Mobile data deals compared

Vodacom recently unveiled their best ever data deals. This is how it stacks up against MTN, Cell C and 8ta’s data promotions.

Vodacom has recently launched three new data deals – 1GB for R89, 2GB for R139 and 3GB for R189. These data bundles exclude a modem.

The new data deals are available on a 24-month contract, and includes ‘Night Owl’ data which gives another 1GB, 2GB or 3GB of data (depending on the package), to use between midnight and 5 am.

These new data bundles complement the company’s modem inclusive data packages at R99 for 1GB, R149 for 2GB and R199 for 3GB.

This raises the question of how Vodacom’s new modem-less data packages compare with similar contract promotions from 8ta, Cell C and MTN.

The following table provides an overview of some of the prominent data promotions from the four mobile operators.

Data deals under R100
Provider	Bonus	Data	Monthly cost
Cell C	–	500MB	R45
MTN	Includes modem	500MB	R69
Vodacom	1GB night owl data	1GB	R89
Cell C	–	2GB	R99
MTN	Includes modem	1GB	R99
R100 to R149
Vodacom	2GB night owl data	2GB	R139
MTN	Includes modem	2GB	R149
8ta (prepaid)	1GB night surfer data	2GB	R149
R150 to R199
Vodacom	3GB night owl data	3GB	R189
8ta	–	10GB	R199

Online support: Who sucks and who doesn’t

Rudolph Muller

February 23, 2012

14 Comments

We put Telkom, Vodacom, MTN, Cell C, Virgin Mobile and Neotel’s online support systems to the test

Telkom and Vodacom came out tops in a recent MyBroadband survey which set out to test the online support channels of South Africa’s largest telecoms operators.

MyBroadband sent all the operators a simple request for information on slow broadband speeds, asking them for feedback on how to address the issue. The operators were asked to respond via e-mail (and hence not telephonically).

Here are the results.

Telkom (support e-mail sent on 11:35 on 21 February 2012)
Telkom immediately responded with an automated e-mail message confirming receipt of the e-mail and providing me with a reference number.
At 12:14 (hence only 40 minutes after the initial e-mail was sent) Telkom officially responded to the e-mail and provided the details needed to resolve the issue.

Vodacom (web support form completed 11:23 on 21 February 2012)
Vodacom immediately replied with an automated e-mail with the message “We are looking into your query and one of our consultants will contact you within 24 hours”. The e-mail also contained a reference number.
At 14:57 (3 hours 29 minutes after the initial e-mail) Vodacom officially responded with all the details to solve the problem.

MTN (web support form completed 11:28 on 21 February 2012)
MTN’s online support system does not have an auto-response system, and the company also did not respond to the online support request by the time of publication.

Cell C (web support form completed 11:31 on 21 February 2012)
Cell C responded immediately via an automated e-mail saying “We have received your query. One of our support staff will contact you shortly if necessary.” This is however where it stopped and there was no feedback from Cell C by the time of publication.

Virgin Mobile (web support form completed 11:41 on 21 February 2012)
Virgin Mobile immediately responded via an automated system, saying “Thank you for contacting Virgin Mobile SA Technical Support Team. We are eager to assist you and will be calling you in the next 4 hours.”
There was unfortunately no feedback from Virgin Mobile within the promised 4 hours, and by the time of publication the company still had not responded to the online support request.

Neotel (website was down and therefore no online support was available)
During the time of testing the Neotel website was down. It was therefore not possible to test Neotel’s online support.

*Please note that MyBroadband only tracked e-mail responses (we asked specifically to be contacted via e-mail), and there may have been calls directed at the numbers provided in the emails.

Email support test
Company	Auto responder	Official response	Time to resolve issue
Telkom	Yes	Yes	40 minutes
Vodacom	Yes	Yes	3 hours 29 minutes
Cell C	Yes	No	Not solved
Virgin Mobile	Yes	No	Not solved
MTN	No	No	Not solved
Neotel	Website down	Website down	Website down

Inside Telkom’s broadband, TV plans | TechCentral

Telkom is involved in a multibillion-rand project to increase the throughput of fixed-line broadband to speeds of up to 40Mbit/s. The plans also include dramatically upping the speed of entry-level broadband services and introducing video-on-demand (VOD) products, possibly from international providers such as Hulu, Netflix and Nangu.

