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Where to next for ISPs?

April 19, 2010 • Opinion

Adrian Bush, MD Even Flow Distribution

The bandwidth price war in South Africa is affecting ISPs in relation to the lower cost of uncapped broadband packages they offer to consumers, which will ultimately affect their profit margins, according to voices in the industry.

South African Internet Service Providers (ISPs) are currently waging a price war in a bid to retain market share as a number of undersea cables come on-stream. Smaller ISPs are cutting their prices to below cost in order to compete with their larger counterparts, without considering the implications on their businesses. As a result, ISPs may experience a sudden decrease in profit margins. In order to keep these profits margin up, 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, such as coupling their data services with voice services.

“Broadband is becoming increasingly commoditised as bandwidth becomes cheaper and uncapped packages become the norm. This will force ISP’s to differentiate themselves with regards to service and value added products”, commented Managing Director of RSAWEB, Rob Gilmour.

The answer could be a Multi-Service Business Gateway (MSBG), 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.

Such a service, like Connecto, operates on both wireless and wire line networks and is suitable for SMEs with limited technical and financial resources to manage all processes at once. The solution provides full PBX functionality, connectivity to all types of phone extensions, LAN networking, WiFi connectivity, and high speed internet access, said Adrian Bush, Managing Director of Even Flow Distribution, a VoIP hardware distributor.

“For SMEs, a complete communications solution provides advanced IP technology with mobility, security and reliability, and by implementing IP technology, communication costs will be minimized”, he added.
In conclusion, the ISPs who can offer more services and support will benefit from the industry, by providing feasible, affordable and cost-efficient unified communications.

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