Telkom defends ADSL billing

By Damaria Senne for Telkom
Johannesburg, 24 Nov 2005

Telkom Wholesale marketing executive John Joseph has no doubt Internet service providers (ISPs) will benefit from the company`s ADSL usage-based pricing model.

Joseph was speaking at a media briefing in Centurion this week, where Telkom executives sought to "provide the facts to the debate about usage capping".

However, it is difficult to quantify the benefits that would eventually reach the consumer, as that would depend on the ISPs, Joseph said.

The main benefit of the pay-per-usage model is that ISPs have the flexibility to create and package innovative products at reasonable prices for the customer, he noted.

Joseph added that Telkom did do the calculations to establish it would cost ISPs less to purchase the same product using the pay-per-usage model than it cost before the 1 November implementation date.

'Good scapegoat`

Rikus Matthyser, head of marketing for TelkomInternet, emphatically denied the pay-per-usage model would dramatically increase costs.

He also denied Telkom has been offering the 30GB product to ISPs with a certain user base. Matthyser said those companies that sold 30GB products used to purchase a 3GB product from Telkom, repackage it and then resell it as a 30GB product. "Telkom never sold a 30GB product to anyone."

Joseph said that while Telkom was aware of what the "abusive" ISPs were doing, an internal decision was taken not to take measures, as plans were already afoot to restructure the pricing model.

He noted that those ISPs are now having a hard time delivering the 30GB product at the same price they used to, as it would invariably cost them more, and Telkom makes a good scapegoat.

Hard cap blow

Although he attended the briefing and got the facts from Telkom, MyADSL founder Rudolph Muller maintains usage-based billing will impact negatively on ADSL consumers and the local IT industry.

"The fact that users could still access local Web sites and make use of local services after being capped meant local content providers enjoyed an advantage over their international counterparts."

He says this advantage has now been taken away from them, seriously hurting these providers. The pay-per-use model also negatively impacts on users who made use of 'free` local ADSL access to develop innovative solutions to reduce their telecoms costs.

However, Matthyser insists ordinary consumers will not be negatively affected. He says 96% of Telkom`s customer base use an average of 1.4GB, and 4% use very high amounts of gigabytes. He says the model allows Telkom to accommodate and manage the high-end users appropriately.

Inhibiting ADSL

Muller says the new pay-per-use system will most likely mean users will closely watch their usage and avoid bandwidth-intensive uses and applications.

He quotes Dr Tim Kelly from the International Telecommunications Union, who recently visited SA, and stated that 30GB monthly usage is the international standard. Kelly said for SA to catch up with its international counterparts, an affordable solution must be made available, encouraging people to use the various services available on the Internet.

Muller says the Telkom pay-per-use model is not a solution as something that costs users a flat rate would be more appropriate.

"ADSL was developed for bandwidth-hungry applications, but with an average use of 1.4GB per user, it is clear that local ADSL users are not using this service to its full potential."

Muller says while ADSL penetration is an important ingredient of the broadband revolution, the local IT industry and economy will not reap the rewards of broadband unless users are given the freedom to make use of the various advantages broadband has to offer.

He says the exorbitant cost of bandwidth inhibits users from making the most of their ADSL service.