When you pay your Internet service provider R250 for a 4Mbps uncapped ADSL account, you may assume that a healthy portion of this money is profit. You would be mistaken.
South African ISPs work on thin ADSL margins, where the price of wholesale IP Connect (IPC) bandwidth is the biggest contributor to the overall cost of the service.
Other costs associated with providing an ADSL account include national and international bandwidth, marketing, support, administration, and network management.
When these costs are removed from the total retail price of a R250 uncapped ADSL service, the profit is low: just over R11.
The image below provides an overview of the costs associated with providing an uncapped ADSL product, with the details courtesy of a local ISP.
This article is republished from MyBroadband with permission.
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Eleven times a million equals lots.