In addition, the company is planning a trial using superfast fibre-optic cables from selected telephone exchanges, with the pilot project expected to kick off as early as 15 January 2012. Details about the fibre project remain sketchy, however.

TechCentral is privy to documents that show Telkom plans to install devices called multi-service access nodes, or MSANs, in its telephone exchanges and street-level distribution cabinets and to introduce very high-speed digital subscriber line version 2 (VDSL2) technology, which will dramatically increase the speeds it can provide over its legacy copper access network.

VDSL2 is theoretically capable of offering download speeds of up to 250Mbit/s over short lengths of copper (up to 500m) and up 50Mbit/s for distances of up to 1km.

Telkom has invested millions of rand in recent years bringing fibre closer to its customers — in many areas, it has built fibre to its street-level distribution cabinets — to offer faster access speeds to consumers over its copper network.

In terms of the plan, which is known as the NGNEC project, Telkom is proposing that by 2013/2014, the slowest access speed offered on its access network will be 1Mbit/s (from 384kbit/s now). By 2015/2016, this will have been increased to between 2Mbit/s and 4Mbit/s with speeds at the high end of 20Mbit/s and 40Mbit/s in selected areas.

Steven White

Under the NGNEC pilot, Telkom will offer three access speeds to consumers: 10Mbit/s, 20Mbit/s and 40Mbit/s from selected exchanges (affecting about 2% of its subscriber base), providing both capped and uncapped products. It also plans to trial voice-over-broadband products in both the consumer and business markets.

The documents show that Telkom is debating internally about whether or not to offer access to the NGNEC pilot project to rivals. It is weighing the regulatory impact of not doing so, including what bearing this might have on plans by the Independent Communications Authority of SA to force it to provide competitors with access to its copper-cable infrastructure through a regulatory intervention known as local-loop unbundling and also how the Competition Commission would view such a move.

Telkom appears to be concerned that “wholesaling” access to the new network would delay the launch of the pilot project. It says not offering wholesale access to rivals during the pilot would “place pressure on competitors”. Also, not doing so would prevent delays as the company would have to wait for “wholesale partners’ fair operational readiness”. However, allowing wholesale access would “discourage” competitors from building competing networks and would be the “least risky option with regards to the regulatory and competition authorities”.

The documents show that by 2013, Telkom wants to offer both subscription and transactional VOD services, which could pit the company against pay-TV operator MultiChoice, owned by Naspers, which has similar plans. MultiChoice already offers a satellite-based transactional VOD service called BoxOffice and has said it plans to offer VOD over the Internet, too.

In an interview with TechCentral in September, Steven White, Telkom’s executive for converged business services, revealed that the company was at an “advanced stage” of discussions with a number of local and foreign content providers with a view to providing VOD over its copper-cable network. He said at the time that Telkom was not in discussions with Netflix. “We’d love to have Netflix, but SA is not on their radar screen right now,” he said.

It’s not clear whether Telkom has signed any content agreements yet, but the documents show it is investigating the possibility of seeking exclusive SA distribution agreements with one or more “over the top” content providers. — Duncan McLeod, TechCentral

Image: Peter Baker

Operators must up service game – Bain | TechCentral

Vittorio Massone

SA’s mobile operators must do more to up their game in customer service instead of simply trying to outdo each other on price, says Vitorrio Massone, managing partner in SA at management consulting firm Bain & Company.

In the past year, the operators have slashed their mobile data prices in the hope of attracting new customers as the market begins to reach maturity. But Massone believes they could be doing more to retain their existing customers by improving the service experience.

“What’s happened in the past year is they have kept competing more on price than anything else, especially the new entrants,” Massone says.

The entry of Telkom’s mobile arm, 8ta, into the market, coupled with a reinvigorated Cell C, has shaken up the market in the past year, with operators undercutting one another on price, especially in broadband.

“The operators have been focused on attracting the most number of new customers as fast as possible, but the game is now about retaining customers and selling them more services. This is a completely different game and requires a different way of competing.”

Now, rather than chasing new customers, SA’s operators must understand how to create “happy customers” who will promote their brands — Massone calls them “promoters” — and win over clients from rival networks. “Growth now needs to be based on loyalty economics.”

