Absa comes to ADSL party

Johannesburg, 16 Feb 2006

South African banking group Absa, which caused a stir when it became an Internet service provider (ISP) five years ago, has joined the ADSL fray, offering a 3GB package in a bid to extend its Internet products and services to users.

Following a 'soft` launch in October last year, the group will officially unveil its expanded ADSL product offering in May, says Masopha Molapo, Absa product manager for Internet access, who is counting on netting 10 000 ADSL subscribers by year-end.

Its 3GB capped package is priced at R225 a month for Absa online banking customers and R250 a month for everyone else, in addition to Telkom line rental fees, and there is no distinction between business and private users.

Molapo says the launch in May will usher in a bigger range of ADSL packages and other value-added products, including a self-service ADSL sign-up option, allowing users to subscribe online, as opposed to the current process which is routed through the Absa help-desk.

Significant shift

"One of the main reasons that we have launched an ADSL service is to give online clients greater electronic access options. Basically, we are responding to a significant shift in the market from dial-up access to broadband, which will allow us to cover a broader range of customers," he says.

Molapo admits the ADSL service is not aimed at becoming a major revenue spinner for the banking group, but rather an enabler for its online banking clients. Despite this, he describes the uptake of the ADSL service since October as "phenomenal", and says uptake is expected to take off with a planned extensive media campaign.

One of the big selling points of the ADSL service is its pricing, Molapo claims. He maintains Absa is aiming to be one of the most cost-effective ADSL providers on the market, with the R225 a month 3GB package coming in at a competitive level. This compares to Telkom Internet`s 3GB offering, which is priced at R249 a month.

MyADSL founder Rudolph Muller comments that the sudden surge in ADSL providers is driven by a strong growth in ADSL uptake, with 10 000 new users signing up in SA every month.

"This is a major growth area, where there is much money to be made. However, most are reselling SAIX accounts and are thus restricted to the R200 to R300 a month price range for ADSL services," he says.

Fewer overheads

Several smaller ISPs with fewer overheads, he says, can afford to offer 3GB ADSL accounts at below R200 a month, in a bid to undercut Telkom. However, Telkom Internet`s R249 is the de facto standard and the country`s fixed-line monopoly is working according to a monthly threshold, rather than a strict 3GB cap.

Rudolph explains that this means Telkom bases its monthly threshold on the amount of bandwidth usage of its entire customer base and during a quiet month users may exceed the 3GB level.

"This is uncompetitive and stems from a whole-seller acting in the retail market. While this is good for users, it is not fair market practice."

Despite this, Rudolph says SA can expect a range of new ADSL providers and products in the near future, as ISPs become more inventive and technology evolves and becomes better priced.

"We are already seeing innovative ADSL packages on the market, with accounts designed for specific purposes, such as gaming, and priced accordingly," he states.