Neotel comes to the party

South Africa’s second fixed-line network operator, Neotel, insists it is not looking to start a price war with the incumbent, Telkom. But by undercutting Telkom’s offerings by more than 50%, it appears to be doing just that.

Neotel’s NeoConnect packages focus on “converged” wireless services, which offer voice communication and internet access in a single device that could replace Telkom fixed-line connections.

This makes direct comparisons very difficult, but analysis by consumer activism website shows how competitive Neotel’s new offerings are.

The NeoConnect Prime 2,5GB package offers consumers a landline and a broadband package allowing up to 2,5GB of data traffic a month for R399 a month—53% cheaper than Telkom’s 3GB broadband offering and Closer 3 package combined.

NeoConnect’s 10GB package costs R599 a month, 71% cheaper than Vodacom’s 10GB offering at R2 049 and 47% cheaper than iBurst’s 10GB package for R1 139.

NeoConnect also offers an unlimited data package for R999 a month, which is 63% cheaper than Internet Solutions’s Business ADSL offering, which costs R2 700.

All NeoConnect services promise that you will be able to download data from the internet at speeds up to 2,4Mbps.

Neotel launched these offerings earlier this month and Telkom’s response has been to keep its broadband prices at current rates.

If wireless broadband is what you want, the three major players—Vodacom, MTN and iBurst—offer packages at similar prices.

On 2GB contracts MTN is cheapest with R389, while Vodacom’s offering is R449.

However, analysts say many people use Vodacom because it has better coverage across the country and internationally.

iBurst HSDPA offerings include a 1GB package for R349 and a 3GB package for R649.

With the recent announcement by Telkom that it has filed a “minimal tariff adjustment” average increase of 2,4% with the Independent Communications Authority of South Africa (Icasa), fixed-line connections are expected to increase.

Telkom says its broadband pricing will remain unchanged. However, analogue line rental—which ADSL subscribers must also pay—will go up from August if Icasa approves.

NeoConnect’s prices include monthly fees, device charges and service rentals, as well as free voice minutes and SMS bundles. The only downside is that consumers have to pay for out-of-bundle usage charges.

Mukul Sharma, executive head of Neotel’s consumer business unit, says his company’s NeoConnect packages offer the best of both mobile and fixed communications.

“We have incorporated global best practices into the design of this product,” says Sharma.

“[It is] a unique solution that addresses the key complaints South African users have been highlighting for years.”

MyADSL consumer activist Rudolph Muller told the Mail & Guardian that several things must be taken into account when choosing between fixed-line and mobile connections.

“Fixed ADSL is still the best bet if you have high usage. In terms of pricing Neotel offers the best, especially in the converged space,” says Muller.

For lower requirements of 1GB to 2GB of data a month Muller recommends a mobile connection.

“Vodacom and MTN HSDPA are fast and wireless, but Vodacom is far superior because of [its] coverage.”
Muller says that he expects to see the speed of connections increase.

“We will also see more competition [than] we see now and prices will continue to drop,” says Muller.

Broadband lore
Vodacom, Neotel, MTN, Telkom, iBurst, 2GB, 3GB, 2,4Mbps and 156Kbps—sounds like a shopping list, doesn’t it? That’s exactly what it is.

When shopping for a broadband offering there are three things to be considered.

The first question to answer is: do you want a fixed-line broadband—a connection that you can use only in your home—or mobile broadband, which allows access anywhere there is cellphone coverage?

Broadband ADSL is a technology that splits your existing phone line into two channels. One channel handles voice communication while the other is used for data—internet access.

In other words ADSL users can use the internet, with high-speed connections, while making voice calls on the same line.

iBurst is a wireless broadband connection. That is, it allows high-speed access to the internet without cables via antennas and radio waves. However, iBurst works only in areas that have a special sort of coverage.

MTN and Vodacom, on the other hand, use cellphone coverage. They use a system called 3G/HSDPA that can give you an internet connection wherever there is cellphone reception.

This gives you the most freedom to move: no need to be tied down to desks, cables, wall connections or hotspots.

The second issue is to decide on the amount of data you want to be able to transfer a month. This is called the “data cap”, which comes in amounts from as low as 1GB to 12GB or more.

The third thing to be considered is the speed of the connection. This determines how fast you are able to transfer information—how fast web pages load, how fast files are downloaded or how smoothly online videos will play.

This ranges from 384Kbps to 4Mbps. The common dial-up modem, in comparison, has a standard maximum of 56Kbps.

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