Massone says promoters help operators attract other customers through positive referrals and typically spend 20% more than other customers. Also, they’re much less likely to move to other networks. Companies need to understand what keeps these customers loyal and what creates “detractors” and improve their customer touch points to turn more subscribers into promoters.

“You need to understand what in those touch points can create a promoter and what can create a detractor,” he says. “There’s a need to focus on creating a consistent performance at the most important customer touch points. It’s a pervasive exercise and has to become something that is done at the CEO level, if not the board level, and must become part of the mission and strategy of the company.”

The challenge for operators, Massone says, is that customer-facing employees are often not sufficiently empowered or trained because they are too far from where power rests and where decisions are made.
“The key step is empowering these people,” he says. He suggests operators could call back customers within 24 hours of an interaction at a key touch point, asking them to score the quality of the interaction to create an objective measure of what’s happening in the company’s branches and call centres. Then, he says, offer to have the employee who dealt with the customer call them for further feedback.

“You empower the front end so these employees begin to understand the impact they have on clients,” Massone says. “From this feedback from clients, [employees] will learn enormously.”

He adds that it’s also important for operators to identify their best customers and focus extra attention on them. “If you are able to understand what clients want, and offer them a differentiated service, then you can prevent yourself from competing only on price.”

Customers will often look for the reassurance of the brand and the quality of support and service on offer and won’t always go for the cheapest option.

However, operators must also reduce their costs as competition intensifies and prices fall, Massone says.
Networks can define who and where their most important customers are and plan differentiated coverage that helps them to manage their capital expenditure better. Operators must also focus on extracting more productivity from their field staff as a way of improving efficiencies and reducing costs. — Duncan McLeod, TechCentral

Telkom gets aggressive with business mobile | TechCentral

Telkom has launched its first mobile offerings aimed at the business market and is taking the fight to its rivals with aggressive introductory offers on smartphones and tablets.

Telkom Business Mobile — the brand the company is using for its business-focused products — is offering tablets from Apple, Motorola and Research in Motion at aggressive prices on 24-month contracts.

The company is promising savings of about 20% compared to products offered by rival network operators.

For example, the company is offering Motorola’s Android-powered Xoom tablet for R340/month with 10GB of monthly data on Telkom’s own mobile network (plus 10GB for use late at night for R100/month more).
It’s also providing BlackBerry smartphones and PlayBook tablets on two contracts costing R410/month and R595/month, depending on the hardware taken.

It’s offering Apple’s iPad 2 tablet, too, though is offering a R6 000 rebate for use at iStore outlets as the US company does not allow the iPad to be sold on contract bundles. The offer allows consumers to buy any Apple product except the iPhone and includes 10GB of monthly data for R375/month on a 24-month contract. — Staff reporter, TechCentral

MTN uncapped broadband pricing compared « Broadband « MyBroadband Tech and IT News

Rudolph Muller

July 10, 2011

MTN recently slashed the pricing of their uncapped mobile broadband packages. This is how they stack up against competing offerings

Cell C stunned the market in September 2010 with their aggressively priced mobile broadband products, but consumers had to wait until April 2011 for Vodacom and MTN to respond.

What followed was a multitude of broadband specials which included Vodacom and MTN’s 2GB for R149 promotions, 8ta’s R199 for 10GB special, and Telkom’s data bonus to their ADSL ISP subscribers.

MTN has now added to the list of competitively priced broadband products by slashing the prices of its uncapped mobile broadband packages.

MTN last week announced that it reduced the pricing for its Broadband Uncapped Lite package from R749 to R299, and cut the price of the MTN Broadband Uncapped Profrom R1,999 to R899.

The two packages are subject to a fair usage policy of 3GB and 10GB respectively. Once the 3GB or 10GB fair use limit has been reached, the connection speed will be reduced to 128kbps for the user for the remainder of the month.

Pricing compared

MTN’s pricing compares favourably with non-promotional pricing for competing offerings in the market. If you include promotional offerings however, 8ta’s R199 for 10GB special blows the competition out of the water.

The table below provides a basic pricing comparison for some of the prominent mobile broadband packages and promotions available in South Africa.

