Seacom to slash broadband costs
February 20, 2008
By Thabiso Mockiko
Johannesburg - Seacom's plan to offer broadband internet connections at about 0.1 percent of the price of current satellite services was a sustainable model that would result in genuine growth in the broadband market, analysts said yesterday.
This week Seacom, the privately owned undersea cable project, unveiled its pricing structure, which is expected to reduce international bandwidth prices by up to 80 percent. The $600 million (R4.6 billion) Seacom cable plans to go live on June 17 next year.
Rudolf Muller, the founder of MyADSL, said: "The current situation in the South African international bandwidth market is low volume, high profit. This is not uncommon in a monopolistic market, but low cost, high volume is a far more sustainable model in a competitive arena.
"There is tremendous pent-up demand for bandwidth in South Africa, and the only thing stopping a tremendous growth in bandwidth usage is the very high prices."
Monthly fees for Seacom's fibreoptic bandwidth will be R267 per megabit per second, whereas satellite connectivity costs R231 000. Telkom's SAT3 charges customers between R3 500 and R11 000 a month.
Russell Southwood, the chief executive of Balancing Act, an internet and telecoms consultancy, said Seacom's entry into the market would result in a "genuine broadband market" growth.
Muller said that in other countries a multiple-fold jump in bandwidth usage was seen after prices were reduced, and the same would happen in South Africa. The lower prices would mean that companies could purchase far larger volumes of bandwidth, and the savings would mean better broadband services at lower prices for consumers.
Seacom will give African retailers open access to cheaper bandwidth, removing the international infrastructure bottleneck and supporting economic growth in the region.
Seacom will provide high-capacity bandwidth linking southern and east Africa, Europe and south Asia. Its two fibreoptic cables will have a capacity of 1.28 terabytes, enabling the provision of high-definition television and internet protocol television services. It will help meet surging internet demand.
Seacom will be the first of about three cables expected to go live in Africa next year.
The New Partnership for Africa's Development (Nepad) cable, in which 12 African governments are collaborating, is said to be "on course".
Henry Chasia, the executive deputy chairman of the Nepad e-Africa Commission, said Nepad had not held talks with Seacom recently. Nepad aims to reduce the cost of telecommunications and increase the efficiency and effectiveness with which Africa does business with the rest of the world.
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