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Lower IPC costs to benefit consumers

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 02 Apr 2012

Consumers are set to benefit from improved fixed broadband offerings and price cuts, as Telkom cuts the cost of IP Connect by 30% from this month.

However, Internet service providers (ISPs) are not yet able to indicate how much of the saving will be passed onto end-users.

On Friday, the Independent Communications Authority of SA (ICASA) said the fixed-line operator would trim the cost of IP Connect (IPC) by 30% from this month. IPC is the single largest cost for ISPs in providing fixed broadband services.

Lower IPC forms part of a phased approach to local loop unbundling (LLU), which will free up access to Telkom's last mile, and should aid competition and trim costs for end-users.

ICASA was initially expected to have regulations for unbundling in place by last November, but instead published a framework. At the time, it indicated IPC cuts would come into effect at the end of March.

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Sean Nourse, Internet Solutions executive for connectivity, says the cut, which has yet to be confirmed by Telkom, will help grow the number of DSL consumers.

It will result in either cheaper prices for the same service, or price reductions with better service performance, says Nourse. “Both ways we should see the market seeing a massive benefit.”

Edwin Thompson, GM of technology and infrastructure at MTN Business, says the lower cost will result in a “clear benefit” for end-users. “This cut will allow for various parties to improve the current broadband services offered, or if they choose, a reduction in prices.”

Thompson says ISPs are likely to use the cut to provide improved overall broadband solutions. However, he is not convinced there will be aggressive price cuts immediately.

MWeb MD Derek Hershaw says: “With any previous price reductions, we've usually ploughed the savings straight back into buying more IPC capacity.” He says the company will do the same this time, but will also “pass something back to our customers on some of our products”.

However, Hershaw could not indicate what sort of price cuts consumers could expect.

Afrihost sales director Greg Payne says Afrihost has been hoping that the cost of IPC would come down for a number of years. “This will definitely have a positive impact on ADSL prices for consumers and businesses in SA.”

Payne could also not indicate how much consumers would benefit, but points out local ISPs will be able to offer “more exciting fixed-line services” to compete with the latest mobile offerings.

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