2GB/3GB mobile data prices
Service	Data (GB)	After-hours data (GB)	Monthly Cost	Best Cost/MB	Basic Cost/MB
Vodacom 2GB + 2GB	2	2	R149	0.04	0.07
Cell C Contract Promotion	2	0	R149	0.07	0.07
MTN 2GB Promotion	2	0	R149	0.07	0.07
MTN 3GB Uncapped	3	40	R299	0.01*	0.10
Cell C Smartdata 3GB	3	0	R400	0.13	0.13
8ta 3.2GB	3.2	0	R500	0.15	0.15
Vodacom 3GB	3	0	R565	0.18	0.18

High end mobile data prices
Service	Data (GB)	After-hours data (GB)	Monthly Cost	Best Cost/MB	Basic Cost/MB
8ta Promotion	10	0	R199	0.02	0.02
8ta Promotion	10	10	R299	0.01	0.03
Cell C (Prepaid)	5	0	R250	0.05	0.05
Cell C (Contract)	5	0	R299	0.06	0.06
MTN 10GB Uncapped	10	40	R899	0.02*	0.09
Vodacom 10GB	10	0	R1,845	0.18	0.18

*We used the theoretical download maximum of 16 bytes per second over a 30 day period to calculate MTN’s lowest possible per-MB pricing.

Telkom giveth and Telkom taketh away | TechCentral

— Duncan McLeod, TechCentral

Telkom is cutting the line rental cost of its mid-tier, 1Mbit/s fixed-line broadband product by 11,3% to R289/month on 1 July, from R326/month previously. Broadband line rental for 384kbit/s and 4Mbit/s users remains unchanged, the company says.

At the same time, Telkom is hiking its basic line rental — which broadband users also have to pay — by 5% from 1 August. Telkom residential customers now have to fork out R139,97/month and business customers R191,84/month per line. This means that, apart from users on the 1Mbit/s service, fixed-line broadband subscribers will have to fork out slightly more for the service.

Telkom filed its annual tariff adjustment with the Independent Communications Authority of SA (Icasa), which must approve the proposed new tariffs before they can be implemented. Because they fall within what’s allowed, Icasa is expected to rubberstamp the changes.

Friday’s filing also shows that Telkom is passing on some, but by no means all, of the benefits of the 1 March reduction in wholesale mobile call termination rates — the fees mobile operators charge other players to carry calls onto their networks. The rate was reduced in peak times from R1,47/minute to R1,40; in off-peak, the rate has declined from R1,17 to R1,12/minute.

At the beginning of March, peak-time mobile termination rates for mobile calls fell from 89c/minute to 73c/minute, with off-peak rates coming down to 65c/minute from 77c/minute.

Telkom is reducing tariffs for all long-distance calls as well as standard-time call charges for local calls. It hasn’t specified by how much local call charges are being reduced by and a Telkom spokesman wasn’t immediately able to provide the quantum of the reduction. The local, per-minute call charge during off-peak times remains unchanged.

In broadband, the company is not changing the monthly subscription fees for its Do Broadband bundles. From 1 September, customers who subscribe to Do Broadband 2 and 3 bundles will receive an additional 1GB of bandwidth for the same price. It’s also introducing a new bundle costing R395/month and offering a 1Mbit/s line and 5GB of monthly data.

In the case of its Closer calling plans, Closer 1 will increase from R150 to R158/month and Closer 2 from R170 to R177/month. Closer 3 remains unchanged at R333.

Telkom’s 8.ta blunder « Business « MyBroadband Tech and IT News

A costly missed opportunity means its numbers can’t begin to compare with the gorillas…

In its first (fiscal) year of operation, Telkom’s mobile business 8.ta, burned through over R1bn. Capital expenditure since the unit’s inception – it had to build a network – totals R1.68bn. That’s for a network comprising 970 base stations. There are still around 1 000 to come. Selling, general and administrative (so-called “SGA”) expenses were R769m.

Employee expenses for the 2011 financial year were R140m. This may seem low when looking at the group’s high-level numbers. Staff costs in the rest of the South African business were R7.977bn for 22 884 employees, an average of R348 584 per employee per year. The mobile business’s costs average out at R614 035 per employee per year.

Who said start-ups were cheap?

We are told by Telkom that there has been “positive market response” to 8.ta, and that “costs are in line with budget”. But, EBITDA breakeven has been pushed out to FY2014, with the mobile business becoming cash-flow positive in FY2015. Nothing too alarming, save for the market response perhaps not being as “positive” as the business case would’ve demanded.

