Telkom`s decision to keep the pricing for its ADSL offerings unchanged for 2005 is a big blow to SA`s broadband Internet growth, says broadband discussion site MyADSL.co.za.
MyADSL founder Rudolf Muller says that last year saw the price of broadband services plummet worldwide, but SA stood out as a country where the price increased.
"It is regrettable that Telkom has decided not to follow this global trend as it will mean that South Africa falls even further behind regarding broadband Internet," he says.
Muller says the recent overall reduction in the cost of broadband Internet services was due to more affordable equipment and the lower cost of bandwidth.
Apart from these two factors the stronger rand further placed Telkom in a perfect position to pass these savings on to the consumer and fuel the growth of broadband Internet in SA.
"These savings unfortunately did not result in the lowering of ADSL costs in SA, and ADSL users must still fork out up to 15 times more for their broadband connection than their European, US or Asian counterparts," Muller says.
He says that Telkom`s pricing policy means that SA is falling further behind the rest of the world regarding Internet connectivity. "Even countries like Mauritius and Oman provide cheaper and superior ADSL offerings than SA."
According to Muller, the monthly cost for an ADSL 512 offering in Mauritius is about R300 per month compared with Telkom`s charge of R1 000 for a similar service.
"MyADSL feels strongly that the government should play a more active role in reducing the cost of broadband Internet for South Africans. A reduction in cost will fuel the growth of broadband in our country and ensure sustained growth in the IT sector," Muller says.
He goes on to say that without a reduction it will be very difficult for SMEs in the IT industry to compete favourably with their international counterparts. "It will further result in ADSL remaining a service that is only accessible to a small, affluent part of our population. This will regrettably further stretch the already large digital divide."
According to Telkom`s product development executive, Steven White, price comparisons with other countries need to be seen in context, where ADSL is significantly cheaper it is as a direct result of local market conditions, such as demographics, size and maturity of the market and government subsidies enabling a far more cost effective broadband network rollout.
"In SA we don`t have these privileges. These markets (typically Asian) exist mainly on local content and have little requirement for expensive international bandwidth, whereas 60% of SA`s broadband traffic is international, making this a huge cost driver," says White.
He says the business market is responsible for the majority of ADSL growth because they are spending less on their ADSL service than on previously billed call units to connect to the Internet.
"To state that Telkom is hampering growth with price is in fact exactly the opposite of what is happening - businesses are financially better off once they become an ADSL customer, and Telkom has not increased the price of ADSL access since its introduction in August 2002."
"We remain committed to pricing that will allow for sufficient bandwidth to provide a satisfactory customer experience."
White says that Telkom will also continue to introduce new diversified broadband access and ISP services, allowing customers the choice of more affordable broadband access and ISP services.
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