Many Internet Service Providers (ISPs) argue that lower IPConnect (IPC) prices, lower ADSL access prices, and naked ADSL offerings will boost ADSL uptake – and benefit Telkom in the long run. Telkom is however not having any of it.
Former MWEB CEO Rudi Jansen, who revolutionized the local broadband market by offering the country’s first affordable uncapped ADSL products, says that Telkom will significantly boost revenues if they lower IPC prices.
“If the IPC cost is reduced, ISPs will buy more capacity and Telkom will get more money to upgrade the last mile – and hence costs will reduce further,” says Jansen.
Jansen added that the throughput of the last mile needs to be increased in line with usage trends, without increasing costs. “This is the only way to relieve congested exchanges,” says Jansen.
Telkom is slowly trying to address the issues mentioned by Jansen, but the pace at which Telkom is moving is definitely not fast enough to satisfy Telkom’s ISP partners.
This raises the question as to why Telkom does not listen to their partners and follow the advice emanating from the ADSL ISP industry.
Jansen says that while he cannot speak on behalf of Telkom, one has to realise that the cost of getting to the last mile is very high. “I would think the answer is all in their financial modeling and where to invest the best. I would think 8ta is taking top priority now,” says Jansen.
“There could be a number of reasons, such as cannibalisation of existing revenues in Diginet services, and the high cost of copper maintenance, due to cable theft.”
Many consumers and ISPs are looking to ICASA to implement local loop unbundling (LLU) and force Telkom to reduce IPC charges. But recent comments from communications minister Dina Pule, saying that she would prefer to not pressurize the regulator with timelines, have all but killed hopes of LLU making a difference within the next 2 years.
Telkom has successfully lobbied ICASA (and the DoC according to industry speculation) to delay any significant LLU interventions. This means that Telkom will have to come to the party (without a big stick from ICASA) if ISPs are to see lower IPC charges and lower ADSL access costs.