2010: the year bandwidth prices nosedived - TechCentral

2010: the year bandwidth prices nosedived

It has been a year of falling bandwidth prices in SA. Though it took a little time before it happened, the arrival of the Seacom undersea cable jumpstarted a downward spiral in broadband prices.

With access to lower international bandwidth prices, Internet service providers were given the chance to step up their game this year.

But exactly how much less are you paying for bandwidth this Christmas compared to last year?

Afrihost director Greg Payne says consumers are paying up to two-thirds less than they were a year ago for fixed-line bandwidth on Telkom’s digital subscriber lines.

This time last year, Internet providers were charging about R70/GB for 1GB of bandwidth on average. To put that into perspective, a standard 10GB capped account would have cost the consumer about R8 400 a year.

Now, the average cost is about R29/GB, translating into R3 400 over year for 10GB/month — a R4 920 saving.

Consumers could even buy 50GB of data without spending as much as they did last year for 10GB. A 50GB account from Afrihost, for example, costs R475 per month, or R5 700 a year.

Afrihost was one of the first companies to slash bandwidth prices — as early as September last year. Payne says that at the time it was charging less than cost price for bandwidth. It was confident that input costs would plummet.

At the top end, the cost of bandwidth has dropped to as little as R9,50/GB.

“We believed that prices would come down thanks to the new undersea cables and we were a late entrant to the market and so we needed to hit the market by storm,” says Payne.

Afrihost’s campaign resulted in it signing up more than 25 000 new subscribers in the six months that followed the first cuts.

MWeb's Nathier Kasu

Prices from rival MWeb have also plummeted, falling from R89 for 1GB of data last year to around R26 now.

But by far the most revolutionary development this year was the introduction of uncapped bandwidth accounts from MWeb. Not worrying about how much bandwidth they consumed changed the way many South Africans used the Internet.

Head of products at MWeb Nathier Kasu says people can now stream video, download video and music, and get stuck into online games without worrying about running over their bandwidth caps and getting cut off.

However, he says by far the most attractive aspect of uncapped broadband has been the fact that customers are able to budget on a fixed monthly amount. Before uncapped products came along, many consumers would top up their bandwidth when they ran out, leading to some months costing more than others.

MWeb’s uncapped service has been widely taken up, and Kasu says the company does have a few users he describes as “power downloaders”.

He says that, theoretically, if a user downloads constantly throughout the month using a 4Mbit/s line they could download more than 1TB of data. “We have had a few users that reached that limit,” Kasu says.

Despite the big drop in prices, Afrihost’s Payne says a lot can still be done to decrease the overall cost. “International bandwidth is now very well priced, but local bandwidth is still expensive,” he says.

In general, Internet providers buy up national bandwidth from Telkom at wholesale rates and on-sell those to consumers. Payne says there is quite a lot of room to reduce these costs.

Also, fixed-line broadband prices are inflated by the fees consumers have to pay to Telkom for line rental. These prices may start to come down when Telkom’s local loop — the “last mile” of copper cables between consumers and Telkom’s exchanges — is unbundled next year.

Fixed lines aren’t the only area where bandwidth prices have come down. Thanks to Cell C and Telkom’s 8ta, there’s been a lot of movement in mobile data, too.

Both 8ta and Cell C have introduced more competitive mobile data pricing and this could prompt their bigger rivals, MTN and Vodacom, to follow suit next year.

Cell C’s new data prices are set at such a level that one analyst, Arthur Goldstuck of World Wide Worx, has even suggested its pricing is aimed at Telkom’s fixed-line offerings.

For bandwidth-starved South Africans, that’s music to the ears.  — Candice Jones, TechCentral

3 Comments

  1. Go CellC!

    Their R3000 package do work out cheaper than a Telkom line with 5Gb bandwidth added.

    Bonus – if you get 9Mb/s speed you score big time.

    My wife and I pull less than 4Gb per month…

  2. It’s good to see that prices have come down, but the major issue is still those areas which struggle to get Telkom lines.
    To reap the benefits of the lower prices one need to move to an area that is covered by Telscum

  3. It’d be great to see some more research on this. For example: Is the average user actually paying less for bandwidth? Or does one have to be somewhat tech-savvy in order to take advantage of the better pricing?

    One also has to look at how internet speeds have dropped over the past year. Some of this is due to increased demand from cheaper packages, but a lot of it is due to completely oversubscribed capacity.

    Many subscribers are paying 2/3rds less, but also get 2/3rds less speed than advertised.

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