ADSL from a First Tier ISP Perspective

1
ADSL from a First Tier ISP Perspective

• Douglas Reed
• Managing Director

2
ADSL Market Summary - Past

• Telkom strategy
• Only announced channel model after launch
• To ensure that the product was exclusive to them
• Pricing model made it impossible for ISPs to
  offer a viable alternative
• Controlled the access to the cloud
• Charged for access to service their ADSL base
  with mail etc

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ADSL Market Summary - Past

• ISPs resold Telkoms product
• No one pushed the product
• ISPA negotiated the IP interconnect
• Absolute joke
• Separate ATM port
• R27,000 per 2 Mb/s line
• DataPro 1st major ISP to offer / market uncapped
  product.

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ADSL Market Summary - Present

• The threat of legal action has brought about a
  more equitable wholesale model
• Margin squeeze Case
• Usage based model
• 1 Mb/s now available
• ISPs allowed access to the cloud to manage their
  own product range

5
ADSL Market Summary - Present

• IP connection fees have dropped to R 22,085 / 2
  Mb/s
• Economies of scale 155 Mb/s equates to R
  5,111 per 2 Mb/s
• IS is becoming a Telco and providing a bit more
  competition
• There are approximately 100,000 ADSL lines
• Mainly 3 GB consumer products
• - 2000 Uncapped Solutions

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Estimated Market Share
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ADSL Market Summary - Future

• ADSL will become the de facto standard for all
  household and small business needs
• Internet access
• Telephones
• Multi Media
• New networks
• Initially wireless for last mile
• Not ideal
• Fixed IP addresses
• 2 Mb/s and eventually 3 Mb/s access

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ADSL Market Summary - Future Competition

• Estimated total size of the market 500,000
• Sourced from
• Mainly form the Dial Up base (-1,000,000)
• Diginet downgrades
• Complimentary to Corporate solutions

9
ADSL An ISPs perspective

• Costs
• IP Interconnect
• Support
• Sales Marketing Costs
• International Bandwidth the major componentof
  costs
• Dependent on SAT 3 and Satellite connectivity

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ADSL An ISPs perspective

• Pricing
• Economies of scale required
• Margins have improved to -18

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ADSL An ISPs perspective

• Problems highlighted by our experience with
  uncapped solutions
• 20 of the users use 80 of the bandwidth
• 20 of those users use 80 of the bandwidth
• Equates to 4 using 64 of the bandwidth

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ADSL An ISPs perspective

• Opportunities
• Huge growth curve
• It will fuel Internet applications
• Provide a platform for cheap voice over IP calls

13
DataPros ADSL Strategy

• Our Mission
• To offer the widest possible range of ADSL
  products and include 3rd party products where
  necessary
• Core Strategy
• Increase the average sale
• Usage based billing
• Improve the quality of the product

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What is our winning move?

• DataPros usage-based ADSL packages will be
  hugely beneficial as it
• Decreases our costs
• Increase our average sale
• Corporate and business ADSL has made a massive
  difference
• Usage based means we will have a natural increase
  as demand increases
• Focus on Business/Corporate ADSL market which
  is/has not been aggressively targeted.
• Continuously improve the quality of the product
• Increase our average sale

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What is our winning move?

• Usage Based Products
• Self Regulatory with Soft cap
• Shaped Unshaped
• Fixed IP Dynamic IP
• 512, 1024, 2048 Kb/s
• DataPro Minimum of 3 GB
• Atlantic R19 pm plus 10 cents per MB
• Plus standard 3 GB
• Uncapped Products
• Fixed IPs
• 512, 1024, 2048 Kb/s
• Satellite Int. Bandwidth

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Monthly Revenue Projections
17
ADSL Average Sale
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To Sum Up

• A huge opportunity for SA business
• Private ISPs will make a profit for the first
  time
• Prices will continue to decline
• The range will increase
• The end user experience will improve

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Any Questions

• Thank you for the time

Group at a glance