MTN Network Solutions' acquisition of 34MB of capacity on the SAT 2 undersea cable will have an insignificant impact on broadband prices, say observers.
MTN NS CEO Mike Brierley says the SAT 2 link, which was bought from British Telecom and Telkom, will allow MTN to independently route international calls, without going through a Telkom network.
By terminating its own calls and using voice over Internet Protocol, MTN will be able to reduce the cost of its international calls, as well as the costs of general Internet and virtual private network access, he says.
"A lot of these savings will be passed to consumers," Brierley says. However, the point of the deal was not to introduce major cost-savings on bandwidth, he explains, but to provide MTN NS with the required redundancy to provide services to clients.
World Wide Worx MD Arthur Goldstuck and Future Perfect CEO Alan Levine agree that the purchase will have an insignificant impact on lowering international bandwidth prices.
The new link may yield a reduction of up to 0.3% in the price of international calls, Levine says.
He adds the bandwidth purchase will have limited impact on Internet service providers. "This is MTN NS buying capacity on a link owned by Telkom; it doesn't mean more competition," he says.
The problem remains that MTN NS is buying access from Telkom at Telkom prices, Goldstuck explains. "Telkom is said to charge up to four times what its international partners charge on international access, which keeps access prices high."
No further decreases
International bandwidth prices will only go down significantly once there is open access to the international gateway, or Telkom is not the sole supplier on this side of the undersea cable, he says.
MyADSL founder Rudolph Muller says MTN made the purchase to accommodate the current drop in broadband prices, which MTN anticipates will increase data usage.
He notes that MTN has already cut the price of its 1GB extended data offering from R499 to R399 a month, and allocated an additional 1GB of free data in the package. This effectively gives customers 2GB for R399. MTN also reduced its 1GB modem plus data package to R479 per month, and allocated an additional 1GB of data.
Therefore, further decreases in pricing are unlikely, says Muller.
The SAT 2 undersea cable, which can handle 15 360 simultaneous transmissions in several different forms, including voice, television and data transfer, was installed in 1992 as a predecessor to the SAT 3 undersea cable.
This infrastructure was expected to cater for SA's telecommunications requirements for the next 20 years. However, demand escalated to the point where SAT 2 become fully utilised before the SAT 3/West African submarine cable was ready for service in the first quarter of 2002.
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