Uncapped local ADSL – larger ISPs give their views

By: MyBroadband

Offering uncapped local ADSL services remains a headache for many ISPs – the bigger players give their views.

Telkom Internet recently started trialing their uncapped local bandwidth service for ADSL subscribers. Pre November 2005 all ADSL subscribers had the benefit of uncapped and free local bandwidth, but the new service from Telkom Internet will most likely mean that subscribers will have to pay for any local usage after being capped.

This raises the question as to what the larger ISPs make of Telkom’s new system and whether they will offer a similar service with uncapped local bandwidth.

The general problem for all reseller ISPs is that local bandwidth is still charged for at wholesale level. The profit margin for ADSL services is also low which means that a free, uncapped ADSL service is not really a feasible option for reseller service providers.

There are no regulations governing the ADSL wholesale market which further complicates matters. This is something many ISPs are calling for, but thus far ICASA did not directly tackle the issue.

Big ISPs give their view

MWEB, the second largest ADSL ISP in the country, says that they are looking at the financial risk and operational impact of the solution which is offered by Telkom.

Asked whether they will offer uncapped local bandwidth, MWEB said that, “In terms of the ICASA regulations we're obliged to, so the answer is yes.”

“MWEB is currently investigating the financial risk and operational impact of the solution proposed by Telkom with the goal of offering a product of premium value to its subscribers,” MWEB said.

Telkom currently charges around R 12-00 per GB for local bandwidth, and with low profit margins – especially on 1 GB ADSL services – SAIX reseller ISPs will soon run at a loss if they offer free uncapped local bandwidth.

“The interpretation of the regulation regarding uncapped local bandwidth has given rise to a number of debates. We are working with Telkom and ICASA to resolve these issues and are hoping to launch an uncapped product in the near future,” said MWEB.

Vox Telecom’s Simon Butler says that Telkom’s proposal is an interesting interpretation of ICASA’s regulatory requirement for local usage. “Although this is not ideally what consumers would like to see, it does add a new beneficial variation to the current ADSL offerings in the market,” said Butler.

Verizon Business SA says that they currently offer ADSL Standard Internet Access, ADSL Peak and Off Peak Standard internet access and National Only ADSL Access, all of which allow customers to decide and change the size of the cap themselves at any time by online interface.

“This means that it’s already possible for our customers to create uncapped ADSL Internet access and National Bandwidth Only Services. Our current product set allows the customer’s administrator to use the cap as a mechanism to protect the customer from accidental over usage and thereby unforeseen expense,” says Verizon Business.

“Our current product does not allow the user the automated action of providing a purely National Service, should the cap be reached, but we are working on making this ability available as an additional ability for all applicable services i.e. those which provide international access.”

“The reason we have taken this approach is that many of our resellers have built some of their products based on our offerings and making changes to these products would have a material impact on our resellers. Our approach allows us to continue to offer the current product with the option to add functionality rather than changing the product entirely. These benefits will be offered to all of our customers,” Verizon Business concludes.

Internet Solutions, who already offer customers 30 GB of local traffic ‘free’ with any standard ADSL account, did not give feedback by the time of publication.