‘ADSL Too Expensive Myth’ Explained

By: Ryan Naraine

A recent article in which Arthur Goldstuck, MD of World Wide Worx, was quoted as saying “it is a myth that it [ADSL] is ‘too expensive’” has drawn great criticism from broadband consumers.
 

With local ADSL prices being over 1000% more expensive than comparable international offerings it is hardly surprising that this kind of statement will get consumers’ backs up.

Goldstuck said that he is not surprised that it caused uproar, but made it clear that this statement was taken out of context. Goldstuck, a well known researcher in the Internet arena, said that the context for saying that "it is a myth that ADSL is too expensive" is entirely one of market demand and Telkom's ability to keep up with that demand.

“The need to be online constantly makes dial-up too inefficient and expensive, and ADSL is a very effective and - in this context - cost-effective alternative. In other words, ADSL is not too expensive for small business compared to the alternative,” Goldstuck said.

“The fact that Telkom has a backlog in installing ADSL further shows that, from their perspective, pricing is optimal, as lower prices will only increase their backlog,” Goldstuck continued.

Goldstuck expanded on his findings regarding the local ADSL arena, and said that the real message is one of competition.

“The real message in this is that it is obvious that competition is needed in ADSL provision, since it would benefit both roll-out and pricing, and the two would feed off each other to make it even more affordable and pervasive,” he said.

Goldstuck was far more critical of the ADSL pricing structure and service description when looking at it more objectively.

“ADSL is absurdly expensive in the context of the limitations placed on the service. What makes it so out of kilter with many other markets is not the cost alone, but the fact that the service is structured to avoid cannibalising other services, in terms of aspects like the cap on data and the insistence on renewing the IP address every 24 hours,” Goldstuck said.

“Take away those limitations, and the equation changes from absurdly expensive to merely very expensive, particularly for the consumer. In its present format, it is capable only of migrating existing dial-up users up the value chain, and not capable of growing the market of Internet users significantly - aside from where single ADSL accounts are used to connect a team or family of people,” Goldstuck continued.

The World Wide Worx MD was clear when it came to what pricing one should see in the broadband arena. “The ideal is very simple: for ADSL to become truly compelling for the entire dial-up base AND for it to attract new users to the Internet, it must come down to the price of dial-up. While that may sound ridiculous to Telkom, it is obvious to consumers, and would be in line with global trends,” he said.