What uncapped ADSL means: The way we use the Internet will change

2010-03-25 00:00

AN inevitable announcement will change the way we use the Internet.

It’s unfathomable just how important MWeb’s much-hyped launch of uncapped ADSL packages last Thursday was. This sounds like more MWeb hype, but the transition to uncapped billing has been inevitable, yet no one was willing to make the first move. “Data metering” has never been an issue overseas (in fact, it’s ironic that cable companies in the United States are now looking at setting caps of a few 100 gigabytes to prevent abuse).

Yet capping has been part of our connected life since the beginning thanks to South Africa’s “unique regulatory environment” (a euphemism I created at a breakfast last week).

Basically, because Telkom was historically the sole provider of Internet access in the country, it was largely free to do what it wanted (and charge how it wanted to). This meant that South Africans used the Internet in a very peculiar way. As if it was a finite, limited resource (which it was a decade ago, but which it is increasingly not any longer).

Think back to 2008, or even last year. If someone had told you we’d be able to buy cheap uncapped broadband access, you’d have laughed. And don’t get on the “this-is-not-cheap-because-I- pay-two-pounds-in-the-UK-and- my-broadband-connection-does-my-laundry” train. Uncapped 512 kbps ADSL at R599 per month (line rental included) may not strictly be cheap, but it’s a helluva lot more affordable than it was last month.

I agree that the bizarre situation that you still have to pay for an active landline connection (around R131 per month) needs to be addressed, but one hurdle at a time. Telkom has argued time and again it cannot provision ADSL services without provisioning a copper voice line, and this is likely the only reason its number of active phone lines in the country hasn’t plummeted off a cliff since ADSL got traction a few years ago.

Uncapped ADSL packages are going to change the way we use the Internet. There’s no going back. No longer will we shout at the kids to “stop messing about on Facebook”. Downloading a few podcasts or songs from iTunes (even though the store is not strictly officially available in South Africa) will no longer be a decision that is weighed up. Want to upload a few 100 photos? Don’t even think twice.

We’ve become so used to measuring our Internet usage and knowing exactly how much (or little) we need to use at various points in the month.

We are going to start treating Internet access as a utility. The way the rest of the world does. Because of these price reductions, broadband access is going to become far more pervasive. There’s much more incentive now for someone to set up an Internet café in a township or semi-urban area that is underserved. He or she will be able to have a fixed monthly cost for Internet access which will not run out.

And yes, there will still be a place for capped Internet. For infrequent or light users who use ADSL to check e-mail and browse the net a few times a month, a 1GB package will more than suffice.

After the cheap per GB packages that we’ve seen in the market since the arrival of Seacom last year, every ISP knew that cheap uncapped ADSL was the next step.

This move by MWeb was calculated and incredibly shrewd. As the second-largest ISP in the country (behind Telkom Internet) it had the scale to wallop the market into shape. With all due respect, the smaller ISPs like Afrihost, Openweb, WebAfrica, Cybersmart were never going to have the impact necessary to stun the market into action.

This move could only have come from Vox (through its @lantic business) or MWeb. And it was the less expected of the two that broke the proverbial ice.

All of this of course has put Telkom further on the back foot. There were rumours that we’d see price changes towards the end of 2009 as the Seacom bandwidth and additional SAT-3 capacity filtered into the market. Now Telkom has been forced into a corner. It needs to cut rates. And the wheels inside Telkom often move slowly.

Price changes (euphemistically called “tariff rebalancing” by the group) normally announced in May are no doubt going to be rushed forward.

If Telkom moves, it’s going to have to pull off something aggressive. If it doesn’t, it’s going to quickly morph into a “dumb-pipe” infrastructure company and lose any hope it had of playing in the services space.

My bet is on the former, and we’re going to see lots of action in the space through the rest of 2010.

Stranger things have happened.

— Moneyweb.co.za

• Hilton Tarrant contributes to “Broadband”, a column on Moneyweb covering the ICT sector in South Africa

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