Broadband costs much too high

2011-09-22 22:27
Johannesburg - South African video streaming provider Antfarm believes that people are not complaining enough about the high costs associated with broadband and streaming video.

The group said that it was possible that fixed broadband services in emerging markets would stifle growth, or certainly make it more difficult.

"Broadband is certainly picking up rapidly in emerging markets like South Africa, and new technology like the Seacom undersea cable are helping to bring this technology to the fore. But costs are still on the high side," said Marek Dziembowski, a director of Antfarm.

According to research house Ovum - which studied broadband prices across 19 emerging markets, including SA, Nigeria and Colombia - growth in fixed broadband was being seriously held back by high prices. The study also found that SA was the most expensive.

In SA, which was the most expensive of the markets studied by Ovum, prices ranged from $1 443 a year for entry level DSL services to $6 000 per year for the high end options.

Cheapest


"In some [emerging markets], broadband pricing was double or triple the price of an equivalent service in a more developed market," said senior analyst Richard Hurst.

"In addition, lower GDP per capita in most emerging markets means that broadband is only available to the highest socio-economic groups."

Ovum's research revealed that HSPA services were the cheapest option for data-hungry consumers in emerging markets, although the performance limitations and lower allowances created a compromise when it came to the actual customer experience.

Commenting further, Dziembowski said that with the adoption of online video services and content on a more widespread basis by consumers and business, the seemingly high cost of emerging markets was a "painful issue".

"The problem is that people just seem to accept it on the whole. They are not complaining enough and there is a general complacency, with people kind of accepting that, hey, it is okay to live with the high costs. Icasa and the department of communication should step up to the podium and look long and hard at these costs issues.

"They seem to be dragging their feet on the more important issues. For instance, it took several years for Icasa to unbundle the local loop, which also allows for other companies to benefit, besides Telkom, and to provide the 'last mile' of communications."

He said there had been a surge in Antfarm's services recently. But this, he believed, should have happened five years ago "because incoming video content in a corporation can increase communication costs for businesses".

'Profit gluttons'

"Because of the increased cost, the general approach by business is to block most video streaming, because it is deemed too costly. This is naturally stifling growth".

"By limiting access rates unnecessarily and actively sustaining excessive bandwidth pricing, telco operators and data carriers are effectively hampering economic, social and intellectual growth in emerging markets, thereby exploiting the increasing efforts and growing needs of less advanced nations trying to catch up and stay relevant in global markets, he said.

He added that poor countries were being disadvantaged by "profit gluttons" and high broadband cost that limited growth.

"Poorer countries are being denied the many advantages and efficiencies enjoyed by wealthier nations with openly competitive and considerably less expensive internet service provision.

"Instead of presenting a positive contribution toward improving people's living conditions and potentials, these selfish profit gluttons are mindlessly draining what little financial reserves the poorest try retain in hopes of building a better future... word by word, minute by minute, byte by byte, silencing their voices as their airtime runs out, breath by breath..."
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