Prices must drop - Neotel

Johannesburg - SA's second fixed-line operator Neotel said the prices of telecommunications services in the market must come down.

"We have no fear of prices dropping in the market, they must drop," said chief technology officer at Neotel Angus Hay. He was speaking at the 2008 MyBroadband Conference held in Johannesburg this week.

Hay said that because all Neotel's services were billed on a per second basis, its pricing was at least 20% to 30% cheaper than another product with the same pricing (but billed on a per minute basis).

One constraint to telecoms prices dropping remained the high "mobile interconnect" charge, Hay said.

Interconnect is the rate that one operator pays another to terminate a call on its network; for instance, when a Telkom subscriber calls a Vodacom number.

While fixed-line interconnect is 31c a minute, cellphone interconnect costs 125c per minute. Regulator Icasa has been investigating imposing price cuts, but has yet to conclude its investigations.

International connectivity prices will, however, come down from the middle of 2009, when the first east coast undersea cable, Seacom, is scheduled for completion.

Seacom president Brian Herlihy confirmed that it was on track to go live on June 27 2009.

Hay said the next cable along that coast, the Eassy cable project, should be finished the following year. It was increasingly likely that a third African cable, the ownership of which was still unclear, would be ready by 2011.

Digging will continue

While some have said there could be a bandwidth glut if all the planned undersea cable projects go ahead, Herlihy said there was "no such thing" as too much broadband.

Back on terra firma, Neotel and other operators continue to dig up roads laying fibre-optic cabling. Hay says the digging will continue, but Neotel has moved from laying metro fibre to the so-called access layer (from the network to homes and offices).

Neotel has fibre-to-the-curb coverage in most major metropolitan areas, even though the rollout in Cape Town has been slow as a result of delays with obtaining permission. There are also plans to do the same to residential homes in time, Hay said.

He called for partners to help lay residential cable. In the meantime, Neotel is offering wireless voice and broadband to consumers in areas where it has coverage.

It was still difficult to say exactly when specific residential areas would have coverage, said Hay. But Neotel was working on increasing its transparency and would launch a new portal in about six months with automatically updated coverage maps.

- Fin24.com