Home entertainment retailer Musica is offering an ADSL product that undercuts Telkom's rates; a move which analysts say is not surprising.
Musica's senior buyer, Achmat Reganie, says the company's decision to resell broadband to its customers is part of its digital strategy. “It is a strategic decision to tap into the market. One has to change with the times,” he says.
The company's product comes in at competitive rates, not undercutting the bandwidth providers, but taking a chunk out of Telkom's direct sale price. Basic bandwidth, for customers who already own a DSL line, comes in at R35 per GB.
The product is available through Musica World.
While the offering is not the cheapest on the market, the company's price compares favourably with some of the country's other providers. In a surprising move, Musica has also undercut Telkom's line rental rates.
The tabled deal
Musica could be one of the first retail businesses to take advantage of the reseller programmes being offered by alternative bandwidth providers.
According to Reganie, the company does have a partnership with one of the alternate providers. “Since we are partnered with another provider, we have received preferential rates. We decided to pass that value onto the customer,” adds Reganie.
A 384Kbps line will cost R140 per month, a 512Kbps line comes in at R300 and a 4Mbps line will cost the customer R380, according to Musica's Web site. The price for Telkom's 4Mbps line is R413 a month.
Musica has also signed a partnership with a support service provider that will front its customers' support needs.
The company says it has no direct plans to become a fully fledged service provider, and its current offering is simply a branded resale of broadband. However, Reganie says Musica's options will remain open.
Good move
With an increasing number of South Africans gaining access to the Internet space, the company will need a digital channel, says BMI-TechKnowledge MD Denis Smit. “A branded Internet service is a good strategic move on their part,” he adds.
Globally, more consumers are looking towards digital channels to purchase content, like music and movies, and an Internet service will provide Musica with that exact channel.
Smit says Musica's decision to move into the broadband space will become a popular strategy among the company's competitors. “They are doing it for the same reason that FNB moved into the market; it's a strategic play on their behalf. Musica needs a digital channel,” he explains.
He says locals can expect more retailers to start accessing the broadband market over the next few months. However, he notes it may not be for the same reason as Musica. “Like prepaid, broadband will become a commodity for them to sell,” he notes.
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