Telkom further says that 8.ta is committed to a “target prepaid market”. One would assume that it’s not hurtling along, signing up customers at any cost. Yet, ARPU (average revenue per user), a useful measure to track performance in various customer segments for its active prepaid subscribers is R15.86 per month. This is on a base of 440 775 customers.

Compare this to MTN’s (mature) prepaid subscriber base of 15.763m, where ARPU is R101 per month as of March 31 2011. The ARPU of Vodacom’s 21.409m prepaid customers is R85 per month. As dominant players are forced to add subscribers in the lower LSM groups, they end up with lower and lower average ARPU. Even in Tanzania, where it’s involved in a vicious price war, Vodacom’s ARPU is R20. Which segment of the prepaid market is 8.ta focused on?

The contract side is equally problematic: ARPU of R238.57 on just 32 829 customers in the case of 8.ta, while Vodacom’s 5m-plus post-paid customers spend an average of R387 per month, and MTN’s 3.4m R299.

With products spanning anything from entry-level offers with high (and unsustainable) rewards, to (extremely) high-end iPad data-only services, one gets the feeling 8.ta is looking to plug gaps in the market, rather than define segments. It’s being forced to fight on the fringes.

The holy grail is in converged services.

The answer has been staring Telkom in the face. Over the past five years’ worth of financial results presentations, without fail, there is a presentation slide with the words “fixed-mobile substitution” (customers are running away to mobile), and another with the words “converged services” (or “integrated fixed mobile bundle”) as a solution.

How difficult is it to bundle a mobile contract, a home phone line and some sort of data service on one bill with one number? When you’re at home, the network routes your calls to your “home/fixed” phone. When you’re mobile, to your cellphone. Answer: not that difficult. Telkom has been trialling this internally for months (probably years).

This is its unique selling proposition. No one else can deliver on this. Not Vodacom. Not MTN. Not Cell C. And not Neotel. Telkom told us, many times before in those presentation slides, that it is “uniquely positioned”.

On the consumer side, it has the customer base to convert: there are 4m fixed lines in the country, of which 751 625 are also ADSL subscribers. In the enterprise space its arguably even stronger.

Sources inside Telkom have confirmed that these converged products are late to market, at least according to its mobile unit’s business case. These were supposed to have been taken to market shortly after launch. Right now 8.ta is still toying around with offering free YouTube streaming to BlackBerry subscribers.

The other official line is that “best practice” around the world is to launch consumer products first and then the business ones. How many of these “others” Telkom looked at globally launched a mobile operator from scratch in 2010? You’re late to market. You’re dominant in the enterprise space. Why still tackle the fierce consumer space first?

8.ta (the consumer brand) launched nearly nine months ago. Towards the end of last year, another well-placed source suggested that Telkom would take a mobile/converged offering to enterprises under the “Telkom Business” brand in early 2011. The official line is that this will only happen in the second half of the calendar year. Another six months.

There are hints as to why there have been delays in Telkom’s commentary and presentation to analysts. It says “complex IT projects [are] taking longer than expected, delaying the launch of new products”. Imagine integrating a billing system from this side of the year 2000 with its legacy one.

Hints of converged products have reached the market. The latest Telkom Simple bundle comes with a free 3G modem. Telkom Mix, which launches on June 27, bundles a BlackBerry, landline calls and mobile airtime for R399 per month (over 24 months). Getting there.

Converged (fixed-mobile) products go hand in hand with its subscription packages (like Telkom Closer). But, by its own admission, the company needs to be “careful” of both the rate and number of customers it migrates to these packages so as “not to decimate revenue”.

It’s caught between defending its traditional voice revenues, and growing its subscription and bundled packages. This almost puts it in a position of not wanting to develop products that are too attractive to certain segments of its traditional fixed line customer base, so that this revenue doesn’t evaporate. This has been and will continue to be a conundrum Telkom has to face.

The 8.ta numbers, had converged products been in the market, would’ve looked far better than those published Monday.

In the same way UK consumers get one bill for their cable television, broadband and voice access, surely that future (or at least a version of that) can’t be too far off?

Why can’t Telkom offer a bundled broadband offer with a sizeable ADSL package and a decent 3G product with one bill? Why not 10GB of data on ADSL and another 5GB on 3G?

