Hefty price cuts to retail broadband prices are likely imminent, at least for the speediest fixed-line products, after Telkom this week took an axe to wholesale prices, reducing fees by up to 37%.
In an effort to spur demand for higher speed broadband services based on very-high-speed digital subscriber line (VDSL) technology, Telkom has slashed the wholesale prices of both its 20Mbit/s and 40Mbit/s fixed broadband products, TechCentral has learnt.
The price cuts come ahead of an announcement by Telkom on pricing for its forthcoming fibre-to-the-home (FTTH) products, which will offer consumers access speeds of 100Mbit/s.
The company’s chief technology officer, Alphonzo Samuels, has confirmed the cuts, telling TechCentral they were made possible by economies of scale as the VDSL network is expanded to more consumers and by the company “taking a future view of uptake on the higher speeds”.
Reports published earlier this year suggested that uptake of the VDSL products had been disappointing. However, this may be more a function of lack of availability of the new, faster speeds than pricing. Telkom is spending billions of rand deploying high-speed multi-service access nodes, or MSANs, that allow it to offer both higher-speed copper- and fibre-based broadband products.
It’s almost inevitable the price cuts this week will translate into cuts in retail prices, too, both by Telkom’s retail arm and by Internet service providers that resell the company’s VDSL products.
The wholesale price of a 20Mbit/s connection is now R300/month, from R387 previously. That’s a reduction in price of 22,5%. The wholesale price of a 40Mbit/s line has been cut even more — by 37% — from R595/month to R375. These prices exclude 14% VAT.
The wholesale prices for Telkom’s 2Mbit/s, 4Mbit/s and 10Mbit/s products remain unchanged, Samuels says.
Samuels declines to provide details about the uptake of VDSL among consumers, saying more detail will be provided when Telkom publishes its interim results for the six months to 30 September sometime in November.
He says, however, that Telkom is making good progress with its FTTH project, and will switch on the first suburbs in the fourth quarter of this year. FTTH prices will be published “sometime in October”. Samuels promises that these prices will be “aggressive”.
He also promises “some interesting stuff” will be revealed in the first half of 2015 that will “reboot the whole broadband ecosystem”. He declines to comment further. — © 2014 NewsCentral Media