No clarity on ADSL 'hard cap`

Martin Czernowalow
By Martin Czernowalow, Contributor.
Johannesburg, 07 Oct 2005

The Internet Service Providers` Association (ISPA) is holding a workshop today to formulate a position on Telkom`s decision to introduce a per gigabyte billing system and 'hard cap` for its ADSL offerings from 1 November, says an ISPA official.

The move will affect South African Internet Exchange (SAIX) Internet service providers (ISPs) that have, until now, been reselling ADSL products under a self-regulation agreement with Telkom.

This has allowed SAIX ISPs to sell products with 30GB caps at 3GB cap prices - ranging from R200 to R500 a month.

However, Telkom recently announced it would put mechanisms in place to control the cap for ADSL services, prompting many industry observers to slam the move as uncompetitive and bad for the country`s economy.

Such a move is expected to dramatically drive up ADSL prices, which will now be subject to per gigabyte billing from Telkom.

Elaine Zinn, a member of ISPA`s operations division, says the organisation cannot comment before formulating an official stance at today`s workshop. Zinn says a statement will be made either later today or on Monday.

It`s 'tricky`

MyADSL founder Rudolph Muller describes the situation as "tricky".

He explains that Telkom has been offering the 30GB product to ISPs with a certain user base. In terms of the self-regulation agreement, these ISPs would be billed for a second account should a user exceed the 30GB cap.

Muller says Telkom`s subsequent announcement that it would introduce a hard cap would mean that users exceeding this would be denied local and international Internet access.

"This is strange, as there is ample bandwidth in SA," Muller points out, adding that the proposed hard cap also goes against recommendations made by the Independent Communications Authority of SA (ICASA).

"ICASA`s findings, which form part of its draft regulations that have already been tabled before Cabinet, state that a cap should be introduced above 3GB a month, in line with international standards, and that local traffic should not count towards the cap."

Muller also says the per billing system would lead to "exorbitant" ADSL prices, with a suggested price of R1 600, excluding VAT, for 30GB products being announced by Telkom.

Clarity needed

SAIX ISP Web Africa is one of the service providers that will be affected by the hard cap.

MD Matthew Tagg says the group is in talks with various parties to determine the best course of action, and adds that Telkom did not provide sufficient clarity on the proposed hard cap issue.

"Telkom has not communicated what it intends to do to its customers and is still advertising ADSL products without a hard cap."

Tagg points out that, whereas Telkom`s move may go against the spirit of ICASA`s suggestions, the ISP portion of an ADSL service is not regulated and can thus not be influenced by the regulator.

"I believe Telkom is doing this for technical reasons, as it can`t differentiate between local and international traffic, which makes billing difficult."

Telkom responds

Lulu Letlape, Telkom group executive of corporate communications, responds that Telkom never sold a 30GB account.

"Wholesalers purchase a 3GB account and then sell it as a 30GB account and end-users are put under the impression that they are buying 30GB accounts. Abuse is also committed in another area, where a 3GB account is bought from an ISP and deliberately abused. One such instance is a TelkomInternet end-user using 296GB, in September, effectively 97 times more than what she paid for," Letlape says.

The solution that will be put in place on 1 November, she says, is "very simple", and resellers will have two options: resellers can purchase from a standard set of products, ranging from 2GB to 30GB, which will be hard capped, or resellers can make use of usage-based billing and the reseller will be responsible for the total consumption of their end-users. Resellers will determine and manage capping of each user individually.

"The introduction of usage-based billing will enable each ISP to make the decision on the size of each account and when, how and why to cap or not to cap a services, directly in line with wishes from the industry and ICASA."