Fair benchmarking sheds some light on Telkom’s ADSL pricing
Internationally broadband speeds are increasing while prices remain affordable. Locally the situation is different with high prices coupled with limited usage offerings dominating the fixed line broadband landscape.
Fair benchmarking
When South Africa is benchmarked against international services, researchers often disregard aspects like speed and usage allowances, two of the most important components of any broadband offering.
These two components have a significant impact on price. In Australia, for example, the most affordable package with slower speeds and a low usage allowance is 5 times cheaper than their high-end offerings.
A benchmarking technique used by organizations like the OECD is to look at the speed of a service in comparison with price, but that is assuming that all the services are uncapped.
In the mobile broadband space, where monthly usage allowances are commonplace, the cost/MB ratio is often used to establish the affordability of a service.
The combination of both the speed of a service and the cost/MB should therefore give a good reflection of the cost of a broadband service in a country when compared with services in other countries.
Telkom’s ADSL versus international services
When Telkom’s Up-to-4 Mbps ADSL service is benchmarked against countries like Australia, which Telkom themselves suggested is a good country to be compared with, it becomes clear that ADSL in SA is costly.
The all-inclusive cost-per-Megabyte on Telkom’s popular DSL1024 with a standard 3 GB monthly usage allowance costs 28 c/MB.
In Australia their high end ADSL offering translates into 1.5c/MB, while similar services in the UK and Morocco give a cost/MB rate of 1 c and 1.4 c respectively.
It is interesting to note that Australia, the UK and Morocco’s services are clearly very similarly priced despite their very different geographical locations and country demographics.
In all of these countries, offerings from the incumbent telecoms operator were used to benchmark, despite various more affordable services that are available.
The question should definitely be raised as to why Telkom is nearly 2000% more expensive for cost/MB than other international incumbent operators.
Cost compared to speed and usage
When benchmarking cost, speed and usage allowances the situation for Telkom looks even worse.
Here Morocco becomes the most affordable among the benchmarked countries with a price of R 0.73 per GB/Mbps. Australia comes in second with R 0.77 and the UK third with R 1.21.
Telkom’s cost per GB/Mbps is R 72.08, in the region of 7000% more expensive that the three other countries.
Speed and usage important
For South Africa to become internationally competitive in the broadband arena all the aspects of a broadband service should be addressed, including price, speed and usage allowances.
With Internet services becoming ever more bandwidth intensive, high usage allowances and fast speeds are very necessary to utilize such services.
Unless South Africa keeps up with international broadband trends, local users and businesses will be left out in the cold, effectively sitting on the wrong side of the digital divide.
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