Pre-empting the price drops the market is hoping to see when the Seacom cable becomes commercial available, WirelessG has announced a drop of about 25% in the rate it charges for prepaid ADSL data access via its G-Connect converged Internet access solution.
The price drop sees prepaid ADSL access rates decrease from 6,5c per MB to 4,9c per MB and during its happy-hour (between 5pm and 8pm daily) decrease to 4,5c per Mb from 4,7c per MB.
“That’s a 25% decrease over our previous normal rate,” says WirelessG CEO, Carel van der Merwe. "And it's a move we believe will lead the charge in price reductions on local Internet access.”
Van der Merwe says this move also makes WirelessG’s ADSL offering the most cost effective in the market at present.
“We have no doubt that our competitors will follow suit shortly,” van der Merwe says. "But the main challenge they will face in offering similar price reductions lies in the fact that we have not had to rely on Seacom’s impact.
“G-Connect is a product that was designed in the recession of the South African market and is therefore particularly cognizant of the challenges its customers are facing in terms of cash-flow and financial strain.
“The competitive pricing we were able to bring to bear on the market resulted from us automating the bandwidth provisioning and running of our service – and what customers are seeing now is the fine tuning of that model.
“We will undoubtedly be capable of bringing even more cost-effective pricing to bear on the market the moment Seacom is part of the equation all related costs are known,” he says.
Van der Merwe says customers also need to be realistic about the impact Seacom will have on Internet pricing in South Africa.
“While the existence of this cable and service providers’ ability to buy access from a different provider will undoubtedly result in cost savings, we need to remember that International bandwidth is only part of the cost equation.
“As such, if service providers experience a 1% decrease in the cost of international bandwidth it’s unreasonable for customers to expect the end-cost to be lowered by the same margin.
“I do think Seacom will have a positive impact on the market,” he says. "But it will not be a cure-all. For really amazing cost reductions, service providers will have to re-engineer their business processes and look for efficiencies they’re not currently exploiting."