'No fast price cuts with Seacom'
2009-06-04 09:57
Cape Town - South African consumers and businesses should not expect broadband prices to fall by a dramatic amount overnight when the Seacom cable goes live in a few weeks from now.
That's according to Steve Briggs, Head of Commercial at iBurst. He said that the 1.28 Tbps East African undersea fibre-optic cable system promises some relief from high international bandwidth prices over the medium-to-long term.
However, consumers will need to wait for more submarine cables like the West Africa Cable System (Wacs) and the Eastern Africa Submarine Cable System (Eassy) to go live before prices start to tumble dramatically.
The construction of the Seacom cable was recently completed and end-to-end testing of its services has commenced.
The cable should be fully operational by late June or early July, bringing extra and much-needed international bandwidth into the South Africa.
Added Briggs: "The Seacom cable is a welcome development in the evolution of South Africa's telecom industry since it breaks the stranglehold that the incumbent operators held on most of the country's international bandwidth through the Sat3/Safe cables.
"However, consumers should not expect to see the sharp falls in broadband pricing that some of the more optimistic commentators have predicted."
Many other costs
In the short term, the new cable may cause a slight drop in costing for international bandwidth, which many service providers will pass on to their customers in turn, said Briggs.
However, international bandwidth is only one of the input factors which make up the overall cost of internet services in the country.
The input bundle for internet services is made up of factors beyond international bandwidth, including the costs of the network providers’ infrastructures, the costs of the customer’s modem, as well as marketing, distribution and support.
“Unfortunately, the popular press has created a perception that lowering the cost of international bandwidth alone would prove to be the panacea for higher internet broadband prices”, states Briggs.
Briggs said that most internet service providers will also be reluctant to rely exclusively on the Seacom cable because it is a standalone system without a redundant back-up.
Most service providers will therefore need to continue using the SAT-33/Safe infrastructure to provide a reliable broadband service to their subscribers.
'Full and equal access'
Initially, the operator that stands to benefit most handsomely from the cable is second network operator, Neotel, which has its own Sat-3/Safe capacity as well as a significant stake in Seacom.
However, Seacom will also benefit other service providers because it is to be operated on an equitable, open-access basis and bandwidth will be sold to all operators at wholesale prices.
"We are pleased that the Seacom cable will be operated on an Open Access basis, whereby all carriers in South Africa will have full and equal access to the submarine fibre cable," said Briggs.
"All licensed or license-exempt operator will have the right to co-locate and interconnect equipment at the cable station, with reasonable, cost-based fees for co-location.
"This means that all service providers will have equal access to this essential facility, which could help us to compete more effectively with the incumbents."
The arrival of Seacom is an important step forward for the SA telecom market, but not a silver bullet for all of its international bandwidth woes, concluded Briggs.