mudd@
26 Apr 2005, 08:11
TELKOM is likely to decrease the price of its asymmetric digital subscriber line (ADSL) offerings from August 1 this year, due to amended legislation which will force the company to submit its ADSL services to regulatory price controls. </FONT>
The news will be welcomed by Telkom's estimated 60 000 ADSL users and would-be users. However, campaigners for lower Telkom ADSL prices are doubtful that the change will help bring the high SA broadband rates anywhere near overseas rates.
The Independent Communications Authority of SA (Icasa) has amended its current price control legislation, which controls the cost of Telkom's services, to include its ADSL services, Telkom executive for regulatory and public policy Gabriel Celli said. The draft amended legislation is currently awaiting approval from Communications Minister Ivy Matsepe-Casaburri, but Telkom anticipates that it will take effect from August 1, Celli said.
The price control regulation stipulates that overall, Telkom cannot increase the prices of its services by more than the inflation rate - less the productivity index, which should be determined in June, Celli said.
The ASDL price decrease will thus depend on the productivity index. The charges may drop further when the number of customers increases.
Telkom will not reveal its profit margins on ADSL services, Celli said.
A comparison by MyADSL moderator Gary Hart of 512k ADSL prices, excluding phone line rental, shows the following: Telkom SA charges R938 and imposes a 3GB cap, compared with UKOnline R111 (no cap), Tiscali UK R179 (30GB cap), BSNL India R246 (5GB), Bigpond Aus R286 (10GB) and Amnet Australia R303 (32GB).
But Celli said the price differences are not simply exploitation of consumers.
BT, for instance, has around two million ADSL clients.
However, "we can and we will reduce our ADSL prices", he said, reiterating what he told the hearing. "It is a growth area and it is in our own interest that [the user base] of ADSL expands."
Telkom was called to explain the relatively high cost of its ADSL offerings and uncompetitive behaviour over its provision of infrastructure needed for ADSL provision by other ISPs, as well as the contentious capping of some of these services, at a four-day hearing by Icasa that ended on Monday.
Individual users and MWeb, MTN Network Solutions, Internet Solutions and Internet Society and MyADSL aired their grievances and questioned Telkom in a two-hour session at the final sitting.
Rudolph Muller, the founder of MyADSL, said that although it will be great news if Telkom's ADSL prices dropped, they will need to be reduced by at least 70% to make ADSL affordable in South Africa. To make this possible, Telkom needs to drop its charges for line rental, which is not charged in connection with ADSL services overseas.
He said Telkom does not want to reduce its ADSL prices because at present the company is pocketing substantial revenue from its other Internet provision services such as Diginet, a form of Internet connectivity that costs in the thousands each month, and dial-up Internet connectivity, which allows the company to charge the cost of local calls per minute connected.
The second major issue discussed at the hearings, the three gigabyte (3GB) capping of some of Telkom's ADSL services, was presented as an issue because the majority of the participants are people who provide an ADSL-related business service, Celli said.
Yet services that have the 3GB cap are intended for the use of small business and residential users, he said.
"The cap is not an issue for the end user - but it is for people making money out of ADSL," he said. Some users and businesses use an enormous amount of bandwidth to download vast amounts of data and for peer-to-peer file sharing, causing the service to slow considerably, which means that all users suffer, he said.
Telkom has other products that are more relevant for the latter purpose but he conceded that they are more expensive. IP Connect, a product designed specifically for ISP providers such as IS and MWeb, costs R27 000 a month.
Telkom was also challenged for uncompetitive behaviour with regard to the cost of infrastructure for ADSL services provided by other ISPs. MTN Network Solutions chief executive officer Mike Brierley said Internet service providers are unable to compete fairly with Telkom in the broadband market. Telkom was "unable to give credible answers" to many of the questions raised at the hearings, said Richard Heath, MWeb's legal representative. "The proof of the pudding is what regulatory measures [Icasa] puts in place to curb the anti-competitive conduct [that Telkom] has been engaging in, in relation to ADSL," he said.
