Price, not bright and shiny baubles, is important

Telkom recently announced its intentions regarding its so-called broadband offerings.  According to MyADSL:

Broadband enjoyed a great deal of attention at Telkom’s Analyst Open Day on Thursday. According to the telecoms giant consumers have a lot to look forward to in the broadband space.

Papi Molotsane, Telkom’s CEO, said that he expects to see an increase from 15% to 20% in broadband (ADSL) lines within three to five years. His ambitious goal of a million broadband users by 2010 will be easier said than done considering the current growth rate of just over 10 000 new ADSL customers per month.

Wally Beelders, Telkom’s Marketing Executive, said that a key driver for ADSL take up would be to introduce higher speeds, next-generation data services like metro Ethernet, bandwidth on demand services and broadband bundles.

Reuben September, Telkom’s Chief Operating Officer, joined the broadband party by providing an overview about Telkom’s future broadband initiatives.

According to September Telkom will focus on “innovative bundling, branding and positioning of broadband access and value added services and products??. He further pointed out that bundled services, like a complete one stop triple play solution, are in the pipeline.

Telkom are keen to include the next generation of broadband users and have stated that there will be a focus on a younger market and the provisioning of a web portal/page with broadband branded value added services. The portal will have content and self service capability meeting the demand for more interaction between Telkom and customers.

September pointed out that Telkom is working on various new broadband offerings.

The new products Telkom are currently working on are Voice over broadband calling plans, Rich content like music, video on demand & gaming, multi choice video on demand, M-net on demand, IPTV, bandwidth on demand, WIMAX products and triple play (data, voice, video).

September hinted strongly that Telkom might increase ADSL access speeds without hiking prices. This is a common international practice where users get bumped up to a higher speed at existing rates.

September further introduced EvolutionWare, a consolidated interface for customers and commercial centres on TelkomInternet which will “enable customer self-provisioning, self-administrating services and automated activation processes for services such as Web hosting and DNS.??

In the presentation the need for faster install times and fault repair was highlighted as one of the main customer satisfaction drivers. According to September they will focus on better communication with the customer and will enhance the self-install option to decrease install time.

September also highlighted the need for competitive tariff packages. Telkom ADSL customers in specific feel that significant reductions are needed for Telkom to fall in line with international standards.

Broadband users have eagerly been awaiting word from Telkom regarding ADSL price reductions after Wally Beelders informed Financial Mail that an announcement will be made in this regard by the end of March.

When Telkom was quizzed on this announcement they said that price reductions are in the pipeline, but gave no information about when it can be expected and how much it will be. Maybe September’s planned ‘improved communications with customers’ can start right here.

The telecoms monopoly will be well advised to make pricing the main ingredient of any broadband strategy.

In a recent website poll 86% of consumers said that cost remains the most important component of a broadband offering to them, which gives an indication of where any broadband provider’s main focus should fall.

Telkom’s broadband plans appear positive for consumers but the proof will be in the pudding.


This drive to unveil new services such as IPTV, rich media and content over an Internet connection and content on demand are all well and good and have their place but these services are of little use where the connection to enable subscribers to use that service are excessively expensive and the connections are slow.  Telkom is missing the point.  Price reductions are unavoidable, especially with the launch of the SNO in the coming months and what I anticipate will be some pretty stiff competition from the new operator in the broadband arena but Telkom seems to be focussed on distracting us with smoke and mirrors.

Telkom seems to be hoping that its enslaved subscribers will forget what they pay for these slow connections and stare intently at these shiny baubles dangled before their eyes, signing up in droves as all these services become available.  It never ceases to amaze me that there is no concerted effort to drive the costs of our Internet connections down, boost our access speeds and either hike the caps or drop them altogether.  There has been no realisation that the price of our paltry connections are more important that all the bells and whistles.

Om Malik published a post on this topic yesterday titled “Wanted Cheap, Not Faster Broadband” which speaks to this need for lower prices:

Forrester Research just released a new report, The State Of Internet Access, based on a survey of more than 4,500 US households and here are some of the key findings.

More than 50% of online US households are using broadband.

DSL is gaining ground on cable.

Consumers are still more interested in price than speed.

Broadband users show little desire to switch providers.

ISPs will have to re-orient their marketing programs to simpler pricing, product offerings, and distribution in order to attract less tech-savvy mainstream consumers.

The report indicates that when it comes to broadband, we are moving towards the base of the pyramid and making money is going to be tougher, and both the phone and cable companies will have to come-up with a simpler way of selling broadband. In addition, the burden of sale is going to fall on cable guys who frankly have not done a good job of selling a cut-rate service.

Take for instance, Cox which is selling a lame 256 Kbps synchronous link for $24.95 per month in middle Georgia. Why would you buy that when DSL is cheaper! If cable cos don’t start pushing the budget offerings don’t, then perhaps they will lose the chance of stealing customers from the Bells. For the Bells, well, another sign, that despite all the talk about cool technology, the IPTV thing is not going to be that easy.

A fast connection would be great, it really would but not at the kinds of prices we have become accustomed to.  These prices are excessive and it all comes down to profiteering.  What we really need is a more affordable (true) broadband service.  Such a thing would do wonders for business and social development in South Africa.

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