Monday, January 24, 2022

ISP warning dampens euphoria ahead of bandwidth rate cuts

Local internet service providers have warned that recent announcements of internet price reductions by Botswana Fibre Networks (BoFINET) chief executive officer Mabua Mabua will not immediately translate into price reductions. In an interview with Sunday Standard, Botswana Confederation of Commerce Industry and Manpower (BOCCIM) chairman for the ICT sector Neo Nwako said while changes are inevitable, they will neither be in the near future nor in the same magnitude as the price cuts announced by Mabua. Nwako said ISP’s first have to consider the costs they incur to bring internet services to the people and then apportion a commensurate rate cut.

Mabua recently announced that bandwidth charges will be slashed by up to 40 percent and BoFINET’s commitment to ensuring that Botswana’s tariffs remain competitive in the region. He said the rate cut will lower bandwidth prices by 40-70 percent from last year’s prices. He also announced infrastructure developments that BoFINET has embarked upon, including expansion of the 6000km long national fibre backbone by another 1000km and introduction of fibre in routes like Sekoma-Tsabong, Sehithwa-Mohembo and Maun-Ngoma-Kasane.

“More fibre will also be rolled out to businesses in Gaborone, Francistown, Kasane, and Maun and later to all major urban and sub-urban areas to enhance broadband connectivity,” said Mabua.
He expressed hope that the rate cut will be of immense benefit to the end user by catalyzing price reduction as well as increasing competition and service delivery. When commenting on the matter, Nwako said changes will happen, but not in the near future or in the same magnitude as the price cuts announced by BoFINET. He explained that BoFINET, as wholesalers, do not interact directly with the end users.

“It is the licensed ISP who has to pass the benefit to the end user. But we must understand that they also incur huge costs to deliver internet to the customer. Therefore it doesn’t follow that if BoFINET slashes prices by 40percent then the same price cuts will be extended to the customers,” he said.

He however admitted that there will be adjustments which will also be influenced by competition and market forces.

“While impact will not be felt immediately after the announcement, significant changes in price and quality of service should be expected,” he said.

Nwako also agreed that bandwidth prices in Botswana are generally higher than in the region, despite massive investments in ESSAy and WACS undersea cables.

“It is true that comparatively prices in Botswana are much higher than in other countries. I agree that cost and speed should have improved with the launch of our undersea cables,” he said.

He added that the general expectation was that with the undersea cables in place prices would go down, speed would be increased and user experience would be rejuvenated. While he admits that these changes have not happened as fast as anticipated, Nwako said the changes are nevertheless inevitable. He said the business world is evolving very fast and nowadays internet is no longer a luxury but an integral function of business.

He welcomed the establishment of BoFINET saying it will level the playing field and allow ISP’s to compete on a more robust and accommodative scale. Nwako challenged government to assist the ICT industry with some form of subsidies. He said ISP’s spend huge amounts of money setting up infrastructure that would eventually enable them to provide end users with quality service. He said the costs of setting up such infrastructure is prohibitively high and called on government to provide some kind of subsidy to assist ISP’s to roll out connectivity to the people.

He added that local ISP’s have not been able to provide business with the optimum service because of cost issues and unfair access to infrastructure. In the past ISP’s have argued that they consider a number of input factors when setting prices, one of which is the BoFINET wholesale prices. While there is no set timelines within which ISP’s should have reduced their prices after BoFINEt’s announcement because they operate independently, Nwako said market forces and competition will eventually force them to extend the cost reduction benefit to the customer.

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