Internet surfers ride wave of broadband price
April 15 2007 at 02:05PM
By Chiara Carter
South African Internet surfers are benefiting from a broadband price war.
Costs of wireless Internet access have been slashed over the past two months leaving all eyes on the biggest provider, Telkom, which has so far indicated it does not plan to follow suit.
But experts think Telkom might have to reduce prices on its fixed-line service rather than brave it out in a competitive climate where its biggest shareholder, the government, has accused the telecommunications giant of profiteering, the market for voice fixed-lines continues to plummet, and cellular Internet providers are nibbling at its heels.
Meanwhile, South Africa faces the challenge of ensuring that more than one in ten South Africans have ready and affordable access to the Internet - regarded as essential for development in the global world. And despite improvements in speed and pricing of Internet access, South Africa is lagging behind other countries.
A report released recently by the World Economic Forum indicated that South Africa fell ten positions in the Networked Readiness Index.
Communications Minister Ivy Matsepe-Casaburri has said it is essential for the country to have widespread access to broadband.
Recent leaps by wireless providers have led experts to contemplate whether, just as cellular phones revolutionised voice communication in South Africa, this technology might lead the way for more people to enter the Internet highway.
Dramatic price cuts in recent weeks by Vodacom, MTN, state-owned Sentech and iBurst, have made wireless Internet cheaper than the fixed-line ADSL - and these options don't involve lengthy installation delays.
The war began with MTN slashing prices and improving its offerings. Others followed suit. iBurst provided more data a month, while according to Vodacom's CEO Alan Knott-Craig, its fees that kicked in, in April are among the best in the world.
Not only have there been price cuts of more than half in some cases, but also extra download capacity - meaning consumers are now getting more for less.
But Telkom so far has only slightly cut the amount it charges other Internet service providers.
In Telkom's favour is that ADSL is regarded as qualitatively better in terms of reliability even if it can be slow.
Notably vociferous on Telkom's lackluster approach to competition is the MyADSL website where consumers can access a relative evaluation of the different prices and bundles on offer in the marketplace.
If this is a war then Telkom has gradually come under siege from wireless advancing on its monopoly bastion.
Just over two years ago Telkom had the lion's share - some 90 percent - of the market but a year later this had dropped by more than a quarter.
Technological advances by both Vodacom and MTN in 2006 saw wireless gain more customers and now Telkom is thought to have just over half of the market.
Analysts say this is unique because the international pattern is for the majority of broadband users to rely on fixed lines.
The government, meanwhile, is not amused at Telkom's approach on a range of related issues - behind the scenes there is sharp tension over perceptions that Telkom is holding the country to ransom by control over infrastructure.
Telkom CEO Papi Molotsane quit in April and his abrupt departure is thought to have been over differences between Telkom practice and government policy - notably government wanting developmental concerns for the continent to be placed over profit interests.
President Thabo Mbeki recently spoke about Telkom "profiteering" from its monopoly position on access to the west coast SAT-3 cable.
DA spokesperson on tele-communications Dene Smuts said "a truly untenable position" should be brought to an end by allowing the communications regulator, Icasa, to declare essential facilities including the undersea links, as the new law (Electronic Communications Act) requires.
Smuts said that Telkom had to wake up to competition and take decisive measures to ensure more access to the Internet for ordinary people. |
