Telkom has announced an "effective" 15% price reduction on its IP Connect (IPC) product offering, set to take effect next month.
IPC is one of the biggest cost drivers for Internet service providers (ISPs) and has previously been cited as a major inhibitor to growing broadband in SA because Internet service providers (ISPs) argued the cost was inflated and limited competition.
Telkom's announcement follows the 5% free IPC bandwidth allowance that was offered by Telkom on a temporary basis from 1 October last year.
Telkom says it has decided to convert the said allowance into a permanent price reduction. "This, together with an additional 10% price reduction, means that wholesale customers will receive an effective 15% price reduction on all new and existing IPC capacity procured from Telkom as from 1 February."
The latest IPC price reduction comes after a 30% IPC cut in April 2012 and an 8% price reduction that was implemented on 17 October last year. Telkom notes: "Taken cumulatively, and considering this latest price reduction, Telkom has given effective price reductions of approximately 53% over the last two years."
The 30% cut in 2012 came after the Independent Communications Authority of SA (ICASA) stepped in to lower costs and increase ISPs margins in order to "stimulate innovation and increased investment".
At the time ICASA said the cost of IPC was the single largest cost component faced by competing ISPs in providing choice to the end-user for fixed line ADSL services.
Casper Kondo Chihaka, Telkom managing executive for Telkom Wholesale Services, says the latest IPC reduction was introduced in a bid to help ISPs grow fixed broadband service offerings in SA.
"We [hope] this price reduction will ultimately result in more affordable broadband price offerings for South African broadband consumers."
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