What does uncapped broadband mean for the consumer?

By Jonathan Maliepaard, MD eNetworks

What does uncapped ADSL mean to the consumer right now, well it depends. The recent exuberance expressed by so many might be short lived when they realise that they might not be getting the same performance that they had before. Why you might ask? It is simple mathematics. Infrastructure and bandwidth cost lots of money and the only way to make an uncapped service sustainable is to make lots of clients share the same bandwidth. ISPs have been doing this for years, but it was easier to do when you were being paid for what you used. Now the playing field has changed and massive oversubscription ratios and caching will be the only way to survive.


What the slightly technical explanation above boils down to is the premise that there has to be a trade off. An uncapped, use-as-much-as-you-want model, means a sacrifice in performance. A pay-as-you-use model is more predictable for the ISP and will ensure better performance. It has been proven that the pay-for-use model is actually a premium model in some countries. So if you don’t need to download lots of (probably illegal) movies and music content and you are actually going to be working in real-time, then you want a pay-for-use product. Understand that the 4Meg uncapped products are selling for around R500 now, but for the same amount of money will buy you 10GB of bandwidth at most ISPs. 10G is more than most individuals will use in a month.

This sudden change is, in my opinion, not going to be healthy for the industry and will hurt a lot of ISPs caught between Telkom and the consumer. A huge number of people reselling Telkom’s services at cost or close to it have no room to move now. Let's hope that they can hang on until Telkom answers the offerings from MWEB and Internet Solutions. The larger ISPs who have managed to get the funding to purchase bandwidth on the Seacom cable, now have to pay for it, somehow. So understand, as a consumer, all that is happening is that they are getting as many people on their networks as fast as possible, because they have to make this investment work for them. It’s not that bandwidth suddenly costs nothing, they are offsetting losses in many cases, but have no choice but to make it work.

This is just the first instance of a wave of changes that will happen over the next years as more and more undersea cables come on line. The problem, sadly, for the bulk of ISPs remains the cost of getting the bandwidth off the Telkom ADSL network into their own. As it stands, to just get bandwidth from Telkom into an ISP costs R10,000 per Mb/s of bandwidth per month. So do the math, a 4Mb/s ADSL at 1:1 bandwidth costs an ISP R40K just to get from your door to their office. For this you pay R 413. Now understand why oversubscription ratios are what they are. Telkom is, as they always have, holding back our economy with predatory pricing and unfair practices. Sadly the competition, Neotel, appear to be a long way away from easing any of this pain.