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Internet body disputes price announcements

By John Churu, Gaborone, Botswana

The Botswana internet Services Provider’s Association (BISPA) which is the only industry body in the country that looks after the collective interests of the internet community, has rejected the recent pronouncement by the government that there has been a price benefit to Internet Service Providers.

“We feel, however, compelled to respond to recent press announcements that there has been a price benefit to ISPs of 59% as a result of WACS capacity. We find these statements are factually incorrect and unfortunate in the way they created false expectations in the market,” said a BISPA statement.

According to the BISPA: “BTC announced a reduction in the wholesale price of bandwidth by up to 59%. Unfortunately none of the announced products has been reduced in price by this much. The majority ISPs who will be purchasing on a 3 year basis will, at best, make a saving of 30-46%.”

It added: “As BTC is aware, the wholesale price of is only one component of the cost of providing internet services, they should therefore have been sensitive to this fact and clearly identified that the percentage quoted do not translate into percentage discount on the retail prices.”

The organisation said a good example of a cost calculation must be factored in is the continued devaluation of the Botswana Pula. Since BTC passes the foreign exchange losses to ISPS every quarter, and since consumers do not expect to pay higher prices to absorb theses costs, price reductions such as these help in buffering this cost. “Therefore, understanding the above explanation, BISPA anticipates that the actual retail price reduction will be the 10% to 15% range.”

BISPA added that there has been no announcement of reduction in the wholesale ADSL bandwidth prices from BTC. The wholesale ADSL price is the price that BTC charges to ISPs who resell their ADSL service and therefore one would expect, since BTC’s input costs have been lowered, there should be some percentage discount which they would pass on to ISPs, which would then allow ISPs to reduce the prices on ADSL.

“ADSL subscriber should note, and as an example, on the lowest priced product, that the internet portions or their ISP charges only contributes perhaps 46% of their overall bill. 54% is actually what they pay directly to BTC and again, this price has not been reduced,” complained the local internet body.

Accordingly, the new pricing will only be available to ISPs who sign a new contract with terms that many ISPs find irresponsible to contract under. Even though BTC’s announcement stated that the changes would be effective from 1st of August 2012, their letter made it clear that pricing would not be available until at least several weeks later.

“Further delays in receiving these prices are also anticipated as each ISP and collectively as BISPA we try to negotiate the terms of the contract to be more in line with acceptable practice,” explained BISPA.    

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