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 Thursday, October 20, 2005

Dr. Tim Kelly, from the ITU Strategy and Policy Unit recently spoke on South Africa’s Position in Global Telecoms, at the 2nd Colloquium on Telecom Prices in Johannesburg, South Africa. For the presentation given by Dr. Kelly, click here.

The South African press also quoted Dr. Kelly; "According to Kelly price is an easy variable to measure. The ITU use a formula based on 30G per month with an average of 30 hours per month."

When measuring South Africa against 40 other economies South Africa is ranked 38th. China for example, typically offers this type of package (30G with 30 hours of usage per month) for around $10 (R66). South Africa is ten times more expensive with figure of $100 (R660) per month for the same service.

Kelly said, "South Africa is paying far too much for broadband.” A good way of measuring the cost of broadband is to use the average income of the population (GMI). The percentage quoted by Kelly as an internationally acceptable measure is for broadband to cost 1% of the average income per capita for a 1Mbps service (currently the fastest service available in South Africa). South Africans are currently paying around 100% GMI for their 1Mbps service. When considering the exorbitant prices South Africans are forced to pay for an ADSL service it is no wonder penetrations sits at 0.2%. Another factor inhibiting broadband usage according to Kelly is bit caps.

"Wherever bit caps are applied it deters the use of broadband," said Kelly. He stated clearly that South Africa needs to abandon bit caps and that there is no reason why residential ADSL users should be subject to a bit cap. Kelly highlighted that the price of broadband and the enforcement of bit caps are the two factors that deter South Africans from using the service. With government and the private sector becoming increasingly restless regarding liberalization of the telecoms sector and specifically broadband provisioning it is time to start addressing some of these issues. 

For the full article, click here.