Cheaper Internet

To hang onto its customers, Telkom is going to have to slash prices, making many web-based services worthwhile, writes Toby Shapshak
THE telecoms landscape in South Africa is changing radically.
And our online worlds are being transformed dramatically. Our Internet experience is on the brink of a new era of broadband connectivity.
Recently, the telecoms industry has been in a state of unprecedented flux. The Financial Mail called it a game of “high- stakes poker” — an apt description because it’s almost impossible to say what the permutations will be, except that the increased competition can only be good — for business and consumers alike.
The big news in 2009 will be the mid-year launch of the second undersea cable, which will link southern and eastern Africa with India and Europe. Called Seacom, it’s the first real competition to the existing Sat-3 cable that is part-owned and mostly controlled by Telkom.
To remain competitive, Telkom will have to lower its wholesale prices significantly, and the cost of broadband should drop to the levels seen in developed countries, where always-on, superfast, unlimited broadband makes so many of the disruptive technologies and web-based services truly worthwhile.
Telecoms companies tend to drop their prices just before competition arrives, in a bid to hold onto customers. From March 2009 I think we’ll see a radical decrease in Telkom’s prices, creating a ripple effect across the broadband industry.
The months of our roads being carved up to lay high-capacity fibre-optic cables in metropolitan areas should also be over. In those orange plastic tubes will now run superfast Internet access from Telkom, Neotel, Vodacom and MTN around the major cities in the country.
With these vastly faster speeds, the broadband services that have been rocking the rest of the world will take off in South Africa. Telephone calls over your broadband line — called Voice over Internet Protocol (VoIP) — using services such as Skype may be the first threat to Telkom’s voice business. But it’s more the existing Web 2.0 services that hold promise. Suddenly, we’ll have real access to photo- sharing sites, such as Flickr or Picasa, social networking through Facebook or MySpace, music and movie downloads through iTunes, or watching streaming video from sites such as Joost.
Superfast Internet access might be even more beneficial to small businesses. Most of the services and software packages you could in the past buy only to run on a Windows-based computer are now free online, and you don’t have to run Windows, or even own a computer.
These web-based services are part of a burgeoning trend begun a few years ago by IBM, which pioneered the concept of service-on-demand. If you want data processing or customer-relationship marketing software, why buy a package when you can “rent” only the time and services you need. Companies such as Salesforce.com, the poster-child of this trend, have made it possible for small businesses to use the same types of marketing processes as big firms, but at a fraction of the cost.
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The Lowdown
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ADSL
STANDS for asynchronous digital subscriber line. It’s a clever way of using existing copper telephone lines to send data. It starts at R200 a month for one gigabyte, from a variety of suppliers.
3G HSPA
Stands for high-speed packet access . The 3.5G data transfer is possible on cellular networks, but only offered by Vodacom and MTN. It’s faster than most ADSLs, but the cap is lower. Prices start from pay-as- you go, while 1G from Vodacom starts at R350.
Neotel
Neotel uses a wireless network that doesn’t require it to lay cables directly to your home or business. The entry-level voice option, called NeoConnect Lite, starts at R99 a month. The unit costs R599 but is free on a 24-month contract.
iBurst
Another 3G-like tech that has had much less of an impact than was imagined. iBurst is now pursuing its WiMAX licences. WiMAX is a much more powerful wireless network protocol that Telkom and MWEB are also deploying. Starting at R50/month for a tiny cap.
• This is an edited version of the chapter Shapshak, the editor of Stuff magazine, wrote for The 2009 Flux Trends Review