said that while they are “sincerely grateful” for any saving, they believe the price reduction should have been at least 30%.

“In effect the cut is only 10% as they are including the 5% they gave last year as part of that,” said Visser.

Afrihost director Greg Payne said that they would like to see more significant IPC price reductions from Telkom, as well as large ADSL line rental reductions and naked ADSL.

Openweb CEO Keoma Wright said that the price cut was not large enough, and that IPC should become the cheapest component on the ADSL network.

“Currently, even after the price reduction, IPC is still the most expensive component to ISPs,” said Wright.

Web Africa CEO Tim Wyatt-Gunning said that the latest IPC price cut is not equal to the equivalent shift in Telkom’s retail rate price drop.

“Telkom’s retail price cuts for its uncapped products since March last year range between 18% and 33%. Even if one assigns zero cost to local and international bandwidth, the 15% IPC drop to ISP’s falls well short,” said Wyatt-Gunning.

“From a customer’s point of view, for uncapped packages, the line rental prices – both voice and ADSL – still account for around 60% of their total internet connectivity costs, so if the full 15% saving was passed on, their total connectivity cost would only reduce by a miserly 6%,” he said.

“Reducing prices for line rentals would have a much greater positive effect in stimulating growth in ADSL than these small IPC cuts.”

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Telkom ADSL IPC price cuts simply not enough: ISPs