The country`s fixed telecommunications service provider has again crossed swords with an Internet service provider (ISP) over its introduction of a hard cap for ADSL services and usage-based billing.
Telkom has denied claims by MyADSL that its new usage-based billing for ADSL services will mean that South African subscribers can now expect to pay up to 1 000% more than international subscribers for similar 30GB ADSL accounts.
The telecommunications group says, in fact, that the new system, introduced from 1 November, will enable ISPs to reduce the cost of providing ADSL services by up to 50%.
"This new billing system will see a huge cost reduction for ISPs if they take advantage of the system. ISPs will be able to control the billing of their customers as they can now charge the customer for every gigabyte used," says Lulu Letlape, Telkom group executive of corporate communication.
Much higher
This is in response to a statement by MyADSL, which claims that with Telkom`s new pricing structure a 30GB unshaped account using a 1Mbps ADSL connection will cost subscribers at least R4 000.
"The wholesale price of this service now stands at a staggering R3 940 (VAT inclusive), but with ISP profit margins added on it will retail for much higher," the statement says.
But Letlape states that the usage-based billing provides ISPs with flexibility, and it enables them to create their own ADSL packages.
"ISPs can save money if they analyse their customer base and establish how many users use more than 1GB per month. In such cases they can charge the customer for that amount only. In this way the customer is happy and the ISP saves the cost," she says.
Before usage billing was implemented, ISPs were forced to buy 3GB accounts to re-sell to their customers because this is what Telkom offered. In most cases the customer would end up using 1GB and the ISP still had to pay for the 3GB account, Letlape explains.
Criticism
"ISPs can now look at customer usage to determine the type of packages they sell. This enables the ISP to make the call. Previously, Telkom would put a hard cap on ADSL and if the customer exceeded his limit he would face the possibility of having his service terminated. Now Telkom does not have to get involved. It is up to the ISP to regulate ADSL usage for their clients."
Letlape adds that, despite all the criticism about usage-based billing, Telkom is making life easier for ISPs and, at the same time, ensuring that even the smallest ISP would be able to compete in the ADSL market.
However, MyADSL claims that Telkom`s "inferior" ADSL service is more than 2 000% more expensive than some "superior" UK equivalents.
"South Africa is extremely far behind in terms of both broadband speeds and broadband penetration. SA`s broadband penetration currently sits at 0.3%, way below the Organisation for Economic Cooperation and Development average of 11.8%."
It argues that Telkom`s recent decision to introduce hard capping locally further cripples the service and hampers local IT growth. MyADSL adds that the only way to ensure this situation is remedied is for Telkom to implement "dramatic price reductions, coupled with improvements in the service levels of their ADSL offerings".
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