As video-on-demand and fibre-to-the-home begins to switch on in South Africa, the public will begin to learn the real meaning of data demand – and pricing models for data will have to change, writes ARTHUR GOLDSTUCK.
In the coming months, suburban South Africa will see an explosion in the use of both video-on-demand (VoD) and fibre-to-the-home (FTTH). The former will be driven by intensification of competition between ShowMax and Netflix, and the latter by the race between a growing number of start-ups laying down fibre in the suburbs. The fibre incumbent, Telkom, suddenly finds itself up against Vumatel, Fibrehoods, Metrofibre, Maboneng Broadband and even MTN, among many others.
High-speed Internet theoretically eliminates buffering, although there’s nothing one can do about content that is housed on slow systems. However, for major commercial services like video-on-demand, the dream of instant streaming becomes reality.
Video-calling from home becomes a quality experience rather than the grainy, jerky visuals that have chased most consumers away from video chat. Online gaming tournaments where split-second reactions make all the difference are suddenly feasible. There are numerous other advantages and benefits, but there is also one major drawback: most fibre subscribers will run out of data almost as fast as they can say “Download THIS”.
The way FTTH works in South Africa is that the customer pays a once-off installation fee to the installer, such as Vumatel or Fibrehoods. A choice is then made of service providers, who offer a range of packages based in line-speed and data allowance, either on contract or a month-to-month basis. Some of these providers will even carry the installation cost if their service is chosen.
The cheapest services start at 4Mbps with a 20GB cap (WebAfrica), at around R424 a month, and an uncapped 4Mbps service at R499 (Vox Telecom), both for month-to-month services. However, the typical FTTH customer has signed on to get serious speed and quality. Netflix itself advises a minimum speed of 5Mbps to watch streaming movies in high-definition. It says 3Mbps will do for standard definition.
What about ultra high-definition? Although the range of ultra-HD content isn’t great right now, it is accelerating fast to take advantage of new 4K TV sets and the increasing speeds of broadband. Bear in mind, most consumers investing in equipment right now are not expecting to have to repeat that spend in the next five or even ten years.
If one is already considering ultra high-definition movies, the minimum speed required is 25Mbps. For now, however, HD is expected to be the norm.
But then comes the data crunch.
According to Netflix, HD movies use about 3GB of data per hour. So if you are using Netflix to replace existing TV use, and you watch an average of 2 hours a day – and assuming only a single stream – that is already 180GB of data per month. This excludes regular Internet use, which in a typical suburban family of 4 can be well over 100GB when one adds social media, gaming, chat, YouTube binging, and trying out app after app.
This means that, to be safe, a family with fibre would need a cap of at least 400GB a month. If movies and videos are being streamed to more than one device, regularly, even that is an optimistic cap.
The real message is that, if VoD is replacing TV and you are moving existing heavy Internet use to FTTH, then uncapped makes sense.
Now it starts to get complicated. Uncapped services at reasonable speeds start at a seemingly reasonable R799 (from Cool Ideas and XDSL) – but there is a massive discrepancy between download and upload speeds: both offer 20Mbps down and 2Mbps up. Which is fine if one is only watching movies, but not much better than ADSL for high-speed gaming, video calls and anything else requiring high speed in both directions.
In short, the cheapest fast-download uncapped offers may well provide an experience equivalent to ADSL.
The weakness of ADSL lurks in the meaning of the acronym: “asynchronous digitals subscriber line”. The asynchronous part means you get about a tenth of the download speed for uploads. A line running – if you’re lucky – at 8Mbps downloads typically gives only about 0.8Mbps uploads. Hence the horrible quality of Skype video chats on typical ADSL lines.
The cheapest FTTH deals, then are also asynchronous, making them ADSL alternatives rather than the full experience of fibre. Cool Ideas offers uncapped 20Mbps up and down at R899, while XDSL offers the same at R999.
While both offer free installation and only a month-to-month commitment, the drawback of the sub-R1000 options is that most still do not deliver on the future that fibre promises. Based on currently available content, websites and behaviours, a no-limits service would start at around 50Mbps down, while some level of asynchronicity would be tolerable, i.e. from 5Mbps upward.
Here again, Cool Ideas leads the way with a 50/5Mbps uncapped package at R999, while a 50/50Mbps service comes in at R1099. The equivalent priced service from MWEB and Vox Telecom, with the same speeds, have 500GB and 400GB caps respectively, just scraping in to the minimum that a highly-connected family would need.
The truly high-speed home or office may well be looking at 100Mbps speeds, and here the cost shoots up, with Cool Ideas offering an uncapped 100/10Mbps service for R1499, and XDSL at R1549. The 100/100Mbps service from Cool ideas goes up only slightly, to R1599. At the time of writing, no one else seems to be offering uncapped services at these speeds, although Cell C is trialling its service.
MWEB offers an insanely fast 1Gbps download service, with 100Mbps up, but astonishingly places a data cap on it – a mere 500GB. The R2499 cost may be dirt cheap compared to an equivalent service just five years ago, but customers of the service would want a bit of uncapped to go with it.
The bottom line for both customers and service providers is to appreciate that isn’t their father’s ADSL. In a new content world, with quality of image and format rising fast and data demand going up even faster, uncapped is the new black.
Speeds may vary, and different usage will require different speeds. But just as ADSL as we know it is no longer good enough, service providers’ current data caps are out of sync with the content explosion these same service providers are promising.