South Africa: Operators give users more bandwidth but no price reductions

Internet

The battle of the bandwidth suppliers has begun, with MTN and MWeb not dropping their fees but instead increasing bandwidth to end users. This is a sort of price war in reverse: the prices stay the same but the volume is increased.

MWeb is targeting its 300,000 residential customers by increasing the size of its data bundles. Subscribers with a 1GB data cap will now get 2GB for an unchanged R145 per month. Users with a 2GB cap will get 3GB for R219, and 3GB packages rise to 5GB for R299.

Telkom began the trend last month by giving its customers larger packages for the same price. Other operators and internet service providers (ISPs) will be under pressure to react if their fees look over-inflated in comparison.

MTN Business is only targeting corporate clients, but since some ISPs buy its bandwidth the benefits may filter down to consumers too. The capacity increase was made possible by combining MTN's data networks with those of Verizon's African operations, which it acquired this year.

"We put the two networks together, and one and one really do equal three," said MTN Business executive Angela Gahagan. All its corporate customers would be entitled to 50% more bandwidth at no extra cost, she said.

"People have only been buying what they can afford, not what they need. We are helping businesses by giving them extra capacity, and we are looking forward to seeing new customers come on board because we are doing that."

Gahagan said MTN was not just dropping its fees, as it had to pay its overheads and invest in its quality of service. It was more important to offer a wider variety of business services, she said.

World Wide Worx research found SA's largest corporations would use more bandwidth if it was cheaper. MD Arthur Goldstuck said a 10% price cut would persuade 4% of firms to buy more capacity, a 20% cut would see 29% of corporate clients pump up the volume, a 30% cut would see 54% up bandwidth and with 40% almost two-thirds would dramatically increase bandwidth bought.

"Whoever is responsible for bringing costs down significantly is going to be able to gobble up a chunk of the market," he said. However, price was only one factor influencing choice of network supplier. Service quality and network maintenance were just as important.

Business Day