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How local-only bandwidth can save money

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The local market is paying a premium for bandwidth and, although ICASA released ADSL regulations in September 2006 that introduced the provision not to cap local bandwidth or charge for it, this hasn't yet made a major impact in the local market.

Some sectors campaign passionately for the implementation of the new regulations, others take a more practical stance.
While Telkom holds the reins on this issue, its position is supported to some degree by ISPs. Between 2002 and 2005, ADSL in South Africa gave users uncapped and unlimited local bandwidth. Then hard capping was introduced. The reason? Simple – where an opportunity exists, entrepreneurs will exploit it. Gaming services and peer to peer networks (both theoretically illegal) sprung up everywhere, leading to congestion.
Still, it's hard to argue that some concessions should not be made when local bandwidth costs a tenth of international bandwidth and the use ratios are 90/10 in favour of international bandwidth. Suggestions raised at a meeting between ICASA, MyADSL and Telkom that the incumbent cap local bandwidth at 30GB as an interim measure or open local Web sites to capped users, had no success.
The levels of abuse need to be understood. In 2005, ISPs were experiencing local bandwidth use of 130 and 140GB by some of their subscribers on a 1Gig ASDL package. This was largely the result of the gaming and peer to peer networks that were being set up. It slowed the lines and was simply not fair on business subscribers. Supply and demand play a role in any business realm and there needs to be some control and some limitation – paying a fee for use certainly makes sense.
The question then is how to identify and limit abuse. To be able to identify the use of local versus international bandwidth by subscribers, ISPs need to purchase access to Telkom's ATM backbone via an IP Connect (IPC) gateway. This allows the ISP to identify traffic between the exchange (the source) and the Internet, rather than it all simply being routing via Telkom who does not provide differentiated billing. Since an IPC comes at a massive cost – approximately R22 000 per 2Megabit connection, with only a limited number of subscribers being able to use this connection if ADSL speeds are to be reached — few ISPs can afford to offer this service or differentiate between local and international use to monitor abuse.
This leaves ISPs in a bit of a quandary. Those that simply resell Telkom's ADSL bundle have no voice and no teeth. Those that own IPC connections need to add considerable value to their offerings to create value for the customer.
According to Dr Taylor Reynolds, an OECD telecommunications analyst, there should be a development of an open access fibre infrastructure in South Africa. This bandwidth can then be tapped by innovative ISPs to develop improved broadband services. "ISPs can only innovate if they have access to backbone connectivity," says Reynolds.
At present, Telkom and ISPs sell local-only ADSL packages at a lower fee. They are not finding many takers. "With a little imagination, these low cost offerings can be leveraged to considerable advantage by local business, however," argues Riaan Leuschner, MD of Nology, an importer and distributor of broadband and networking solutions.
"The willingness to pay for a better service is reflected in business demand for Virtual Private Networks (VPNs) that provide faster and more secure point to point connectivity. Now, advances in modem router technology offer a new opportunity for bandwidth savings
"Since our new range of Billion routers with IPSec and SSL VPN features – the Billion 7402R2, 7402G, 7404VGO and BiGuard range – offer multiple VPN channels, local businesses with more than one branch office can use a local only bandwidth connection for inter-office communications (data and VoIP), configuring the device to do inter-office communications on the 'local only' bandwidth service using a defined VPN channel.
"When employees need to communicate externally or make use of Internet resources that require use of international bandwidth, this communication can be diverted as usual without a VPN.
"This can deliver an approximate 40% saving on bandwidth costs for these businesses."
Concludes Leuschner: "Of the 5-million Internet users in South Africa, only 450 000 are broadband users according to a recent study. There is hope that in future, as broadband use increases, broadband capacity grows and greater transparency is introduced into the system that a better alternative to the present situation can be found."