Q&A with MWeb CEO Rudi Jansen - TechCentral

Q&A with MWeb CEO Rudi Jansen

Rudi Jansen

MWeb dropped a bombshell on the SA Internet industry on Thursday morning when it announced it was slashing the cost of fixed-line broadband and introducing uncapped offerings starting at just R219/month.

The move, which brings SA Internet pricing more in line with other markets, could spark a price war among Internet service providers in the next few months.

TechCentral editor Duncan McLeod spoke to MWeb CEO Rudi Jansen, and asked him what motivated the company to do it, and what its fair-use policy really means for heavy Internet users.

TechCentral: Why has MWeb done this? What’s the principal motivating factor behind it and was it driven by your parent company, Naspers?

Rudi Jansen: MWeb drove it but we’ve had tremendous support from Naspers in this initiative. It’s a privilege to work for a guy like [Naspers CEO] Koos Bekker. The motivation was two-fold. We had to put MWeb back on the map as a leading Internet service provider (ISP) and, secondly, our ADSL base was big enough to allow us to do it and still make some margin on it.

So, are these uncapped packages going to be profitable for MWeb?

Yes. The margin is a lot lower than some of our other products, but it really depends on how many people we get using the new products and how the ratios pan out. But we’ve done the research and we know it will work.

Does this mean Naspers is no longer going to sell MWeb?

MWeb’s been off the market for a while now. The strategy for the group has changed. Networks are important to media companies like Naspers. The decision to sell MWeb was taken about three years ago, and the world has changed significantly since then. Things have come full circle and networks are now part of the strategy.

Where are you getting the cheap bandwidth from to do this?

We have a very good and strong relationship with Seacom, which is supplying us.

You’re also buying bandwidth on Sat-3. Has Telkom reduced its prices on this undersea cable?

Telkom has reduced these prices quite a bit in the past year. The Sat-3 pricing from Telkom is quite attractive now. What’s nice about it is it gives us redundancy [to Seacom].

Will this move by MWeb result in a broadband price war? How do you expect your competitors to react?

I don’t know what they’ll do, but I wouldn’t mind if they follow us. Ubiquitous broadband is what this country needs to grow. We want to do our part in getting SA there. I hope that they follow us because I think as a country we desperately need it.

Does MWeb have the pockets to survive a price war if it comes to it?

This is not a price war. This is a good offer we put in the market. We won’t get ourselves into a position where we can’t make money.

Do you have a fair-use policy for these new, uncapped offerings? If so, what does it entail?

I knew you were going to ask this [laughs]. Yes, we do, like any other ISP or telco in the world. We’ve looked at all of them and made sure we weren’t any different from the big ones like France Telecom, BT, Sky and Virgin. So, yes, we have a fair-use policy, but the idea of it is to ensure the abusers don’t spoil it for everyone. We have no intention of shaping bandwidth more than is necessary in peak network conditions. It’s not dramatic shaping at all, and it’s only in peak hours. This is not a big issue. Everyone makes it out to be a big issue, but it’s not.

What will you do with users who use peer-to-peer services like BitTorrent, and people who stream audio and video online?

What [the fair-use policy is]there for is to stop, say, someone who hosts a website with 80 000 movies on it, and invites other people to download from their server. We won’t go after people who are using [the service]for their own personal use.

So if I want to listen to streaming music or watch streaming video all day, that’s not an issue for MWeb?

No, it’s not.

Are broadband prices going to fall even further than this or has a new base been set for a while?

This isn’t actually the issue. The issue is the line rental [from Telkom]. You pay for voice and ADSL line rental. That needs to be split. It should be either one or the other you pay for, not both. Also, line rental is such a big component of the cost of a broadband connection now that it has to come down significantly. We need to get government and the regulator to change that.

16 Comments

  1. Yeah, that definitely clarified some inconsistencies in articles that I’ve read.
    Very happy about the streaming and BitTorrent.

  2. Don’t think Mweb can realistically get any credit for starting the price war. The latest chapter in the price wars already been underway for about 6 months. Seacom has been the enabler and Afrihost the most recent prominent leader. Other participants have been SAOL, CyberSmart, DigiChilli, etc, all with some or other innovative offering. Web Africa can’t get any credit unfortunately since they’ve fallen quite behind the other players and have shown no intentions of competing on price with the likes of Afrihost.

    Mweb stands out as the first heavy-weight ISP to enter the fray. Their uncapped offerings ought to get credit for making cheap, uncapped Internet a reality at last for the South African home user and hopefully prohibitively low caps become a thing of the past. Let the uncapped era begin!

