Consumers are now spoilt for choice, as Internet service providers (ISPs) have been trying to outdo each other with several product offerings.
MWeb yesterday introduced capped ADSL packages for the small office/home office, SME and home markets, ranging between R99 and R190 per month.
This comes barely a week after Telkom unveiled a range of uncapped products aimed at the consumer market. Last week, iBurst also rolled out several aggressively-priced packages that range from R49 a month to R879 a month.
According to Steven Ambrose, MD of Strategy Worx, the cost structures of supplying broadband services and the competitive pressures are driving costs down at the same time as data usage is exploding, so all the companies want to share in the spoils of the burgeoning broadband market.
He adds that the user is the big winner here. “The low margins inherent in the broadband market make it difficult to make reasonable profits in the absence of real scale. The ISPs who manage to get large installed user bases will do well; those that don't, no matter the value in their offerings, will fall by the wayside.”
However, Ambrose notes that the ADSL market is still fairly constrained by Telkom and the various suppliers are simply realigning their offerings and chasing the same customers with better and better products.
Frost & Sullivan analyst, Vitalis Ozianyi, says the major ISPs were bound to respond to Telkom's strategic decision to introduce uncapped ADSL services. “The market already had uncapped services offered by ISPs like MWeb, but the impact of Telkom as the sole provider of the copper loop cannot be ignored by the market.”
He concurs with Ambrose that this is a trend the market has been waiting for. “ISPs want to expose the primary differences between ADSL and 3G to attract greater usage of the former. Based on observation of trends in the ADSL market for the past year, I would say it is healthy competition.
“Already ISPs have been lowering the cost of ADSL data. An important thing to note is the decline in international cost of bandwidth, which means ISPs are no longer inclined to separate international and local data bundles. This opens up room for uncapped as well as higher cap ADSL data services,” says Ozianyi.
Rudi Jansen, chief executive at MWeb, says uncapped, unthrottled ADSL remains the company's “hero” product. “We're very excited to see the Internet landscape moving towards an uncapped environment. However, we understand the market is made up of users who are adopting the Internet at different rates,” says Jansen.
The ISP says its new offerings give consumers who are still in the market for capped Internet a greater degree of choice when selecting a package to suit their needs. With these new products, capped customers will now benefit from ADSL pricing from as low as R18 per GB, it adds.
MWeb also says it will automatically upgrade customers on selected capped products to higher data allocations. For example, customers on a 5GB data package will be upgraded to 8GB of data, free of charge.
“MWeb does not throttle any uncapped ADSL product and gaming traffic receives the highest priority and assurance levels on the MWeb network, regardless of the package,” says Jansen.
Carolyn Holgate, MWeb Connect GM, says it is both refreshing and exciting to see the Internet landscape in SA evolving towards uncapped ADSL. “In terms of general competitiveness within the connectivity sector, a growing market always attracts a lot of players.
“However, the trick is creating a sustainable business, and continually enhancing your infrastructure and resources to give your customer base the quality network and technical support they're looking for.” She also points out that the Internet in SA is still in its infancy and different consumers need different products.
“The need for capped products is decreasing, as more South Africans experiment and discover what the Internet truly has to offer. The fact that Telkom, iBurst and less recently MTN launched uncapped offerings clearly indicates that uncapped Internet is in demand.”
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