According to reports Telkom’s wholesale division is looking for ways to reduce Internet Service Provider (ISP) costs, and is considering cutting IP Connect (IPC) costs again soon, in an effort to ultimately reduce consumer prices.
This would be the fourth IPC price cut in the last three years. It was last cut by 10% in February 2014 following settlement between Telkom and the Complaints Commission after a series of complaints was lodged against Telkom from 2005 to 2007.
Prior to that, there was another reduction in April of 2012, when IPC prices were reduced by 30% after The Independent Communications Authority of SA (ICASA), stepped in to lower costs to ISPs. This was followed by a smaller price cut of 8% in October 2013.
With IPC seen as one of the biggest cost drivers for ISPs, its inflated costs have been seen as a major inhibitor to the growth of broadband in South Africa, and ISPs are calling for even more drastic cuts in the cost.
According to Afrihost director Greg Payne, ISPs want a minimum 30% drop in pricing per year for the next four years. This would allow ISPs to be more competitive and enable them to offer cheaper ADSL to end-users.
Payne says local IPC bandwidth is being charged at four times the cost of international bandwidth. “[This is a] ridiculous situation, especially [considering] the last mile copper line rental is being recovered separately from the IPC.”