  3. 5.10 Isnt that rule violated by any person using Skype or some service that needs to check whether you are online, and have any new messages. What about windows. If windows needs to update while your not at home then every user would have to setup their windows updates to manual.

    Basically we should shut down our modem when we leave ?

    unless (“You may stay connected as long as you are actively using that connection.”) ‘you’ means the user account on the PC ? Therefore my pc user is actively using the connection

    5.6 1- Dont go linking your home with your home in Cape Town and continuously monitor your security cams 24/7.
    I presume it would be okay to continuously stream a Youtube video

    2- Dont make a program re-download the same file/s from an FTP site

  4. Anonymous Coward on

    Excellent to hear.

    Hope they come down hard on network abusers, and throttle them to 56k 🙂

  5. They can come down hard on the abusers but then they gonna lose business, as anyone that wants uncapped is getting it for unlimited downloads. :P. I can pull 20GB a day

  6. @Dave Not really true – for R219, I’m getting this for my mother, my sister and will recommend it to anyone that’s not familiar with internet… never having to field a call like “my internet stopped working” because of a cap is worth the few extra bucks. It’s a whole change in mindset of how people see the internet. I die a little inside whenever I have to give a technophone an explanation of what caps are and how they work. Now I can just say “Get this account, have fun on the net. byeeeeeee”.

  7. WOW!!!! I love the last question, that could solve a lot of people money!!!!!

  8. personally i think that the terms of service are not as literal as they are made out to be and they are inline with what happens in the rest of the world. if you download videos every day in usa or greece,like 100 GB a day, the isp in that country send you a letter asking you to stop and will cut you off if you don’t. so as long as you don’t host your website at home and dont down every season of every show ever aired everyday i think mweb will consider you a valued client.

  9. My BB service provider here in the U.S. has a cap limit of 250 Gb per month. We have never popped it once, family of three, watching Hulu maybe a couple hours a month, looking at videos for school work, etc. I work at home, my colleagues and I lob multi-MB files at each other all day long. I don’t think we’ve even come close. Of course, most of the material is a lot closer to us here! But this “unattended” clause, that never enters into the conversation- we leave the web page open for days at a time, no worries.

    All the best to South Africans with this offer. These kinds of services are long overdue and I think you’ll really see some changes now. Finally.

  10. I think just the fact that MWeb is a south african company already makes it a lot less rigid than, say, Comcast – saffers are very tolerant people by nature, heheh.

    Finally, I can look forward to Grooveshark at home again 🙂

    ~ Wogan

  11. Are we missing something here. I currently pay R299/month for the 4096 kbp service which will now go up to R539/month. That is an 80% price increase and the only differece is i go from a 5 Gig cap to uncapped. If i dont need more than 5Gig per month why should i be forced to pay the huge increase? I would much prefer faster speeds and for them to retain the Cap

  12. Steve: You don’t have to use the uncapped option, obviously.. you can stick to your 5Gb but you’ll find that if you start using the internet more and more, or making full use of it, 5GB is a tiny amount that isn’t nearly sufficient for modern web applications and new uses of the internet. We’d like to move on to the standard of the rest of the world and rather not have extremely restrictive bandwidth caps like 5GB.

    Great move from Mweb, their professionalism is refreshing really, this is a proper uncapped service unlike DigiChilli and Screamer who were really just chancers trying to be the first to put out cheap uncapped accounts even with a terrible network.

  13. @Steve: 5GB is not even able to get you any modern game on Steam. Dragon Age was a full 15GB download and the last patch was another 900 something MB. I just received my cancellation notice from another ISP for their uncapped and will be popping onto MWeb or whomever comes out cheaper (yay us fickly South Africans) from the 1st.

  14. A word of warning those who are about to sign up: They prevent users from downloading too much by reducing the speed for anything that can possibly drain MWEB’s cap. This is how they can get away with selling a no-cap service. For example; on 384 lines, the actual speed is reduced so much it cannot be called ADSL any more. This very heavy shaping is supposed to occur at off-peak times, but in reality MWEB have it turned on all the time, even on a lazy Sunday at 2:30AM in the morning. As a result, even if you sit at your computer all day, you still would not be able to browse your way through enough cap to worry MWEB’s cap-policemen. They have hit torrents with a baseball bat, Rapidshare too. YouTube stutters a lot – so much it isn’t watchable. You have to ask why they need to shape 384 anyway, considering it doesn’t achieve more that around 35-40 Kb/s on a good day on a semi or unshaped line.