Internet costs to go down-BOFiNet
Boitshepo Majube | Friday February 14, 2014 15:00
This week, the new state-owned entity revealed that it has signed two new 10-year long contracts with backhaul suppliers, or networks that communicate with the global internet. This will be paid for at wholesale commercial access rates. BOFINET is the wholesale provider of telecommunications distributing to industry retailers and does not sell directly to end-users.
In separation of assets between BOFINET and Botswana Telecommunications Corporation (BTC), backhaul suppliers remained with BOFINET. Now with BOFINET settling from and managing the transition from BTC, most contracts of backhaul suppliers are under negotiations, with some having been finalised.
On Tuesday, BOFINET Strategy and Business Development Manager, Ludo Mogegeh conceded that bandwidth (internet) prices have been comparatively high in Botswana, compared to other countries in the region.
“As we negotiate new contracts with backhaul suppliers, we also negotiate for better terms with an aim of reducing bandwidth costs,” she said at a BOFINET stakeholder breakfast seminar.
Mogegeh said in a move to manage the costs, BOFINET would bring down the wholesale prices, with the expectation that retail organisations in the market will pass reduced costs to the end user (customers). Mogegeh said cost reduction would take place “in the near future,” without giving a specific timeline. On who will reduce the prices in the market so as to benefit end users, Mogegeh stated market forces would dictate the terms; hence Botswana Communications Regulatory Authority (BOCRA) is the overseer of pricing and should help in pricing.
BOFINET accepted that high price of connectivity in the market limit take-up of bandwidth services. At the seminar, BOFINET retailers said they would pass on the reductions to customers, should wholesale prices come down.
“We don’t just unilaterally set our prices; BOCRA has to give the go ahead for our prices before we charge them to our customers,” said a stakeholder.
“Competitors usually take advantage of this reduction to lure customers, so market forces would also force one to reduce prices.” In an interview with BusinessWeek, Botswana Internet Service Providers Association (BISP) Chairman Semere Tekie said bandwidth prices had been in steady decline due to stiff competition in the market. “Prices have been coming down and bandwidth is increasing,” he said. Tekie however explained that it is not easy to reduce prices by retailers, as they would need to add more customers in order to maintain their margins in a saturated market. Meanwhile BOFINET Chief Executive Officer Mabua Mabua stated that there is tremendous network improvement ongoing. “We are undertaking major upgrades aimed at offering resilience in the network,” he said, adding that they are building points of presence around the world.