Telkom, South Africa’s only fixed-line provider, has announced that they expect the total ADSL subscribers to reach 120 000 before the start of the festive season. ADSL packages first entered the market in 2002 and in three years have grown to a less than impressive 120,000 users.

Whilst the total tally is not substantial by international standards what is encouraging is that the rate of installation has increased since the appointment of the new CEO Papi Molotsane.

During the period 2002 to early 2005 the total number of ADSL users was around 50 000.

In the last few months this figure has grown by over 100% which is an indication of people’s interest in broadband Internet.

According to Telkom ‘growth is now taking place at a much faster rate’ and the figures provide evidence that this is indeed the case.

“South Africans are developing an appetite for the Internet and see it more and more as a powerful business tool,” said Steven White, Telkom’s executive for product development.

Whilst South Africans may have developed an appetite the question still lingers as to whether Telkom are able to meet these demands.

Telkom’s recent move to a pay-per-gig billing system is enough to curb any bandwidth hungry user’s enthusiasm.

The system now places limits on the user because whilst they do not have to watch the clock they do have to watch their Megs.

Telkom’s ADSL really only caters for those with a very small appetite but in a famine bread and water look extremely appetizing.

White defends this new billing system stating that the statistics prove critics wrong.

“Before usage based billing was introduced on 1 November, ISP’s had to buy 3 Gbyte packages while a large proportion of their customers required far less and were paying for bandwidth they did not use.”

“Recent analysis shows that 4% of ADSL customers are responsible for 50% of the traffic. The remaining 96% of customers use an average of 1.4 GB per month, yet are paying for double that.”

“Usage based billing of bandwidth to ISPs allow them to introduce smaller packages at a lower cost. While some ISP’s have been vocal in the media, others have introduced innovative new products which are taken up by the market,” White said.

Whilst the statistics do look impressive one has to scratch a bit deeper to understand the Internet behaviour of the average South African user.

Since users are aware of their 3G limitation they are not free to use the Internet at will and restrict their behaviour accordingly.

Overseas a standard measurement, according to Dr. Tim Kelly from the ITU, is 30G’s.

The real issue concerns why South African users are not in line with international trends and how Telkom’s business model has influenced this phenomenon.

In the interim South African content and websites are hardest hit by the reluctance of the South African market to go online and use bandwidth for more than just emails and surfing.

White outlines the many advantages of ADSL and rightly notes the value of offering Internet access at a fixed rate.

“24 hour access to the Internet at a fixed price offers a good value proposition and attracts customers away from dial-up services. ADSL customers do not have to manage account surprises at the end of the month. They know exactly what their monthly Internet access costs are,” White said.

Once again it is encouraging to see that Telkom recognizes the value of fixed-rate Internet access but this statement is somewhat contradictory, considering their latest move to offer fixed-cost telephony but to not extend this offer to dial-up Internet access.

The good news for South Africans is that ADSL penetration is growing faster than ever before but the bad news is that this growth will soon reach a plateau should the prices not fall significantly.

The average South African cannot afford Telkom’s ADSL services at the current price which means that the market will soon become saturated.

Especially when one considers that part of the growth in the ADSL arena includes dial-up users moving over to 24/7 Internet and not only new ADSL customers.

With Telkom’s current prices the percentage of the population with Internet access will not be able to grow to the extent that we see in many of our global rivals like Australia, Brazil and India.