Free ADSL Upgrade

ADSL South Africa (Broadband South Africa), 28 August 2006

ADSL speed upgrade from 1 Mbps to 4 Mbps welcomed by Internet Service Providers (ISPs) and Telkom’s DSL1024 customers.

It might be seen as a little too late but Telkom’s move to upgrade DSL1024 customers to a service of 4 Mbps is a step in the right direction. The best of all is that it comes at no extra cost for the ones lucky enough to stand in line. Telkom’s move brings us closer to international speed standards although pricing and usage limits still leaves a bad taste in one’s mouth.

Telkom’s only viable competitor in ADSL wholesale space, IS (Internet Solutions), welcomed the news. Pricing on IS’s uncapped ADSL solutions will understandably be unaffected by Telkom’s announcement. Douglas Reed (MD of DataPro) added his voice to the responses in favour of Telkom’s announcement although he deemed the step to be late in the game.

Many smaller ISPs (smaller SAIX per-Gig resellers) in general also welcomed Telkom’s announcement. Both Jacques Peenz (MD of Hyperlink) and Rupert Bryant (General Manager and CTO at WebAfrica) welcomed the news and agreed that it should not have a big impact on their business models. Matthew Tagg (MD of WebAfrica) stated that “a faster ADSL speed will not only promote the products which customers will select in favour of other offerings like iBurst or HSDPA, but also enhance the user experience in offices where a higher burstable speed will alleviate the effect of congestion on a slower speed” (MyADSL).

On the negative side the profit margins of many smaller ISPs might come under further pressure. The reason for this is that the margins of many are depended on overselling of bandwidth at this stage. One can assume that higher speed will mean higher usage resulting in less ‘unused’ bandwidth. This will result in a negative impact on profit margins.

According to Laurie Fialkov (MD of Cybersmart) “...the 1Mb to 4Mb bump is a little bit of marketing hype and has maybe been done at this point so that the focus is once again taken off the real issues at hand namely, local loop unbundling, cheaper local and international bandwidth to ISPs, and the exorbitant cost of the IPC service.” He still sees the development as positive however. “Marketing gimmick or not, it definitely seems that Telkom have taken notice of the complaints that have been levelled against it and are doing things to please the consumer which is definitely a step in the right direction.”

Well, it’s definitely a step in the right direction. It will be interesting to see how iBurst and similar service providers battle it out with the fixed line ISPs. iBurst and Sentech seem to expand their coverage areas at a rapid pace at this stage. Will their competitors be fast enough to win the hearts of ADSL users in South Africa? Will Telkom be able to deliver with an increase in demand asking for more new installations?”