Telkom uncapped? Bring it on, says MWeb

MWeb CEO Rudi Jansen

MWeb CEO Rudi Jansen says the Naspers-owned Internet service provider is expecting Telkom to begin offering uncapped broadband soon over its fixed-line network. But he says he’d welcome the decision.

“We are waiting for Telkom to do something,” Jansen says. “We will be ready for them when they launch.”

Telkom is widely rumoured to be planning to introduce uncapped offerings this year after asking some of its customers how they’d feel about such a service. The operator had earlier criticised service providers who had launched uncapped products, accusing them of not delivering on their promises.

Though Jansen is reluctant to provide absolute subscriber numbers, Jansen says MWeb has taken market share from its rivals with its uncapped offerings, which it launched a year ago. More than 50% of all its digital subscriber line (DSL) customers have moved to uncapped offerings, he says.

Jansen says MWeb would welcome another big service provider like Telkom offering uncapped products. Telkom’s Internet arm has the country’s most DSL customers, but the operator has been reluctant to introduce unmetered options.

“I’m looking forward to it,” Jansen says, adding that competition in the uncapped space between two large players would be good for the growth of the market. “The sooner they launch it the better.”

When MWeb first introduced its uncapped broadband products in early 2010, many rival service providers criticised the move, saying the trend elsewhere in the world was to metered options. But Jansen says MWeb already makes a profit from all its uncapped products.

“We are running ahead of our business plan and all our products are profitable,” he says.

As the network grows and bandwidth prices come down, MWeb is reducing the “shaping” – the prioritisation of certain traffic like peer-to-peer file sharing services – on its network. He says MWeb’s aim eventually is to offer uncapped and completely unshaped products, but admits there are still some barriers that need to be overcome.

First, though, he says “everyone needs to peer openly”, meaning service providers carrying traffic between their networks without charging each other transit fees. Secondly, he says, mobile operators have to reduce their wholesale data prices. That would result in stronger growth in the mobile data market, he believes.

The arrival of another undersea cable, the 5,1Tbit/s West African Cable System (Wacs), should also have a big effect, Jansen says. He believes Wacs will have a “revolutionary” rather than an “evolutionary” impact. “We will get the same effect as when Seacom came in,” he says.

Seacom, on Africa’s east coast, resulted in a dramatic reduction in international bandwidth prices, allowing MWeb to introduce uncapped broadband.

DSL access prices remain a concern for Jansen, though. He says the cost of broadband line rental needs to fall. Also, the amounts Telkom charges Internet services providers to access its network are “absolutely ludicrous”.

“Those prices are far more than the price of international connectivity,” Jansen says. “Telkom charges us to get access to their last mile and then charges end users to get access to the same last mile, so they make double money on it. And it’s completely mispriced.”  — Duncan McLeod, TechCentral

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  • MikeeSpikee

    But will the telkom offer be cheaper, and UNSHAPED that is the question!

  • mohammed

    i have the telkom 5gb option and thats all i can afford. if they offer uncapped,they should make the cheapest option R258 inc adsl line rental(which is a big ripoff).
    instead of lowering prices, they rather improve their service-this way they still make the amt of money they were getting before.
    they dont care its ovepriced as it is

  • Ben

    Why do the other ISPs put up with Telkom?
    They should block the Telkom AS and force all their traffic internationally until Telkom agrees to bilateral peering.

  • lemon

    I agree with Ben…

  • http://janneman27.wordpress.com Janneman

    …it’s not that easy, Ben, but theoretically I agree with you…they need Telkom’s last-mile network to connect to their consumer customers…as soon as local loop unbundling occurs, then only can they do that, but then it would be unnecessary, because they wouldn’t have to deal with Telkom in the first place…

  • http://www.cablemap.info Greg

    @Ben I thought they were already doing that? At least Mweb is – just did a tracert now from my mweb uncapped account to dogaming.co.za … it goes via an int’l route.

