Wireless broadband gets cheaper

By Candice Jones for Telkom
Johannesburg, 06 Mar 2007

While market observers agree recent wireless broadband price reductions could lead to a price war, they differ on the possible long-term impact of the tariff cuts.

Sentech, MTN and iBurst recently announced price adjustments and package restructuring for their respective offerings.

MyADSL founder Rudolph Muller says this creates among the cheapest wireless access rates in the world, particularly those from MTN and Sentech. "They now compare to international standards and are globally competitive. MTN and Sentech have raised the South African wireless arena to a new level," says Muller.

However, World Wide Worx MD Arthur Goldstuck says this is only true on a per-MB basis. He adds that when the entire basket of packages is taken into account, the prices are not really competitive.

MTN recently dropped the price of its 1GB prepaid data bundles and contracts to R399 a month and added an extra gigabyte of free data usage to its package. Sentech increased its broadband speed to 1Mbps and dropped monthly payments and modem costs.

iBurst also increased its monthly bandwidth allocation by 200MB-500MB, depending on the package. Unused bandwidth will be rolled over to the next month.

No comment

Vodacom and Telkom refuse to be drawn on broadband pricing discussions. Telkom, which offers a 1 024MB DSL package, for a monthly rental of R516, says it annually files its price adjustments with the Independent Communications Authority of SA, as required by law.

A Telkom spokesman says this does not mean it is the only time the fixed-line operator would cut prices. However, he would not disclose whether Telkom has any tariff cuts on the horizon, as that information is linked to "competitive advantage".

Vodacom would also not comment on its competitors' price reductions. Vodacom customers who wish to buy 2GB of data per month would pay R878, more than double MTN's latest price.

"Due to the competitive nature of the market in SA, Vodacom cannot comment on its data pricing strategy at this stage," says the company's chief communications officer Dot Field.

Calling for courage

According to Muller, Vodacom is working on revised product offerings and prices, and should respond soon.

"Sentech indicated the cuts were made because international bandwidth is now cheaper, which raises the question as to why the others [Telkom and Vodacom] have not responded," he notes.

Goldstuck believes Vodacom will have to respond, and is in a better position to do so aggressively. "Vodacom will probably not change the prices, but will offer some other competitive advantage. It would be ideal if they show courage and implement a new pricing structure."