With numerous ISPs recently launching uncapped broadband accounts, and adding fuel to an already smouldering fire, otherwise known as the bandwidth price war. South African Internet Service Providers (ISPs) are bidding lower prices against one another, either in an attempt to match or even beat their competitors. Smaller ISPs are cutting their prices to below cost in order to compete with their larger counterparts. But what are the implications on the ISPs?
Lower costs for consumers ultimately leads to a decrease in profit margins for ISPs. Should a particular ISP choose not to offer uncapped broadband packages at lower costs to the consumer, they’re not keeping abreast with the changes in the industry. If they do, their profit margins will start to minimise. With the pressure mounting, ISPs who traditionally focus only on data services may need to investigate new streams of revenue by broadening their services and attracting new market segments.
Managing Director of RSAWEB, Rob Gilmour, agrees that ISPs need to re-evaluate their business models in accordance with the transforming industry. “Broadband is becoming increasingly commoditised as bandwidth becomes cheaper and uncapped packages become the norm. This will force ISPs to differentiate themselves with regards to service and value added products.””
New developments in hardware devices make it possible for ISPs to invest in several alternatives beyond their regular broadband connectivity. A Multi-Service Business Gateway (MSBG) is a viable option for many ISPs who target small and medium-sized enterprises. MSBG combines multiple network voice and data communication functions into a single device, giving the ISP the ability to manage and control all aspects of a client’s communications needs. This is also a feasible option for SMEs who have limited technical and financial resources to procure, implement and manage new technologies.
Adrian Bush, Managing Director of Even Flow Distribution a VoIP hardware distributor notes: ‚The latest MSBG appliance available on the market operates on both wireless and wire line networks. The Connecto, by ITS Telecom is an all-in-one package with multiple interface options which provides a variety of solutions that can be used to support a SMEs entire network. The Connecto provides full PBX functionality, connectivity to all types of phone extensions, LAN networking, WiFi connectivity, and high speed internet access. ISPs benefit in offering MSBG appliances to SMEs as they will be the single point-of-contact for all voice, data and Internet services in the SMEs’ office: they will increase their revenues through incoming and outgoing calls made by office staff: and with a MSBG appliance such as the Connecto, ISPs will provide SMEs with simplified, remote management and support.‚
So, where to next for ISPs? With industry changes, come opportunities. SME’s are looking for feasible, affordable, and convenient service providers. Those ISPs who can offer more services, with reliable management and support, with a saving in costs to the SME, will benefit from this evolving industry.