Not quite a price war
Wireless providers shape up
ANNOUNCEMENTS over the past month have set the cat among the wireless broadband pigeons, with MTN, Sentech and iBurst all cutting prices or improving services.
While most announcements were some time in the planning, the confluence of the events has created a newly invigorated market in which the companies in this field are able to take on the might of Telkom’s ADSL offering on a stronger footing.
While MTN was the first to move – doubling the bandwidth provided to its subscribers on a short-term basis – it’s the warring between smaller players iBurst and Sentech that makes for the most interesting battle.
iBurst MD Alan Knott-Craig says the changes to the company’s service that saw it give subscribers between 200MB and 500MB of extra throughput each month, have been planned for some time.
“These improvements are part of a strategy to drive down the cost of Internet access, allowing us to target new areas of the market,” he says.
“We’re adding between two and three thousand new subscribers each month, and as we roll out new coverage areas, this number should increase,” he says.
While iBurst has been successful over the past few years, Sentech, with its MyWireless service, has been languishing. The company does not disclose subscriber numbers but estimates put them at between 2 500 and 4 000, well down from the peak of more than 8 000.
Marcel Steyn, MyWireless product manager at Sentech, says the company had some soul searching to do to find a way to again make the product offering competitive.
“Of the three areas we could have been competitive in – speed, coverage and price – we’re not in a position to expand our coverage and we can’t differentiate ourselves in terms of the speed of the service, but we can make our product offering more competitive in terms of price,” he says.
With offerings that start at R99, the State-owned organisation is offering the most keenly priced broadband in the market and is positioning itself to take a slice of those Internet users who have been sticking to their dial-up connections.
Rudolph Muller, founder of MyADSL, says that while the new strategy is likely to increase numbers, coverage remains the Achilles heel.
“I think the new offerings will have a positive effect on subscriber numbers, but without being able to extend their coverage, it will continue to be the smallest provider. It needs funds to grow its network and market its products, and with Government dragging its feet, Sentech is really between a rock and a hard place.”
Steyn believes that even with the handicap of not being able to increase coverage, there’s a sufficiently large untapped market within existing coverage areas to offer the company growth opportunities.
However, Arthur Goldstuck, MD of
Sentech is really between a rock and a
World Wide Worx, says wireless broadband suppliers have a way to go before they can make inroads into the unconnected market.
“Once wireless broadband brings down the total cost of broadband connectivity to something approaching the total cost of dial-up (subscription plus per-minute phone charges), it will become an alternative to ADSL for those upgrading from dial-up. Sentech’s R99-a-month offering is well positioned to do just that. However, it’s not a viable solution to bring on board those not yet connected. Dial-up is too expensive for that market, so wireless broadband, at cur- rent prices, is certainly not going to have an effect there.”
The problem is that the market for basic Internet access isn’t growing as fast as the broadband market.
“Growth of overall connectivity is completely stagnant – we’ve seen 10% growth in the Internet user base in the last three years. The only real growth we have seen is the extent to which users have upgraded from dial-up to ADSL, or adopted wireless broadband alongside other connectivity options,” he says.
With the wireless operators moving to aggressively target the market, South African consumers may not be getting the price war they were hoping for, but with Sentech at least making an effort to compete effectively, the opportunity is there for users to compare the deals that are out there and pick the one that suits them.
Putting the plan into
action. Alan Knott-