Telkom expects 300 000 ADSL users

Telkom started taking orders this morning for asymmetrical digital subscriber lines (ADSL), the long-awaited residential broadband technology. The price is steep in comparison with current dial-up connections and availability is limited, but the company says it sees a huge potential market.

Although ADSL is theoretically capable of speeds of up to 8Mbps, Telkom is offering 256Kbps upstream and 512Kbps download without any speed guarantees.

Product development executive Steven White says the speed limitation is deliberate as the costs of providing megabits a second across the Telkom network for every customer would be prohibitive. International bandwidth is a particular worry for the company and it expects a need for much customer education as users are frustrated by slow international downloads.

There is also likely to be a backlash as customers are initially denied ADSL requests.

"It is either going to be good or it is not going to be at all," says White. "We will not provide service where the line quality is not adequate."

Only 1 700 ports will initially be available and users more than 3.5km away from their local exchange, or in areas with poor copper line quality, are unlikely to be approved.

Those who do get a line face a maximum data limit of 3GB, but Telkom says it will take no immediate action against customers who download more data. If "rogue users" turn out to be a problem, as they have elsewhere in the world, threshold billing will be introduced, it says.

Despite the limitations, Telkom is expecting a huge response to ADSL, given enough time.

"We see a market for up to 250 000 to 300 000 services in theory," says White.

Residential users will pay a flat rate of R748 (including the normal telephone rental fee of R67.72) a month for an ADSL line. Business users will pay R120 more, which with line rental comes to R890/month. A once-off installation charge of R404 will be levied and modems are available from Telkom at R2 000 and up.

That, however, is during the commercial trial period in selected parts of Johannesburg and Gauteng. As the service is extended to the Cape, KwaZulu-Natal and Free State by March 2003, more options will become available.

Six- or 12-month financing packages are already offered on the modems and other suppliers should start stocking modems as the equipment is a type approved by regulators. The option to self-install the equipment should also be available by February next year, allowing users to reduce the initial price.

"It is fairly difficult to install and means moving IT skills into residential areas," White says. However, new micro-filter technology will remove the need for much of the internal wiring currently required.

The current service will offer only dynamic IP addresses, but Telkom says it is considering fixed addresses, albeit "at a steep premium".

Even if niche products are launched, ADSL is not for everyone. For the time being, Telkom expects "discerning Internet and remote users" to opt for ADSL. It has predicted a certain cannibalisation of both ISDN and Diginet services as users move over, but says that is according to plan.

"I would expect professional firms using lower-end Diginet to switch to ADSL," says Telkom`s chief sales and marketing officer, Pinky Moholi.

White contends that ISDN was never a truly appropriate technology for those looking for better Internet speeds and a switch to ADSL would be natural. However, Telkom says there will still be a market for the point-to-point capabilities of ISDN.

Although there are no call charges with the use of ADSL, users who want direct Internet access will still need to find an Internet service provider (ISP) willing to provide onward connectivity at the same kind of data rates ADSL can offer.

At present, users can connect to any provider on the same terms as a traditional dial-up account, but will then see much the same speeds when browsing as before, negating the benefits of ADSL.

TelkomInternet is still considering special ADSL packages that will allow users better browsing and although no pricing is yet available, executives predict it will be significantly more expensive than the R100 subscription for ISDN users.

Meanwhile, the company has invited interested ISPs to order connections to the two B-RAS or broadband remote access servers that will serve all ADSL clients for now. It expects that number to increase to eight with geographic expansion.

It is also offering ISPs ports on its SAIX backbone network at R652 a piece at a typical oversell ratio of 1:4, creating a base cost of R160 per customer before any international bandwidth is provided.

Pre-selection software, which will allow users to determine if their system configuration is viable for ADSL, is available for download from www.adslspeedfreak.net or on CD from Telkom.

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