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Jennigay Coetzer – Business Day – 30 July 2009

Seacom’s open business model is already having an effect on the South African market in terms of the transparency of its wholesale bandwidth prices and the fact that operators and service providers alike can buy bandwidth directly. “The current wholesale prices are published on the Seacom website,” says Niel de Wet, CEO for BCS Group.

He says the fact that Seacom has continuously kept its word about its open business model has prevented any price fixing. Businesses can also see the current prices and work out for themselves if the benefit of lower bandwidth prices is being passed onto them by their service provider.

If the service provider is not adding any value to the bandwidth it is selling on to them, in the way of managed services, companies can decide if they would be better off buying direct. This whole philosophy of being open instead of monopolising the market is refreshing.

“The assumption Seacom has made is that prices have been kept artificially high in this country and that by bringing down prices this will stimulate demand,” says de Wet.  As a local provider of converged services, BCS formed a joint venture with UK based private equity funder IBS and signed a contract with Seacom early on for bulk bandwidth, linked to 20-year usage rights.

“We were one of the early adopters and therefore got a really good bulk wholesale price,” he says. The company will provide managed services on top of the raw bandwidth and pass on the price advantage to its customers.

“As a smaller player we have the flexibility to do this,” he says. The more service providers that adopt this attitude the more competitive the market will become, and the better the prices the more bandwidth consumers and businesses will use.

This in turn will create continuous downward pressure on prices. More affordable bandwidth will pave the way for new products and services and allow companies to interact with customers and business partners online, do more corporate research and participate in e-commerce and social networking.

The more this happens the more market intelligence will flow into the business community and this in turn will have a positive impact on the economy and allow SA to become more globally competitive. “SA is a leader in technology adoption as a whole, but is way behind with e-commerce, and increased bandwidth is the only thing that will change this,” he says.

Once SA becomes an e-commerce driven economy it will change the way companies do business. More bandwidth capacity will also allow companies to merge their voice and data networks and focus more on content and what to do with it instead of whether this or that broadband technology is faster.

“Users should be able to take high-speed access for granted,” he says. Greater bandwidth capacity will also open up opportunities for e-government and more widespread internet access in education. For example, it will make it more viable for companies to sponsor internet connectivity projects in rural communities and schools.

Companies like Vodacom and MTN are already reaping the benefits of sponsorships like this as a means of promoting their products in rural areas, says de Wet.

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