Mbeki explains ADSL plan

Johannesburg, 04 Sep 2006

Government is waiting for the establishment of competitors in the telecoms market before lowering ADSL and Internet access prices, president Thabo Mbeki said at the Presidential International Advisory Council on Information Society and Development press briefing yesterday.

"We have not made much of a significant dent on the pricing of telecoms and broadband as we still need to build infrastructure and establish competition through the SNO [second national operator]," he said.

"Once this is done, we will be able to have broadband penetration throughout the country. At the moment though, the cost of telecoms is still high."

Market observers expressed disappointment with the Independent Communications Authority of SA`s new ADSL regulations, released last month. Contrary to expectations, the regulations did not specify a price ceiling for ADSL services or call for the introduction of a single price structure, based on an international pricing model. Thus SA`s high ADSL prices remain unchanged.

No timeframe

Mbeki added that unbundling the local loop, as well as establishing competition, would help to lower prices in the future. However, he did not provide a timeframe or any set pricing targets that government may want to meet.

Communications minister Dr Ivy Matsepe-Casaburri, responding to questions about further planned statutory provisions to be enacted to aid price reduction, said: "People must be made aware of what the new Electronic Communications Act can do for them.

"We are always open to anything that can be done to make broadband affordable."

Esther Dyson, chairperson of venture capitalist firm EDventure Holdings and a member of the Presidential Advisory Council, added that consumers needed to be entrepreneurial by buying and reselling broadband.

"Though there was a sense of urgency on the behalf of the government, competition must come from the customer," she noted.

SA`s fixed-line competitor to Telkom, Neotel, was officially launched at the end of last week, with the introduction of the group`s first service to the wholesale telecoms market. The company is planning to offer initial services to consumers by March 2007.