Telkom has introduced a new, entry-level asymmetric digital subscriber line (ADSL) product at a wholesale price of less than R50/month in an attempt to light a fire under demand for fixed-line broadband and to steal market share from the mobile operators.
And the company is mulling other options to grow fixed-line broadband in South Africa, including doing away with the need for consumers to pay subscription fees for both telephone line rental and ADSL even if all they are after is broadband, not a dial-tone service. However, this so-called “naked ADSL” option, introduced by a number of fixed-line operators around the world, does not appear to be in the immediate offing.
Prenesh Padayachee, Telkom’s MD of wholesale services, says in an exclusive interview with TechCentral that the new 1Mbit/s plan, which should allow Internet service providers to offer capped services at less than R100/month (excluding telephone line rental), is designed to get people onto the fixed-line network.
It’s a space, for data, that’s dominated right now by the mobile operators, with many consumers relying on relatively expensive cellular data bundles to get online. The new product is also meant to provide access at a good price to people who live far from Telkom’s exchanges — those who can’t get higher speeds over copper because of distance limitations.
Padayachee says that even at R50/month, Telkom can provide 1Mbit/s access speeds profitably, but he emphasises that this is only because the company is using infrastructure it already has in place. If it had to roll out new networks and equipment, it wouldn’t make financial sense. Still, the product is being offered at a slim margin, he says.
He predicts the new, lower price point will have a “massive impact” on demand for fixed lines in South Africa.
In addition, Telkom is contemplating the possibility of doing away with the need for its customers to pay for a dial tone in addition to the ADSL subscription charges. This would involve providing a single price for copper-based subscriptions.
“There is a lot of work happening in the background around that… It’s definitely something we are analysing.”
He says that on Telkom’s new home fibre broadband installations there is no telephone line rental charge and it may make sense to do this on copper, too. “It’s the way the world is going as well.”
But he says that there is a “real cost” in maintaining copper lines into people’s homes. “A large portion of the maintenance component is covered in the access line rental rather than in the ADSL component. But we should get to a point where the copper portion is a fixed-line portion and everything on top of that is an add-on.” — © 2015 NewsCentral Media