For years, bandwidth hungry consumers have been hoping that the second network operator (SNO) would rescue them from Telkom's monopoly. Even though it is licensed and has already launched, Neotel will only start offering consumer services sometime this year.
Even if it does, Neotel will be severely hindered by its licence conditions and government's own attempts to get involved in providing broadband through undersea cables and the state-run Broadband Infraco provider.
Says Neotel MD Ajay Pandey: "We've been working flat out laying cables, installing equipment and setting up agreements that give us a national fibre network. We now have physical layer access to over 10 000 km of fibre optic cable."
But after the long wait, there is doubt about the effect the new operator will have on the market, given how Telkom has had time to entrench itself.
Storm's Dave Gale's comment on Neotel's short-term effect on broadband pricing reflects the industry's scepticism. "It has had little influence to date, but I hear rumours of big deals signed, which should get the cash-flow running and allow them to look lower down the food chain."
Telkom, in spite of bad press, does offer an okay service, he says. "If Neotel can leverage wireless last mile plus Infraco backbone plus their own international cable... we could see someone pressure Telkom to drop the price by 50% and differentiate on quality."
The so-called last mile, or local loop, is the connection from the exchange to consumer or business premises and is the subject of intense lobbying as unbundling the local loop from Telkom's monopoly.
World Wide Worx MD Arthur Goldstuck says cost is the main hindrance preventing broadband uptake. The accompanying chart, from the World Wide Worx Internet Access in SA 2007 survey, shows many minutes of usage of dial-up Internet access per day would justify moving to each version of broadband. It is a "like-for-like" comparison of all major access options.
Only iBurst did not allow for direct comparison of the chosen bundle size of 1GB, since it does not have a contract offering with modem in this range. The next package down in size was selected for comparison purposes. "This is, obviously, a pure cost-based chart, and does not relate to quality of performance.
"The variation in monthly cost between dial-up and each of the other services reveals the impact of apparently minor price differences on cost-justification of broadband," says Goldstuck.