  • Dick James

    Guys. If the price of copper is around R300 (wihtouh ADSL and any gigs) then no ammount of LLU or “reducing line rentals” is going to change the equation. The average price for fixed broadband overseas is R350-R400. The broadband speeds are faster and you get more, but that’s becuase the price of copper (as indicated by LLU pricing) is around R100. Thus there is more money to invest in broadband.

    Why is copper so expensive in South Africa?
    i) Government policy. The Telecoms Act of 1996 imposed a roll-out target of Telkom of 2.7m new lines (mostly in rural areas). Today you are still paying for that, because ICASA refuses to lift any historical obligations on any operator.
    ii) Copper theft. Can you think of another country like South Africa? Countrary to popular opinion copper is not a sunk cost (it is still being depreciated). You would be lucky if the copper is sunk at all.
    iii) Lightning damage. Can you think of any other countries with mile high cities built on a minieral rich soil?

    If you can find a country that matches (i) – (iii) then how do their prices compare?

    Secondly Telkom does not charge a double line rental. The analogue line rental is from the home to the line card on a concentrator in the local exchange. The ADSL service fee (incorrectly referred to as line rental) is from the concetrator port, including backhaul network to BRAS (included) in a tandem exchange. Doesn’t sound like double charging to me.

  • nic

    @Janneman. LLU is not necessarily going to be the silver bullet. For other ISP’s to make us of LLU they have to invest millions and millions to install equipment at every Telkom exchange. Most cannot afford this and the ones that can does not necessarily want to play in that space. What we actually need is a feasible last-mile replacement technology and we needed for Neotel to be less of the disappointment and to provide even some competition -unfortunately it seems that ship has sailed.

    @Dick your points (i-iii) are all valid, but do not for one second think that Telkom is not completely over charging for anything as has always been the case. They built the network with tax payer money when there was no competition allowed and they are now reaping the benefits of years and years of unfair business practice. The fact that things are not going too well there is only because of mismanagement (think the Congo disaster) and that they are finally being brought to book by anti competitive tribunals.

  • The Trutherizer

    Hard to believe how blatantly this country is being robbed. And that the golden share of one of the companies that do most of the robbing belongs to the government. You have to wonder what they need all these hidden taxes for. I can’t wait till i3 Africa has finished their network. Then Telscum can stick their copper where the sun does not shine. Then they can take it all out of the ground and sell it for profit amongst the cadres like they’ve been salivating to do for years I am sure. Tata ma copper -Tata ma millions!

  • CableGuy

    @Greg, the reason your tracert goes via an international link is because Telkom & MWEB are not peering. Telkom is the reason. All other ISP’s are peering with MWEB.

  • CableGuy

    @Dick James Tell me this.

    i) If i only want to use ADSL and not make calls, WHY must I pay for aanalogue rental?

  • Jevon

    What good is Telkom if they cannot even provide the line. I have already caught two sets of cable thieves and am waiting for my reward which is under review.
    Surely Telkom are obligated to provide the line?
    In the last year the cables have been stolen 6 times. Average replacement time 1 month. Its just not Fing good enough. Every time they are replaced they simply replace the pole to pole wiring instead of doing something more permanent.
    I require uncapped ADSL for my business, but find myself spending R1000 a month on mobile bundles which are slow.

  • http://www.cablemap.info Greg

    @Jevon Although I agree burying the cables or something would be better, after 6 cable thefts I think you can blame the police for your loss of connectivity, and not Telkom.

  • Jevon

    @ Greg…do you honestly reckon if they buried it after the 2nd theft we would still have this problem? I seriously doubt it.

  • http://www.cablemap.info Greg

    @Jevon that’s exactly what I said. But 6 thefts in the same area in a year is a crime problem, not a telecomms problem.

  • chris

    Burying cables does not work. Those cable “shoppers” dig up one end , and then they pull out what they can with a truck. Telkom then has to dig up the whole lenght to fin out where the cables snapped. Above ground is much cheaper to replace. What you need is a serious HT cable running along. Perry soon there wont be any thieves lef over

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