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Telkom's pricing 'stunts Web hosting growth'


Johannesburg, 15 Jan 2007

Telkom's stronghold on bandwidth and pricing is suffocating the Web hosting industry in SA, says Wam van Strij de Regt, global Web hosting entrepreneur.

"Prices are being kept artificially high and do not compete with international standards. Web hosting companies aren't offered special rates by the bandwidth supplier, which keeps most Web content overseas. This is damaging the South African Web hosting industry."

He adds: "Lower prices for local hosting companies will lead to a boom in the South African hosting market, because it will allow local producers and developers of high-end, complex Web sites to start offering their full services locally. Consumers and Internet-using businesses will benefit by experiencing faster access to more relevant local content."

Telkom's response is that it is committed to consistently adjusting its pricing model in its effort to increase broadband access to the South African public.

"Price adjustments are filed with ICASA [the Independent Communications Authority of SA] on an annual basis. In August 2006, ADSL rental prices were reduced by an average of 24%," the fixed-line operator says.

Statistics presented by Department of Communications director-general Lyndall Shope-Mafole at the Information Society and Development Inter-Governmental Relations conference last year indicated telecoms prices had in fact dropped in 2006. The greatest cost-saving was on business DSL, which enjoyed a 40.4% decrease, the figures showed.

"Things are not as bad as they are made out to be in the media," Shope-Mafole said.

Expensive in SA

However, Geoff Rehmet, new business development manager at Internet Solutions, says bandwidth pricing does not affect the hosting industry.

"The environment for hosting companies is not directly affected by ADSL pricing, since hosting companies do not usually use ADSL connectivity for the Internet connections."

He says hosting providers would either buy a leased line connection to the Internet from a first tier Internet service provider or lease space in a large data centre.

"The problem which any hosting provider is faced with is that the connectivity provided to customers is costed based on leased lines provided by Telkom, thus making hosting in SA expensive, even though the costs of physical space are lower than in the UK or the US, due to lower real estate, electricity and labour costs," he says.

Rehmet adds: "The impact of ADSL on hosting providers is that end-users are able to pull more content from Web sites, thus hosting providers need to connect themselves to increase the pipes with which they connect to the Internet."

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