How much the price of internet connectivity can reduce in one year

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Unlimited Broadband AdvertA year ago, US $50 per month unlimited broadband was only offered by one internet provider, the state owned PowerTel. Many would argue doesn’t really ‘need’ to make money. It wasn’t  the best internet in town, largely because of congestion issues, but PowerTel afforded many small businesses and middle income earners an opportunity to have their own internet connection for the first time. The rest of the providers had prices north of $100 for any type broadband, forget unlimited.

Today, unlimited packages priced around US $50 are not as uncommon. ZOL introduced mid last year a $70 package connecting at 512kbps for the first gigabyte of usage and best effort thereafter. In July 2011, just a month after the ZOL price reduction, TelOne literally broke all rules with a $30 10GB package which, everyone that uses knows is not really limited to 10GBs. TelOne had re-established their monopoly on ADSL in preparation for this launch so they unsettled the ISPs quite a bit there.

All this while, another internet provider, Africom, was disrupting the market with an offering no other private company could match. The company has for more than a year now been giving away internet at $18 for the first gigabyte bundle and lets customers buy as many first 1GB bundles as they want. The competition says it’s unsustainable and that if continued, could threaten Africom’s viability. But the company seems to be soldiering on and one thing is certain, Africom’s been a major contributor to not only getting more people online through directly signing up customers but also through forcing the other ISPs to review their margins in a bid to remain competitive.

In November, a relatively new Internet Access Provider, Brodacom (a Spiritage Business company that was called Valley Technologies before they launched the consumer services commercially) introduced its own $50 unlimited data package that connects at 256kbps. As the year came to a close in December, YoAfrica, one of Zimbabwe’s largest ISPs, followed with the launch of a $50 256kbps unlimited data internet option.

The price per megabyte of mobile broadband services from the country’s GSM operators (Econet, TelOne and Telecel) also reduced over the year, albeit not at the same rate. But this too increased pressure on the ISPs to review downwards. Mobile phone internet applications are not as bandwidth hungry as their desktop counterparts and, even at a higher price per megabyte, the internet works out cheaper to the user on mobile. The ‘desktop internet’ providers had to respond to this.

Another cause has been the increased international bandwidth coming into Zimbabwe. A total of 4 providers established direct access to fibre connections at Zimbabwe’s borders last year and collectively they account for over 3 Gbps lit fibre bandwidth capacity. This has given local internet providers more options for wholesale internet and the competition has helped push the price down.

In just a year, a huge chunk of the price of connectivity has disappeared. The trend is clear. Small business and a growing middle class increasingly see internet as a need and are going out to shop for it. The competition is stiff. Smaller operators are getting squeezed and as a result some consolidation has also started to take place. At the beginning of 2011 ZOL and YoAfrica (the two biggest ISPs then) created a strategic alliance one of whose objectives was to enjoy bulk discounts from wholesalers. At the beginning of this year ZOL sold to global fibre and satellite player, Liquid Telecom.

Prices are likely to continue dropping in 2012 as internet penetration grows. It’s not farfetched at all to see an even steeper drop in 2012 than Zimbabwe registered in 2011. if not an outright drop, the definitely some creative new packages for low income earners previously excluded groups of people

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  • Max Soutter

    Yes, It’s awesome to see these prices come down and so many more people discovering the internet. What I’m waiting for is the day when businesses finally start to realize that there’s so much more they can do to take advantage of all this than simply set up a website. Alas, one step at a time!

  • Andrew Mujaranji

    Well for me currently nothing beats the ADSL packages offered by telone for low cost home or office broadband, although if one intends to do some large file downloads then do not go for the basic package becoz you will be downloading at around 202 kbp/s = 25KBp/s which is not much to talk about however the good thing is the webpage loading speed is excellent, skype is doable and their uptime is not bad at all. Telone should move with the times and forget about traditional analogue lines and focus more on capitalizing on the broadband solutions they have to offer and even incorporate VOIP solutions for their ADSL clients considering the monopoly that they enjoy on this side of the market.

  • Tatenda Dzumbira

    good article but can u also cover the issue of network coverage..where I stay in bulawayo all these ISPs have no coverage except for econet and telecel

  • http://www.techzim.co.zw L.S.M. Kabweza

    Heard TelOne and NetOne both have services in Byo, no? ZOL, Yo Africa, Africom too have quite some services there. Unless ofcourse we’re not talking about the city and its surrounding suburbs.

  • Tatenda Dzumbira

    Soul Kabweza true that but for telone they say my residential area is not yet covered by their ADSL..Powertel and the otherISPs cover the city centre, the low density surburbs and a few other residential areas in the western areas…im having to rely on the mobile phone companies

  • http://www.techzim.co.zw L.S.M. Kabweza

    Tatenda Dzumbira Sorry to hear that. Will research on coverage and post something

  • Brilliant McMoo Nkomo

    Tatenda Dzumbira , I agree wit you. I use Powertel in Famona, Suburbs and right in town. Tried it ePumulaand eish…

  • Allen Farai Gazi

    I can see that u guys cant wait to see telone use its gsm lcns(The price per megabyte of mobile broadband services from the country’s GSM operators (Econet, TelOne and Telecel).

  • Chirau

    Zimbabwe’s Internet landscape will never be the same, 2011 was a good year connectivity wise, I think mobile Internet is a a mere compliment to the desktop/laptop experience and that mobile providers need not spearhead internet access to the masses but encourage internet usage via mobile. In all honesty the rcost of mobile internet is steep and it’s an oligopoly that needs to have it’s price structure shaken up not so much that the networks become congested but to maintain a quality reliable internet experience from a novice user to an outright expert user.

    I think this post is a good one in highlighting how far internet access has come and where it’s likely to be heading, what I’ve enjoyed reading is the unbiased view of how things stand right now as well as how comments have been expressed of the topic. Thank you techzim and L.S.M. Kabweza I hope 2012 brings more popularity to your site.

  • Fungai Machirori

    I got the link to this through Kubatana. Important story this as it will be important to see how competition and innovation will continue to influence Zimbabwens’ Internet consumption patterns.

    Thanks!

  • Drewchad

    ISPs are all dependant on the amount of coverage there is in your area, especially in Africa in which you find a large amount of areas not having any network what so ever