South Africa recently received news of the first uncapped ADSL package launched on the market to much acclaim.
On the face of it, these deals are exactly what the bandwidth-strapped South African market has been crying out for. With increasing commercial competition from a global market and a more sophisticated desire for more flexible Internet access, there clearly is a need for a shake-up in the market. The move will be welcomed by the man in the street, who will be lapping up the chance to surf the Web for as long as he wants to, for an accessible price.
But one industry professional is urging caution.
Jean-Pierre Dumont, CEO of WebNow, feels that while uncapped ADSL is generally a good thing in principle; consumers should look more carefully at what they are getting before they jump ship from their existing provider.
He explains his concerns: “Uncapped accounts are ideal for some users but very bad for others. The packages announced recently do look very good to the uninitiated. But they are laced with conditions and caveats that may catch the average user unawares.” Cost, reliability and conditions are the main concerns, as Dumont elaborates.
The uncapped deals are structured to appeal to consumers who are fairly light internet users. In some cases a user with a 3 GB capped account may feel they will get better value by switching to an uncapped account. In doing so, they may forego a very reliable service that meets their needs for R99 a month, for one that costs an average of R200 per month. Their costs go up but it is unlikely that their user profile will change. Where's the benefit in that?
Furthermore, uncapped accounts are new to the South African market. With many accounts using one network provider the backhaul capacity to serve all of these uncapped users is unknown and untested. This, combined with potentially high contention ratios, is likely to result in performance problems for users. The service may be uncapped but it could be less reliable.
To counteract that, the uncapped accounts are heavily shaped and in some cases throttled, giving priority to general web browsing. In addition, line speed restrictions of up to 384 kpbs will be designed to reduce users' ability to download a lot of data. Although ISPs will have the ability to cap or disconnect users that are deemed heavy users, light users will subsidise the heavier users. This imbalance in turn threatens the system's reliability.
There could also be restrictions on VOIP and multimedia downloads. Dumont asks: “How do these restrictions make the service uncapped? Because these terms are buried in the fine print, these seemingly amazing deals could be seen as misleading for the average consumer. And it is the average consumer that these deals are targeted at.”
The uncapped offerings are further restricted in the terms and conditions. In particular, the cheaper accounts are available to personal users only. Businesses are traditionally heavier users and these restrictions make it difficult for cash-strapped small businesses to take advantage of the web now said to be free.
Having said that, Dumont acknowledges that the South African market is ripe for uncapped offerings. His firm WebNow launched an uncapped package this week. But Dumont is clear that the market is also ripe for alternatives that meet the needs of everyone, whether they are connecting with buddies on Facebook, Skyping their grandchildren in London, building an e-commerce based home business, or linking to video conferences with global clients in multiple time zones.
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