Broadband deal: Industry reacts
2010-03-19 13:22
Cape Town - Industry players have welcomed the lowering of costs for broadband in SA after MWEB announced its uncapped service.
While OpenWeb welcomed the news of uncapped broadband, it was quick to differentiate between what it saw as two types of offerings in the South African market.
"The market is now separated by two types of providers: The Low Cost Provider, whom provides a service that enforces a high contention ratio, with the quality of their access reliant on other users, and the Business Class provider, whom provides a service focused on reliability, whom offers always available ADSL access irrelevant of another users usage," founder Keoma Wright told News24.
"We are firm believers in selling a quality product that works, opposed to a cheap product that has a high contention ratio where the user is at the mercy of his fellow internet users, whom may or may not be abusing the network," he added.
He announced that OpenWeb would be launching uncapped broadband, which will be unshaped after hours.
Challenges
In an apparent response to MWEB, the packages start at R219 per month for a 384kbps connection, and range to R539 for 4096kbps. For business users the price ranges from R499 to R1999, respectively.
"OpenWeb will officially be launching the packages on Tuesday (March23)," he added.
Imagine's business development manager Peter Pedrick said that MWEB's offer would have a minor effect on their business.
"It's a fantastic thing that's happened, but it will have a minor effect on our business. We have a large VIOP and data service," he told News24.
He speculated that MWEB spent several million rand to produce this service.
"I've worked it out and it must have them a quarter of a billion rand, but when you've got the backing of huge media company you can do it," he said.
Internet giant Google said that while they have factored uncapped broadband in their plans for SA, they still felt that the internet presented some challenges in the market.
"If we compare South Africa to Kenya for example, both countries have approximately 10% internet penetration.
"In Kenya however, we are seeing some aggressive government led policies, such as "encouraging" telcoms and cellular providers to bundle low cost lap tops with unlimited plans at fixed prices, with ministers such as Bitange Ndemo explicitly stating that Kenya will overtake SA in internet penetration by 2012 latest," Head of Google South Africa Stephen Newton told News24.
He said in a statement that there were strict regulations and limited competition in the South African market and that Google believes in universal internet access.
Gradual decline
"Google believes that internet access should be a right, not a privilege and as such, should be accessible by all people, not just the privileged. South Africa is in a great position to do this, but some more aggressive measures will have to be taken," he said.
He added that Google had several ideas planned for a South African market with unlimited broadband and believes that it will "give people the tools to begin to self educate".
"With unlimited broadband access, e-learning classes in theory could be facilitated on YouTube in HD quality. With unlimited broadband access, products like Google Health become possible. This platform would allow individuals to put their medical records securely in 'the cloud'," he said.
Seacom said that SA has established communications networks, compared to the rest of Africa, but that investors needed to recoup their money before consumers would see large scale reduction in prices.
"There has been a gradual decline over a three year period, and in fact, there has been a significant declines of between 30% and 40%. Guys have invested hundreds of millions and they first have to recoup the money before consumers will see dramatic price declines," Seacom Head of Strategy Suveer Ramdhani told News24.
He said that while Seacom will not engage directly in the consumer market, many consumer services depended on the Seacom infrastructure.
"We have channels to the market, through companies like Internet Solutions and others and many players have advertised reduced prices to consumers without saying that it comes through the Seacom cable," he said.
He added that the government needed to get more actively involved in the market and make available more WiFi frequencies as well as invest in the fixed line network.
Internet Solutions declined to comment.