Telkom`s recent service increases, coupled with the weakening dollar value of the Rand, has boosted the cost of international bandwidth to local Internet Service Providers by around 30% in the past few months.
This not only continues the trend of making Internet Access services in SA a lot more expensive than comparable services in many American and European countries, it`s also threatening the viability of many smaller ISPs.
So says Stuart Hardy, general manager, Networks, at Internet Solutions (IS), South Africa`s leading Internet Service Provider (ISP) and the e-business infrastructure provider subsidiary of Dimension Data Holdings.
"Local first tier ISPs, like IS, which purchase large amounts of International bandwidth via satellite to the US and via fibre to the UK are not totally immune to the effects of a weakening Rand as terminating agreements with international bandwidth suppliers are paid in hard currencies. But first tier ISPs have sufficiently large corporate client bases - and therefore purchase sufficient bandwidth to benefit from economies of scale - to ameliorate the effect of the increases. Smaller ISP`s don`t
"When additional fixed-line telco licences are issued in the next year or two, there will be gradual relief for ISPs and what they pay for infrastructure services. However, this is likely to be too late for many ISPs. They will not be able to sustain the high cost of telecommunication services till then," he adds.
But, he continues, there is a way out for ISPs with the technical expertise and vision to look beyond `vanilla` Internet access as their sole source of income to providing services which add real value to their customer base.
"IS, for example, has developed more than 30 value added services over the past few years, making the company less reliant than many ISPs on the access market alone.
"Certainly, access will always be one of the cornerstone services offered by IS, as it creates the infrastructural link between the company and its subscribers. But this link enables us to provide value-added beyond access and e-mail," he explains.
Hardy also believes that another differentiator in the ISP environment will be the ability of ISPs to give their customers greater control over their Internet usage.
"SA corporates are becoming increasingly dependent on the Internet. It is no longer a `nice to have` but a mission critical component of their day-to-day operations. In a move aimed at making its operations more transparent, IS recently launched its Customer Zone, to give customers access to many of IS`s back-end systems previously not seen by subscribers.
"This gives customers access to corporate-specific information about account payment and billing history, records of all their support queries and utilisation statistics for their organisation to general statistics relating to IS`s local and International IS backbone capacity and usage.
"This transparency gives subscribers the assurance that their services are in order. They can also evaluate the traffic load on the IS backbone as well as related bandwidth issues in real time, without relying solely on the word of IS," Hardy concludes
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