Telkom in bid for rapid ADSL growth - TechCentral

Telkom in bid for rapid ADSL growth

Prenesh Padayachee

Prenesh Padayachee

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

8 Comments

  1. Andrew Fraser on

    “And the company is mulling the idea of offering “naked ADSL”, doing away with the need for consumers to pay for a legacy dial tone”

    This would be a real change. Reducing the DSL cost is all good and well, until you factor in the close on R190 that you have to pay for a voice line, whether you want it or not.

  2. ADSL for less than R100 but add line rental then it’s no longer cheap. Is this a game changer? Without naked ADSL, I doubt it.

  3. Hitting Thefan on

    What Telkom needs to do is expand services to areas without infrastructure. There is a huge amount of potential clients without infrastructure. They need to do studies to see where these untapped revenue sources are. That is growth, grow your base Telkom then you will grow your revenue.

  4. Isn’t this the very same state owned company that was telling the consumers of this country last year (with a straight face nogal) that reducing prices wasn’t good business practice?
    Here’s a hint Telkom: You just concentrate on your knitting and keep the core business of telecomms digital transmission going and leave all business decisions to experts not appointed by Luthuli House.

  5. Yes! A pity the article does not say what the original price is, but at least Telkom is thinking in the right direction. Fibre will be taking over the high-LSM and high-speed market share, but ADSL can really dig into the rest – especially those who primarily rely on expensive mobile data.

  6. Greg Mahlknecht on

    Yes – IIRC there are around 4mil Telkom line owners without ADSL. I’ve long advocated that Telkom do something like this – it’s what they did in India long ago and worked very well – they went a bit further, and you could get packages from 256kbit uncapped ADSL for R50’ish. It seems awful, but that’s probably the kind of speeds they’re seeing on their 2G devices anyway – flat-rating internet access at a predictable, affordable price (effectively turning it in to a utility) is a game changer.

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