Surely by now Telkom and the SA government has realized that low cost ADSL will not only be a huge benefit to small business owners and consumers but also mean growth in the number of small business that are created. This in turn will mean increased profits for Telkom - so why the short sightedness from one of South Africa's largest and impactful organizations? - Your thoughts please?

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Telkom says it plans to slash the price of Asymmetric Digital Subscriber Line or ADSL - the permanent internet connection - but many argue that, by international standards, we'll still paying obscene sums for shoddy connectivity. So what are our options?


What you don't know can't hurt you, so the saying goes.

Those of us who have never accessed the internet from a home anywhere else but in South Africa don't know the experience of cheap, super-fast connectivity. We just pay up and put up, grateful for any little scrap Telkom throws us.

So it comes as little surprise to learn that according to Telkom's market research, the "satisfaction rating" among its ADSL customers is 82%.

Telkom advertised "slashed prices" a week ago across two pages in the Sunday press and included an "up to 32% decrease on ADSL access costs". The average ADSL reduction, effective from August 1, is 24%.

But what Telkom is doing is scrapping its slowest speed ADSL offering - 192 kilobits per second (Kbps) - currently costing R270 per month, and the 384Kbps will become the minimum speed offering, which from August 1 will drop in price from R359 to R245. That's the 31.8% "price slash".

So if you're a Telkom DSL 192 customer, from August, presuming the Independent Communications Authority of SA approves the new tariffs, you'll get "bumped up" to a faster speed (free) and pay R25 a month less.

But that's not the whole story. Because, as Rudolph Muller, founder of the thorn-in-Telkom's-side website myadsl.

com, points out, that "average 24%" ADSL reduction claim is misleading, as it applies only to the access part of ADSL.

"Both the line rental portion and installation charges for this service will increase," Muller says. "So the effective price reduction on the full ADSL service is actually only around 12%."

To bring South Africa to "within acceptable international standards", Muller says, Telkom needs to reduce the total cost of ADSL by around 70%. Even countries such as Chile, India, Morocco and Egypt have far cheaper connectivity costs than South Africa, he says.

"Unless this happens, South Africa will continue to fall further and further behind the rest of the broadband world. This will seriously damage the IT industry and economy as a whole."

Myadsl forum member Philippa Davis says the high cost of connectivity in this country is due to Telkom's unorthodox multi-tier charging system.

"We pay for the phone line, then we pay for the ADSL line, which is in fact the same line, then we pay even more if we ask for a faster service, but it's still the same line. Then we pay an internet service provider (ISP) for a connection service, then we pay for extra bandwidth."

Steven Hayward, managing executive of Telkom's retail marketing, puts it down to "economies of scale". "As the number of people using ADSL increases, so we are able to bring down our prices," says Hayward, adding that the price cuts have been "dramatic" though nowhere near that of much larger overseas markets.

"We are never going get the economies of scale of the UK or US," Hayward says. "So our costs are always going to be higher than theirs. That's why we feel that Muller's price comparison is unfair."

Another reason for South Africa's relatively high connectivity costs, Muller says, is the fact that most content "sits in the US". "So in South Africa we are downloading all the way from the US, on expensive international bandwidth, so we are at a cost disadvantage."

In spite of the costs, though, there's been a huge response to Telkom's ADSL service. In January 2005, some 50 000 were connected. By the beginning of this month, there were more than 143 000 - in other words the number of ADSL customers has almost trebled in just 18 months. Half of those customers are paying for the 512 Kbps speed.

Telkom's 2010 target is one million broadband subscribers. And given how our lives are becoming increasingly dependent on permanent connection to the internet, that target is probably not unrealistic.

Dial-up, or ISDN (integrated services digital network, giving you access to the internet which requires you to dial up every time you want to do an internet search or send an e-mail) is just too slow and too expensive.

Not having some kind of permanent connection is becoming very hard to justify, especially if you have teens under your roof.

But navigating your way through the adverts to find the connectivity most suited to your needs - and pocket - is no easy thing, particularly if you're techno-challenged.



The Cape Times
June 19, 2006
Telkom charges 'obscene'
By Wendy Knowler