While welcoming the new products and price reductions announced yesterday by Telkom, the Communications Users Association of SA (CUASA) has warned consumers to be cautious about adopting the new offerings.
CUASA spokesman Ray Webber suggests the announcement has more to do with competition in the sector than a genuine interest in reducing the cost of its offerings.
"Obviously, any kind of price reduction in SA`s infamously expensive broadband arena is welcome news to local businesses and consumers," says Webber.
"However, Telkom`s latest announcement surely has more to do with competitive wireless options than assisting their home and corporate users. But it proves our claims that competition in the local telecoms market is starting to reduce costs for users."
He says the minister`s recent clarification on liberalisation in the sector, which included the proviso that value-added network service (VANS) providers could not provide their own infrastructure, means that it appears Telkom is still a de facto monopoly.
"We also urge consumers to be cautious of signing any 24-month contracts which include `free` modems, as it is likely that competitors will offer counter products, and at increasingly competitive prices," says Webber.
"On the face of it, the average businessperson and consumer should not really care which company wins in a competitive environment, just as long as they are able to obtain broadband offerings at internationally competitive rates.
"However, we seriously doubt if the monopoly would be in the least bit interested in reducing its fees for broadband offerings without the presence of new and significant competitors."
He points out as an example the fact that Telkom`s latest HomeDSL 512 price point is now exactly the same as that of one of its wireless competitors.
Level playing fields
Webber also claims the market is seriously tilted in favour of the monopoly, as it is the only one entitled to provide most of the infrastructure necessary for broadband services, and unless the regulator can level the playing field, CUASA fears that new players will struggle to compete.
"If those new players are no longer capable of effectively competing, there won`t be any prizes for guessing which incumbent operator will then increase its prices once more.
"Telkom`s latest price reductions are nonetheless a welcome surprise, even though our local broadband options still lag behind those provided by other developing nations such as India and Egypt," he says.
"It is simply depressing to compare Telkom`s offerings and prices with those in many developed countries, but at least we are heading in the right direction."
CUASA also claims that Telkom`s new low-cost DSL option, HomeDSL 192, will offer hideously slow connectivity when compared to international broadband offerings.
"Few, if any, international broadband providers in truly competitive environments even bother providing such measly offerings as 192Kbps, as the same sort of money in those countries would buy you an unlimited 1MB or even a 2MB offering, with additional services thrown in.
"However, in spite of our negative comments, HomeDSL 192 offers a lot more than a regular dial-up connection at a price which at least some homes will start to consider seriously," says Webber.
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