Why can’t Telkom offer a blended package of 1 000 minutes per month on either your home or mobile phone on one bill, at one price?

Why can’t customers buy a converged phone service, with a BlackBerry (for argument’s sake) bundled in for e-mail?

And while we’re at it, why can’t customers pay for ADSL line rental without having to have a fixed line too?

*Hilton Tarrant contributes to “Broadband”, a column on Moneyweb covering the ICT sector in South Africa. Converged services are really not that difficult to take to market!

Telkom’s 8ta to offer per-second billing

— Staff reporter, TechCentral

Telkom’s new mobile operator, 8ta, will introduce per-second billing for prepaid customers from 15 May. Until now, calls were billed per-minute.

“All new prepaid customers will be billed on a per-second structure,” Telkom says.

Calls will be charged at R2,75/minute in peak times and R1,12/minute off-peak, with per-second billing applying from the moment a call is initiated. The rates apply for calls to 8ta customers and users of other mobile networks.

In comparison, MTN charges R2,89/minute, billed per second, to all networks during peak times; MTN’s off-peak rate is R1,19/minute. Vodacom’s basic prepaid charge is R2,58/minute for on-network peak-time calls and R1,12 off-peak. Calls to other networks cost R2,75/minute peak and R1,30 off-peak.

Unlike rival networks, 8ta also provides “free” outgoing minutes to customers receiving incoming calls.

Calls from 8ta to Telkom landline numbers on the new per-second billing plan will cost 65c/minute, also billed per second. This is significantly cheaper than the rates charges by MTN and Vodacom.

8ta prepaid customers on per-minute billing options can switch to the per-second plan. They can also opt for a R1,50/minute all-day rate, billed per minute.

Telkom, which was criticised for charging per-minute instead of per-second rates when it launched 8ta in October last year, is expected to provide details of how well the new mobile network has performed when it publishes its annual financial results next month.

Telkom and Neotel do battle over local loop

By Candice Jones, TechCentral

Neotel has filed a complaint against Telkom at Icasa

Neotel has fired the first salvo in what could quickly become a ferocious battle over access to Telkom’s copper cable network. TechCentral can reveal exclusively that Neotel has filed a complaint with the Independent Communications Authority of SA (Icasa) against its rival, asking the authority to give it access to the fixed-line incumbent’s local loop.

In a submission to Icasa, dated 23 March, and which includes copies of full correspondence between the two operators, Neotel has set out the reasons it believes it should be given immediate access to Telkom’s “last-mile” infrastructure of copper cables into businesses and residential homes.

A lot is riding on the outcome of Neotel’s submission because it could mean the difference between local-loop unbundling taking place in 2011 and a lengthy, drawn-out process that could take years.

The telecommunications industry has been awaiting Neotel’s complaint to Icasa with bated breath as it represents a litmus test for using facilities-leasing regulations as a way of achieving local-loop unbundling. It’s believed Icasa will use the complaint to force unbundling to happen in the short term, instead of having first to go through a process of developing detailed regulations to manage the process.

Icasa dropped a bombshell on the industry last year when it said Telkom’s copper infrastructure represented an “essential facility”, meaning its competitors could request access, using regulations that were published in 2010.

Essential facilities include any telecoms infrastructure that is required to provide services to customers. Undersea cables and the local loop are specifically mentioned in the Electronic Communications Act, which governs the sector.

In many markets, incumbent operators like Telkom have used their control of this infrastructure to squeeze out competition by charging high prices for access.

Icasa’s facilities-leasing regulations are meant to prevent abuse by dominant players.

Communications minister Roy Padayachie wants the local loop unbundled by November, and if Neotel’s complaint is upheld by Icasa, the process can begin in earnest.

Neotel was always the most likely candidate to test Icasa’s facilities-leasing theory, and it first made a request to Telkom to access the local loop in November 2010.

Telkom's Andrew Barendse has rejected Neotel's request

According to Neotel’s complaint, it has requested that Telkom give it access to two telephone exchanges, one in Benmore Gardens in Sandton and the other in Rosebank, Johannesburg. Within these exchanges, Neotel has requested that certain aspects of the local loop be made available to it, including termination equipment, the main and handover distribution frames, and tie circuits.

