In layman terms, the contention ratio is the number of customers per Mb of speed. So when we say a 10 Mb link on a contention ratio of 10:1 (ten to one) we are saying that we are sharing 10 Mb with 10 customers. i.e. if you are the only one using the link at a specific time, then you will get 10 Mb. However if 4 others use it at exactly the same time, that means a total of 5 users using the same 10 Mb, we split the link to 2Mb each. So best case you will get 10 Mb, worst case you will get 1Mb. Hence the expression : “Up to 10 Mb”.
Raw data,i.e. 1:1 or un-contended data can cost between R600 per Mb to R1000 per Mb of speed. So technically a 10 Mb link can cost R10 000.00 per month. In order to sell a 10 Mb link for under R1000 uncapped – we can only sell it by sharing the cost between more participants and relying on the fact that there will be a natural up and down between users. If a link requires a max thruput guarantee at any time night or day, then only a 1:1 link can be sold and that requires the entire cost to be covered by the one customer. IN most cases, customers are content to share, and IN most cases the contentions rarely go down to 10:1. However, with the advent of video streaming, constant downloads to laptops and devices for updates, this is not always the case. On the bright side, the higher the volume of traffic the cheaper internet costs become.
2-3 Years ago we were paying over R4000 per Mb. Now its below R1000 so things are looking up.
Most low cost FTTH (Fiber to the Home) services are sold at Between 15:1 and 20:1. So 100 Mb links can actually run as low as 5Mb and usually average at about 20-30Mb during peak hours and 60Mb in non peak.
The only way to guarantee speed is to buy lower contention, and face higher costs.
The other way around this problem is to sell data based on a Hard CAP. So a 10 Mb Link is capable of 3TB of data a month. i.e. in a 1:1 scenario, if you were able to download permanently at full speed, its likely you will be able to download 3000GB in a month if fully uncapped. So a 1:1 link costing R10 000.00 per month can download 3000GB a month.
Either we sell full speed and R/GB or we sell uncapped data but shared cost per Mb.
As the RAW costs come down, so these ratios and costs improve.
Internet is not free. There is a cost to buy international links, there is a cost to maintain local links. Peoples salaries are paid for out of these fees. Just like any other business Internet Service provider have to Buy and Sell a product, pay salaries, buy infrastructure and make a living, if not at times a profit. For some reason it is perceived that internet Service Providers make money out of nothing. As a wholesaler, Telkom is one of the single most expensive enterprises to work through. Essentially they control the price of everything internet wise, and they are not efficient. They are hugely expensive and provide very poor service quality to us Wholesalers. They also compete with us direct;y when they feel they have a reason to get into our market. So on one hand they force us to pay high fees, and on the other they then complete with us at retail level with rates lower than they supply us. And we have no choice other than to build and pay for our own infrastructure. In every other modern country in the world, the primary provider provides a great fast and cheap wholesale service and do not compete in the marketplace. Even as we speak, Telkom makes use of Taxpayer funds and bailouts to compete with the cellular market and 8ta. Why does Telkom still have the most expensive fixed line service in the world, yet it chooses to compete with cheap prices on the cellular market, to the point of making massive losses.