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<p style="margin: 0.0px 0.0px 5.0px 0.0px"><span class="Apple-style-span" style="color: rgb(0, 5, 50); font-family: Verdana; ">West African consumer broadband prices continue to tumble as operators try to find the price point that will attract a wider public beyond the relatively small numbers of corporate customers. The most recent company to slash its broadband prices to create a retail offer is Benin’s ISP OTI Telecom. It is the latest francophone country to introduce this kind of offer but undoubtedly others will follow. However, the challenge remains the high cost of international bandwidth on SAT3 for most countries on the cable. Russell Southwood looks at what’s happening to broadband prices in the sub-region.</span></p><p style="margin: 0.0px 0.0px 5.0px 0.0px; line-height: 19.0px"><font face="Verdana" size="3" color="#000532" style="font: 12.0px Verdana; color: #000532"> <br> Benin’s leading ISP OTI Telecom surprised the market last week by lowering its broadband prices for retail customers to FCFA 25,000 (US$57.95) a month without tax. Equivalent prices for 512 Kbps are FCFA80,000 (US$185.43) and for 1,024 Kbps FCFA200,000 (US$463.58).<br> <br> But according to Blaise Adetonah-Donhouede, the DG of OTI Telecom, the price that would really crack open the retail market would be more like somewhere between FCFA9,000-12,000 (US$20.86-27.81). At this level, for example parents who are paying for their children to do research in a cyber-café on a per hour basis will begin to see the financial advantage.<br> <br> The fall in retail prices has been matched by new offers for professional and corporate users: a 512 Kbps connection without tax for FCFA100,000 (US$231.79) and a 1,024 Kbps connection without tax for FCFA220,000 (US$509.93). Cyber-cafes also benefit but with a slightly higher price on the lower capacity connection: 512 Kbps for FCFA130,000 (US$301.25) and 1,024 Kbps for FCFA220,000 (US$509.93). However, the cyber-cafes get a free ADSL modem-router, a maintenance pack, a guaranteed maximum 12-hour call-out, personalised technical support and two IP addresses with 512 Kbps connection and four with the 1,024 Kbps connection.<br> <br> By comparison with DSL broadband offers in South Africa, what you see is what you get in Benin. An equivalent residential 512 Kbps connection from Telkom South Africa costs US$129.51 a month which at first sight seems cheaper than OTI Telecom’s price. But OTI Telecom imposes no restrictions on download amounts. But in South African there are potentially three additional amounts that will be added to the bill at the end of the month. Firstly, the access charges paid for a 512 Kbps connection add a further US$43.17. Secondly, the connection is “shaped” which means that it’s impossible to use VoIP so you can pay an additional US$22.33 for an unshaped connection. Thirdly, in order to have unlimited downloads you pay an extra US$64.01. All of which gives a whole new meaning to “slice-and-dice” pricing.<br> <br> But Adetonah-Donhouede of OTI Telecom says that such a pricing structure just wouldn’t work in Benin because his customers would spend a great deal of time contesting their the detail of their bills if they had multiple payment options. It’s already reached the situation where customers ask for money off if the connection is down for more than 24 hours!<br> <br> A comparison with prices in the West African sub-region put OTI Telecom and Benin in a good position. In Senegal for example Orange offers a 512 Kbps ADSL connection for FCFA19,900 (US$46.12) without tax a month. In Côte d’Ivoire Aviso offers the same connection on a similar basis FCFA40,000 (US$92.71). In price terms, these are both at the low end of the range for Burkina Faso’s Onatel offers a 512 Kbps residential connection for FCFA40,000 (US$138.84).<br> <br> In Togo and Ghana, residential connections are still limited to 256 Kbps. Togo Telecom’s “Helim” residential connection for this capacity costs FCFA70,000 (US$162.25) and Ghana Telecom’s “Broadband4U” connection costs US$92.30.<br> <br> The impetus for lower broadband prices is driven by two key factors: the level of competition in the market and the price of international connectivity. The exception to the first driver has been Orange in Senegal which has been the continent’s only de-facto monopoly that acts in a price-progressive way. However, it will face competition this autumn from Sudatel-owned Expresso.<br> <br> OTI Telecom has 15 POPs and a very high level of access to Benin Telecom’s network which has enabled it to secure 60% of the 2,000 DSL subscribers in the country. But it secured this position when Benin Telecom was cash-strapped and in chaos at the end of the last Government. Its D-G can easily see that Benin Telecom will re-exert control over its delivery of DSL and OTI Telecom will become a “virtual operator”. If a single entity controls the supply chain for DSL broadband and there is no wireless alternative at a low price, then the fall in prices is unlikely to continue.<br> <br> The second pressure preventing lower broadband prices in West Africa is the continuing high cost of wholesale SAT3 connectivity. This varies between US1,300-15,000 per mbps per month depending on the country involved. The lower the prices, the higher the volumes sold and the greater the pressure on the existing SAT3 cable. And Nigeria, which should be the sub-regions largest market is to some large extent still “choked off” by the continuing chaos (both financial and maintenance) at Nitel.<br> <br> By Q2, 2009, Seacom and TEAMS will be offering wholesale connectivity on the east coast between US$500-1,000. The Glo One cable may start operating Q3, 2009 and will undoubtedly offer cheaper prices to a number of countries and two other pipeline projects are in the wings. Once they are in place, there can few further excuses for not offering significantly cheaper consumer broadband price at or below the price point Adetonah-Donhouede of OTI Telecom suggests.<br> <br> If you need to know more about African broadband prices and retail broadband users, Balancing Act last month published:<br> <br> African Broadband, Triple Play and Converged Markets<br> For a detailed contents: <a href="http://lists.balancingact-africa.com/t/2188/237672/424/0/"><font color="#0016e7" style="color: #0016e7"><u>http://www.balancingact-africa.com/bbtriple.html</u></font></a><br> Cost: African price (GBP250/US$500); Rest of the world (GBP400/US$800); and Universities and NGOs (GBP125/US$250)</font></p><div><br></div><div>nb: sorry for crossposting</div><br><div> <span class="Apple-style-span" style="border-collapse: separate; border-spacing: 0px 0px; color: rgb(0, 0, 0); font-family: Helvetica; font-size: 12px; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; text-align: auto; -khtml-text-decorations-in-effect: none; text-indent: 0px; -apple-text-size-adjust: auto; text-transform: none; orphans: 2; white-space: normal; widows: 2; word-spacing: 0px; "><div>Eric M.K Osiakwan</div><div>ICT Integrator</div><div>Internet Research</div><div>www.internetresearch.com.gh</div><div><a href="mailto:emko@internetresearch.com.gh">emko@internetresearch.com.gh</a></div><div>42 Ring Road Central, Accra-North</div><div>Tel: +233.21.258800 ext 2031</div><div>Fax: +233.21.258811</div><div>Cell: +233.24.4386792</div><div><br class="khtml-block-placeholder"></div><br class="Apple-interchange-newline"></span> </div><br></body></html>