It has also requested that Telkom make space in the exchanges for Neotel’s own equipment racks, either in cages or in a separate room. It wants to connect to its own fibre infrastructure located outside the exchanges.

Neotel made the request in terms of processes stipulated in the facilities-leasing regulations.

Telkom, however, appears to be steeling itself for a fight. It has clearly stated that it does not agree that facilities leasing is a means for other companies to gain access to the local loop and has declined Neotel’s request.

In a letter signed by Telkom’s wholesale account manager, Johan Botha, the operator argues that local-loop unbundling is “still enjoying the attention of the regulator, but is some way from being finalised”. He adds that Neotel is acting prematurely in requesting access to the infrastructure.

Neotel made a second and third request to Telkom in December and January, pointing out that the facilities-leasing regulations cover the local loop and that fuller local-loop unbundling regulations are not required.

However, Telkom isn’t relenting. In correspondence to Neotel, it insists that the access its rival is requesting falls under local-loop unbundling, not under facilities leasing.

“The entire purported request for the lease of copper last-mile facilities is a frivolous attempt on the part of Neotel to impress upon Telkom a convoluted interpretation of the facilities-leasing regulations in a manner that gives credence to the erroneous belief that facilities-leasing regulations contemplate the instigation of a regulatory process culminating in the unbundling of the local loop.”

Telkom has long argued with Icasa about the classification of the local loop as an essential facility and pushed the same argument in its responses to Neotel. Its understanding of the legal definition of an essential facility is a facility that “cannot feasibly be substituted”. However, Telkom maintains that the mobile operators have created a substitute, which it calls the “wireless local loop”.

The operator has also slammed Neotel for “persisting in formulating speculative requests which are clearly beyond the contemplation of the applicable regulatory dispensation”.

Icasa has previously indicated to TechCentral that it will apply its mind to Telkom’s argument that the local loop is not an essential telecoms facility.

In a last ditch attempt to get Telkom to reconsider, Neotel sent a letter to Telkom’s group executive for regulatory affairs, Andrew Barendse, on 2 March. “Having exhausted all available means to resolve this request amicably, Neotel offers Telkom one final opportunity to respond favourably to our facilities lease request within the next five working days, failing which Neotel will have no alternative but to refer the matter to the regulator.”

Barendse declined the request two days later, prompting Neotel to file its complaint late last month. An Icasa spokesman was not immediately available for comment. However, it is likely the authority’s complaints and compliance committee will hear the case.

What unbundling means for service providers and consumers

Drive around SA city streets and you’ll soon notice Telkom’s green and blue distribution cabinets, like the one pictured above near TechCentral’s offices in Johannesburg, writes Candice Jones.

Soon distribution cabinets of various colours could be popping up next to Telkom’s street boxes, thanks to local-loop unbundling. And their arrival could herald a steep reduction in fixed-line broadband costs for consumers and businesses.

Telkom’s distribution boxes, many of which now have fibre-optic cables running into them, are often the place where the company provides consumers with access to its digital subscriber lines, the broadband links over the copper cables that run into people’s homes.

The Internet market has long been anxious to see the local loop, the so-called last mile of copper cables that connects consumers and small businesses to Telkom’s network, unbundled.

This dream could be realised before the year is over, and rival operators and Internet service providers have to start thinking now about how they will gain access to this network to provide fixed-line broadband directly to consumers.

Worldwide, local-loop unbundling has boosted competition among Internet providers, driving down prices and paving the way for new services.

Greg Massel, CEO of alternative operator Switch Telecom, says one of the requirements is that Telkom allows competitors to “co-locate” telecommunications equipment in Telkom’s exchanges – and, closer to homes, in distribution cabinets — so they can gain direct access and provide onward connectivity over their own backhaul links.

Getting the equipment into these facilities is a big exercise, even if Internet service providers only want to serve niche areas rather than offering broadband services nationally.

“Costs will vary depending on the coverage area, the equipment used and the capacity deployed, but I think it’s safe to say the kind of investment required will limit the direct benefits of unbundling to larger service providers,” says Massel.

But he says smaller service providers will have more options when looking for alternative wholesale suppliers, which may help drive down prices.

For many local Internet providers, backhaul will be a key consideration. Web Africa CEO Matthew Tagg says getting fibre to Telkom’s facilities will be the biggest factor influencing how successful unbundling will be.

