The broadband price scuffle

It's tempting to say there's a broadband price war in South Africa right now, but actually it's just a skirmish - a skirmish on the fringes of the greater battle.

South Africa still pays too much for connectivity. Though it is admirable that the cellphone networks are fighting this out, and producing the cost-cutting deals we've seen in recent weeks, it should not be necessary.

A sad indictment of the state of this country is that 8ta has a cheaper broadband offering than its parent, Telkom.

It is beyond disgraceful that the cellphone network operating division of the monopolistic telephone provider can sell you cheaper broadband than its fixed-line equivalent.

Just the slightest understanding of how the telco industry works is enough to know this should not be the case.

Telkom should be sitting pretty with an enormous network using fibre optics. Instead, the national telecoms utility - its infrastructure, I should add, we have paid for using our tax rands - has squandered its strategic advantage. The strategic lack of vision is truly remarkable.

Instead of building on its strengths, Telkom effectively ignored them.

Most similar telecoms companies around the world are preparing for the next evolution of connectivity using the super-fast speeds available with fibre optic cable, the replacement for copper wire. It is not cheap, but it is what is needed for the next wave of how we will use the internet, with its video-heavy applications.

Like every other tech commentator, I was fascinated when this broadband cost scuffle unfolded a few weeks ago. Like all of them, I rushed into writing a column, which I stopped at this point.

Wait and see, I thought, if something really does shift, or if this is just a burst of enthusiasm. Now we know. Just a skirmish.

It's remarkable that the largest internet-service provider, with the most customers, is not the wired telco but Vodacom, which has 3million customers to Telkom's 751625 ADSL subscribers (according to its recent results).

For the past few years, like most other South African consumers, I have effectively paid twice for my wired broadband. I pay R120-ish for the phone-line rental, another R400-odd for the ADSL line rental (notice that, twice for the same piece of copper) and then I pay another R540 for my actual broadband account. The difference now is that I pay the latter to M-Web for an uncapped account, which is worth every cent because I don't have to think about data usage at all.

The years of worrying about how many YouTube videos or software updates I had done turned using the internet into an unnecessarily worrisome experience.

Before I switched to M-Web, I had a Telkom ISP account for a mere three gigabytes (GB) of broadband, which was always soft-capped at 5MB and officially increased to that a year or so ago.

My total monthly cost to get internet access therefore is in the region of R1000 a month, or R12000 a year. It's utterly absurd. In developed markets, where competition has driven down prices, you can get super-fast broadband packages for in the region of $30 (R210).

Bundled telephone and TV services on top of that can be as cheap as $50 (R350), depending on how many TV channels you choose.

So, when Cell C began the price war last year with a R199 a month for 5GB package, it was noteworthy - a fifth of the cost of my current fees. And, as Cell C kept telling us, much faster than the wired network.

Other networks quickly called it "unsustainable" but have all effectively matched, or bettered, it.

I'm often asked where the South African equivalent of Google or Facebook is? It's not going to happen with internet costs still so high.

• Shapshak is editor of Stuff magazine