Icasa's panel is to deliberate the written and oral submissions on the issue and will publish its findings and conclusion, following the Section 27 inquiry. Based on this, Icasa will decide how to take the process forward, said Dianne Ngoasheng, senior manager for Icasa's consumer department.
The news will be welcomed by Telkom's estimated 60 000 ADSL users and would-be users. However, campaigners for lower Telkom ADSL prices are doubtful that the change will help bring the high SA broadband rates anywhere near overseas rates.
The Independent Communications Authority of SA (Icasa) has amended its current price control legislation, which controls the cost of Telkom's services, to include its ADSL services, Telkom executive for regulatory and public policy Gabriel Celli said. The draft amended legislation is currently awaiting approval from Communications Minister Ivy Matsepe-Casaburri, but Telkom anticipates that it will take effect from August 1, Celli said.
The price control regulation stipulates that overall, Telkom cannot increase the prices of its services by more than the inflation rate - less the productivity index, which should be determined in June, Celli said.
The ASDL price decrease will thus depend on the productivity index. The charges may drop further when the number of customers increases.
Telkom will not reveal its profit margins on ADSL services, Celli said.
A comparison by MyADSL moderator Gary Hart of 512k ADSL prices, excluding phone line rental, shows the following: Telkom SA charges R938 and imposes a 3GB cap, compared with UKOnline R111 (no cap), Tiscali UK R179 (30GB cap), BSNL India R246 (5GB), Bigpond Aus R286 (10GB) and Amnet Australia R303 (32GB).
But Celli said the price differences are not simply exploitation of consumers.
BT, for instance, has around two million ADSL clients.
However, "we can and we will reduce our ADSL prices", he said, reiterating what he told the hearing. "It is a growth area and it is in our own interest that [the user base] of ADSL expands."
Telkom was called to explain the relatively high cost of its ADSL offerings and uncompetitive behaviour over its provision of infrastructure needed for ADSL provision by other ISPs, as well as the contentious capping of some of these services, at a four-day hearing by Icasa that ended on Monday.
Individual users and MWeb, MTN Network Solutions, Internet Solutions and Internet Society and MyADSL aired their grievances and questioned Telkom in a two-hour session at the final sitting.
Rudolph Muller, the founder of MyADSL, said that although it will be great news if Telkom's ADSL prices dropped, they will need to be reduced by at least 70% to make ADSL affordable in South Africa. To make this possible, Telkom needs to drop its charges for line rental, which is not charged in connection with ADSL services overseas.
He said Telkom does not want to reduce its ADSL prices because at present the company is pocketing substantial revenue from its other Internet provision services such as Diginet, a form of Internet connectivity that costs in the thousands each month, and dial-up Internet connectivity, which allows the company to charge the cost of local calls per minute connected.
The second major issue discussed at the hearings, the three gigabyte (3GB) capping of some of Telkom's ADSL services, was presented as an issue because the majority of the participants are people who provide an ADSL-related business service, Celli said.
Yet services that have the 3GB cap are intended for the use of small business and residential users, he said.
"The cap is not an issue for the end user - but it is for people making money out of ADSL," he said. Some users and businesses use an enormous amount of bandwidth to download vast amounts of data and for peer-to-peer file sharing, causing the service to slow considerably, which means that all users suffer, he said.
Telkom has other products that are more relevant for the latter purpose but he conceded that they are more expensive. IP Connect, a product designed specifically for ISP providers such as IS and MWeb, costs R27 000 a month.
Telkom was also challenged for uncompetitive behaviour with regard to the cost of infrastructure for ADSL services provided by other ISPs. MTN Network Solutions chief executive officer Mike Brierley said Internet service providers are unable to compete fairly with Telkom in the broadband market. Telkom was "unable to give credible answers" to many of the questions raised at the hearings, said Richard Heath, MWeb's legal representative. "The proof of the pudding is what regulatory measures [Icasa] puts in place to curb the anti-competitive conduct [that Telkom] has been engaging in, in relation to ADSL," he said.
Icasa's panel is to deliberate the written and oral submissions on the issue and will publish its findings and conclusion, following the Section 27 inquiry. Based on this, Icasa will decide how to take the process forward, said Dianne Ngoasheng, senior manager for Icasa's consumer department.