Screamer bows out of ADSL

Local Internet service provider (ISP) Screamer Telecoms is getting out of the ADSL provision market to focus on its WiMax network.

“Screamer Telecoms has discontinued providing ADSL service as it became difficult to maintain the high quality of service our network is known for,” says marketing and PR manager, Bianca Robins.

She says the company is reliant on the service levels provided by upstream and downstream ISPs, and their service delivery has not been up to scratch, leaving Screamer customers in the lurch. “Unfortunately, the inconsistent quality was effecting our reputation, which, as an independent network, we have worked hard building up,” she explains.

Screamer has handed over its ADSL customers to business ISP the BCS Group, which deals primarily in the wholesale and enterprise markets of service delivery.

Despite Screamer's assertion, Steven Ambrose, MD of WWW Strategy, says Screamer is most likely the first casualty in the broadband price war. He says the company did not have the economies of scale to hold up against the massive price drops for ADSL bandwidth sparked by WMeb's uncapped offerings.

“Research we did in the industry shows the company had no real penetration in ADSL, and it's difficult to create a compelling offering without a critical number of customers,” he adds.

According to Ambrose, the environment will only become more difficult as the price war continues, although it seems to have abated for now.

However, Screamer's release of ADSL is not the end for the company. According to Robins, it will now turn its focus to its WiMax network and offerings.

“With the prospect of WiMax spectrum being allocated, we are focusing on our core wireless business, and structuring our affordable wireless broadband and telephone service network for national deployment.”

She says there is a market for low-cost broadband that has varying levels of quality and availability, but there is also a growing demand for high-quality, high-availability broadband that certain South African consumers are prepared to pay a little extra for.

The company's core WiMax network does not rely on other ISPs or Telkom for its service levels, meaning Screamer has total control over what it offers off that network. “Screamer will continue to be a market player and provide clients with quality broadband and voice services,” adds Robins.

Ambrose says Screamer's move to focus on WiMax may be a double-edged sword for it. “It is still an uncontested space, with few companies offering an effective service off WiMax.”

According to Ambrose, the WiMax arena is still largely a capped service with high margins, which will give Screamer something of a first mover advantage. However, with the looming auction of additional spectrum into the market, Screamer may have some tough competition ahead.

It is an open secret that Screamer uses Sentech's available WiMax-suitable spectrum to run its network. With the Department of Communications calling on the regulator to push a use it or lose it policy, Screamer's focus on its WiMax offering may save Sentech from losing the spectrum.

Industry watchers have noted that if Screamer released a viable WiMax offering, at least the spectrum is being used and not wasted.

However, with additional players getting ready to enter the market with the unallocated spectrum, Screamer will have to up its game, adds Ambrose. “If Vodacom got additional spectrum, they could compete at an extremely cost-effective rate. It will be a tough ride for Screamer, depending on who wins the spectrum licences.”