IPC cut encourages ADSL promos

Bonnie Tubbs
By Bonnie Tubbs, ITWeb telecoms editor.
Johannesburg, 11 Apr 2012

The recent IP Connect (IPC) cost cutback has prompted a number of improved fixed broadband offerings and price cuts from Internet service providers (ISPs), with the industry anticipating further consumer savings.

Just short of two weeks ago, the Independent Communications Authority of SA announced that Telkom would reduce the cost of IPC by 30%. IPC is the single largest cost for ISPs in providing fixed broadband services.

Part of a phased approach to local loop unbundling, which will free up access to Telkom's last mile, lower IPC should in theory aid competition and considerably shave the price tag on fixed broadband for end-users. While there is no definitive indication of total end-user benefits as yet, the scope for consumer savings has opened up and ISPs have started initiating various ADSL campaigns.

Preliminary promotions

Yesterday, big four bank First National Bank (FNB) announced its own ISP, FNB Connect, would increase the free monthly ADSL data awarded to eligible cheque account customers as of 8 May. Qualifying FNB cheque account holders will receive up to 5GB of ADSL data on a monthly basis.

Head of products and markets at FNB Connect, Farren Roper, says the bank sees the latest promotion as a launch pad for free Internet for many of the bank's customers and for increased Internet usage for existing customers. Data allocations are based on the account type and range from 1GB for Smart cheque account holders, to 5GB for RMB/FNB Private clients.

Last week, Web Africa revised its home ADSL packages and lowered top-up data costs. The ISP removed the peak and off-peak differentiator, delivering up to 400% more anytime connectivity at the same price. For instance, customers who previously had 2GB peak and 8GB off-peak data, now have 10GB of anytime data for the same price.

Afrihost sales director, Greg Payne, says the ISP has already introduced a number of new products in its ADSL range and, following the IPC cut, is looking at reducing the cost per GB on its capped products, as well as improving the performance and user experience on its uncapped accounts.

Internet Solutions (IS) says the market can expect to see an upshot from Telkom's IPC cost reductions manifest in either price reductions or service improvements.

Executive of connectivity at IS, Sean Nourse, says price reductions on products that have a direct correlation between IPC cost and selling price are on the horizon. “[That is] a lot of your capped/per GB accounts. We might see this only being passed on to the client in the form [of] 'you'll get more data for the same money you spent before' because ISPs have a lot of other investments like international and local bandwidth that still needs to be recovered.”

MWeb MD Derek Hershaw says the company will plough savings straight back into buying more IPC capacity and also “pass something back to customers” on some of MWeb's products.