Fight fire with fire

ADSL South Africa (Broadband South Africa), 14 March 2007

It comes as no surprise that Telkom and ICASA are once again standing in the way of decent pricing and service where telecoms and broadband Internet in South Africa are of a concern.

How are they standing in the way of lower prices and better service?

Well, both ICASA and Telkom’s efforts do not complement the idea of lower prices and better service, especially where ADSL broadband in South Africa is of a concern.

Telkom executives made it clear at a recent analyst meeting that they ‘…would stop drastic price cuts for broadband access” (Telkom’s 2011 broadband plans, MyADSL, 7 March 2007). Telkom Managing Executive of Retail Marketing, Steven Hayward added: "The fact that the market has lagged on the competitive and regulatory fronts is giving us time to do more smart stuff on the retail front" (Telkom’s 2011 broadband plans, MyADSL, 7 March 2007). In other words, Telkom is set to squeeze ever telecoms cent you can afford out of you while they still have the opportunity to do so. Let’s hope this is not the “smart stuff on the retail front” that Hayward referred to. There’s nothing smart in shameless thievery but only the evil desire to screw people whenever you get the opportunity. The best of all is that they are not even concerned about a possible backlash from consumers because they made their intentions very clear.

“The fact that the market has lagged on the competitive and regulatory fronts” must also be in reference to the fact that ICASA has effectively stopped Neotel from launching its residential telecoms and broadband services on schedule. ‘The initial launch date for Neotel’s residential and SMME telecoms and broadband services was March/April 2007’ (ICASA forces Neotel to delay launch of broadband services, MyADSL, 8 March 2007). Neotel was forced to move this date to round about June this year mainly ‘because ICASA failed to allocate the spectrum they need in a timely manner’ (ICASA forces Neotel to delay launch of broadband services, MyADSL, 8 March 2007). In other words, the parrot at ICASA lied when it said: “Although ICASA has lost a number of staff recently, this has not affected the deliverables of the organization” (ICASA forces Neotel to delay launch of broadband services, MyADSL, 8 March 2007).

ADSL South Africa (Broadband South Africa) tends to agree with Hellkom’s take on things: ‘It's incredibly embarrassing that this country, which has an incredible amount of potential, is constantly being held back by extreme idiocy, bribery and corruption - take your pick. Someone in ICASA would have to be in Telkom's pocket, or why on earth is there still a delay? Surely they *know* that Neotel needs the licences as soon as possible? Surely they *know* that Telkom is stealing potential business while Neotel suffers delays? Surely then they *know* that this will be another blow for Neotel in taking on Telkom and will slow down Neotel's entry into the market?’

It’s as clear as daylight that ICASA is hampering Neotel’s efforts to effectively compete against the likes of Telkom. In other words, the Regulator that’s suppose to ensure fair competition for one is now standing in the very way of fairness and decency.

Does Telkom have any plans in place that will truly benefit South African consumers?

No, although they will go to great lengths to let you know how many mountains they are going to move or have moved to help you.

One can come to the above conclusion after Telkom laid out its broadband plans at a recent analyst meeting:

• Prices will not come down soon - Even after generous price cuts from broadband access providers such as MTN, Sentech and Vodacom, Telkom made it clear that they are ‘…not currently actively addressing the pricing of their ADSL products’ (Telkom mum on ADSL price drops, MyADSL, 6 March 2007). In other words, Telkom is satisfied with the status quo.

• Average speed increases – Telkom plans to increase the speed of its broadband service to 10 Mbps by 2011 from the fastest 4 Mbps currently offered. This might look rosy but remember that ‘…while a 10 Mbps service may be internationally competitive now, by 2011 it will definitely not measure up to international norms, where Fiber-to-home connections are already starting to take over from ADSL’ (Telkom’s 2011 broadband plans, MyADSL, 7 March 2007). In other words, they are really out to offer you yesterday’s speeds.

• Broadband penetration rates – Telkom made it clear ‘…that they are looking at 15-20% ADSL fixed line penetration rate by 2011, once again moving the goal posts further and further away’ (Telkom’s 2011 broadband plans, MyADSL, 7 March 2007). In other words, they are ‘…once again moving the goal posts further and further away’ (Telkom’s 2011 broadband plans, MyADSL, 7 March 2007).

In short, if Telkom sticks with its planning, its going to miss out on the opportunity the 2010 Soccer World Cup offers in terms of showing the world that we’re not as backward as rumour has it.

Are Telkom’s ADSL broadband pricing and speeds really that bad?

Well, decide for yourself…

SPEED

In terms of speed ‘African countries like Morocco and Kenya have already broken the 20 Mbps broadband barrier, and both these offerings carry no usage limits’ (Telkom’s 2011 broadband plans, MyADSL, 7 March 2007). In other words, Telkom is offering you 4 Mbps at best at this stage while you can already get much faster broadband in developing countries such as Morocco and Kenya.

Let’s rather not try to compare Telkom’s speed offering to that of developed countries. Some of us might just choke on a carrot or something…

PRICING

MyADSL has perfectly described the situation: ‘Internationally broadband speeds are increasing while prices remain affordable. Locally the situation is different with high prices coupled with limited usage offerings dominating the fixed line broadband landscape’ (Fair benchmarking sheds some light on Telkom’s ADSL pricing, MyADSL, 5 March 2007). In other words, we are moving in the opposite direction when compared to world trends in regard to broadband.

This is how Telkom compares to international ADSL broadband access providers…

‘The all-inclusive cost-per-Megabyte on Telkom’s popular DSL1024 with a standard 3 GB monthly usage allowance costs 28 c/MB. In Australia their high end ADSL offering translates into 1.5c/MB, while similar services in the UK and Morocco give a cost/MB rate of 1 c and 1.4 c respectively’ (Fair benchmarking sheds some light on Telkom’s ADSL pricing, MyADSL, 5 March 2007). In other words, ‘Telkom is nearly 2000% more expensive for cost/MB than other international incumbent operators’ (Fair benchmarking sheds some light on Telkom’s ADSL pricing, MyADSL, 5 March 2007). This is true while the parrot at ICASA is seeking proof that the prices of ADSL broadband are too high in South Africa.

Hang onto your seats because you have seen nothing yet…

‘When benchmarking cost, speed and usage allowances the situation for Telkom looks even worse. Here Morocco becomes the most affordable among the benchmarked countries with a price of R 0.73 per GB/Mbps. Australia comes in second with R 0.77 and the UK third with R 1.21.Telkom’s cost per GB/Mbps is R72.08, in the region of 7000% more expensive that the three other countries’ (Fair benchmarking sheds some light on Telkom’s ADSL pricing, MyADSL, 5 March 2007). In other words, Telkom is making a killing to state it slightly because it’s clear that their broadband offerings are among the most expensive in the world and in South Africa.

One thing is sure: We will have to fight fire with fire if there’s going to be any progress in regard to ADSL broadband in South Africa.

ADSL South Africa (Broadband South Africa) hopes that each and every Telkom shareholder sleeps well at night. They say almost all hostages grow a love for their hostage takers even after they have beaten them senseless.