SA's broadband most expensive

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 10 Aug 2011

Fixed and wireless broadband in SA is as much as 20 times more expensive when compared to offerings from providers in 18 other countries, which are also classified as emerging markets.

The prohibitive cost of broadband in SA is an aspect government has vowed to tackle for several years, yet a recent research report finds connectivity is out of reach for most South Africans.

Ovum's “Broadband Pricing in Emerging Markets in 2011” looked at HSPA, WiMax, and DSL broadband services in 19 countries in Asia, Eastern Europe, the Middle East and Africa, and South and Central America.

The report states SA has the most expensive broadband tariffs of the 19 countries it looked at. Some low-end entry level services cost as much as $1 443 a year, while costs for higher end services are as much as $6 000 a year.

Ovum adds consumers in emerging markets are still paying far more for broadband than their mature counterparts - putting it completely out of reach for most of them. The lack of affordability is a major inhibitor to unlocking the growth potential of these markets, the company says.

Emerging markets analyst Richard Hurst says: “Demand for broadband services in emerging markets continues to be stifled by high prices. In some countries, broadband pricing is double or triple the price of an equivalent service in a more developed market.”

Sky-high surfing

Telkom's entry-level DSL offering is 14.5 times more expensive, at $1 443 a year, than India, which offers the cheapest package at $99 a year, Ovum's report finds. Entry-level DSL in Nigeria is $1 211 a year.

The report says the affordability of entry-level DSL services varied significantly across the 19 countries in its sample, with SA ranked among those countries offering the least cost-effective services and the United Arab Emirates (UAE), Russia and Poland being the most affordable.

SA's fixed-line giant Telkom also has the highest price for its high-end DSL service, according to the report.

Telkom charges $6 048 a year, which is 20.5 times more expensive than the cheapest offering, provided by TP in Poland for $294 a year. Telkom's pricing is followed by Telecom Egypt, at $3 954 a year.

There were significant differences in the download speeds offered by operators. Etisalat in the UAE offered the highest speed, at 30Mbps, while SA offered a maximum of 4Mpbs. The slowest download speed was in the Philippines, at 2Mbps.

Ovum says the most expensive entry-level WiMax offering is from iBurst, at $1 443, which is 13 times more expensive than Pakistani operator Mobilink, which charges a yearly price of $107.

iBurst was also the most expensive provider for high-end WiMax services, coming in at $3 039 a year, compared with India's Tata, which offers the high-end offering at $2 847 a year.

However, SA had the cheapest low-end HSPA offering, at $41 per year, while the highest was in the UAE, where Du's entry-level HSPA tariff is $708 per year.

Ovum found there are no entry-level HSPA packages that offer an unlimited download allowance, with most capping the service between 100MB and 3GB.

For every 100MB

SA was also the most expensive country in terms of cost per 100MB, among Ovum's sample of emerging markets. “The country recorded a cost per 100MB of $2.41 for WiMax, $12.02 for DSL, and $35.18 for HSPA,” it says.

Local broadband services were the most expensive in the sample on a cost per 100MB basis. MTN's entry-level HSPA service cost $35.18 per 100MB of data, while its mid-level HSPA tariff cost $17.60, says Ovum.

Most entry-level WiMax service providers charge under $1 for 100MB of data. However, Ovum found SA is among the countries in which this cost is substantially higher, with every 100MB of data costing $2.41.

“The high prices in these countries were due to low or limited data usage capacity and the high cost of backhaul and transmission as a result of limited infrastructure,” says the report.

Entry-level DSL in SA also costs more than $1 for every 100MB, coming in at the highest cost of $12.02. Ovum says SA is only one of two countries to charge more than $1 for every 100MB, the other being Bahrain at $1.43.

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