However, Tagg says alternative fibre network suppliers like Dark Fibre Africa have begun providing backhaul links, which should help keep prices down.

The process becomes complicated in areas where Telkom doesn’t provide broadband access over copper from its traditional telephone exchanges, but rather from the distribution cabinets along city streets.

In recent years, Telkom has actively laid fibre closer to people’s homes, running into distribution cabinets, and shortening the distance between consumers and high-speed fibre backhaul. Shortening the local loop in this way has allowed Telkom to offer higher-speed broadband, up to 10Mbit/s in some areas that are served by Metro Ethernet technology.

But it also means Internet service providers have to start thinking about deploying their equipment in those boxes, or even building their own, says Tagg. The problem is there isn’t much space in Telkom’s cabinets, so alternative providers will have to consider building their own cabinets nearby.

There have been suggestions that Telkom could offer what is called “bit-stream unbundling”, where it provides all the equipment other service providers need to connect customers. In this scenario, service providers won’t need to provide their own facilities in the exchanges or build their own distribution cabinets.

“The industry should have had bit-stream access from when Telkom first introduced digital subscriber lines,” says Tagg.

He says to propose bit-stream access as an alternative to full unbundling is “a big cop-out”. “It will do very little to drive competition or produce real change for customers.”

Tagg says full unbundling has been “very successful in Commonwealth countries such as Australia and New Zealand”. Increases in speeds and broadband quality in those countries can be directly attributed to the increase in competition brought on by unbundling.

“We are already playing catch-up with countries like Australia. By my estimation we about seven or eight years behind,” says Tagg.

Though smaller operators are looking forward to unbundling, larger players are wary of committing themselves to exactly what will be needed to take advantage of the process.

MWeb CEO Rudi Jansen says what will be required will depend to a large extent on what the regulator, the Independent Communications Authority of SA (Icasa), stipulates must be unbundled.

The authority last week revealed, in an exclusive interview with TechCentral, that it hopes facilities-leasing regulations will be enough to force Telkom to provide competing operators access to the local loop.

In terms of the Electronic Communications Act, the local loop is considered an “essential facility” since it is a key aspect of the telecoms environment and operators are now able to demand access from Telkom.

However, Jansen says facilities leasing is only a portion of unbundling and will only take the process so far.

“At the end of the day we are all in the hands of what Icasa decides and how much Telkom would like to open up and under what conditions it will allow us into their facilities,” he says.

“We need naked digital subscriber lines, where telephone and broadband line rental is split and not a situation where one is conditional on the other,” Jansen says. “More exchanges need to be upgraded to be broadband-capable and investments need to be made in access speeds,” he says.

However, he says Icasa is not entirely on the wrong track. “For now, I think the regulator must go for the easy wins that will give immediate benefits to all.”

Internet Solutions MD Derek Wilcocks says the best bet for local-loop unbundling is for the country to impose on Telkom what UK regulator Ofcom imposed on Britain’s incumbent fixed-line operator, BT Group.

BT spun off its local loop into a separate, independent company called Openreach, which manages, maintains upgrades and leases the local loop to competing operators, including BT itself, and does it in a way that is transparent to all market players.

“Creating a wholesale, transparent spin-off would be the most practical short-term solution for getting things done,” says Wilcocks.

However, he says Telkom is preparing new products that indicate it is taking unbundling seriously. “For example, it is offering aggregated capacity at the larger exchanges to competing providers, instead of charging for every circuit in that exchange.”

Whether Internet service providers will gain access to the local loop this year remains unclear. However, most industry players are hoping Telkom will meet the November deadline set by communications minister Roy Padayachie.

ICASA commits to local loop deadline

By Leigh-Ann Francis
Johannesburg, 6 Jan 2011

This is despite Telkom's warning that the deadline is unrealistic, given the regulatory challenges and lack of clarity holding back the process.

However, the Independent Communications Authority of SA (ICASA) maintains the regulatory process for ensuring the LLU implementation will unfold during the course of 2011, through a full public consultation process, to iron out any “uncertainty”.

The last mile, or local loop, is the copper link between the end-user and Telkom's network, and is currently owned by Telkom.

The rationale behind LLU is to foster competition and reduce telecommunications costs by eliminating large investments by competitors to build their own infrastructure for last mile connectivity.

Telkom, a key player in the process, argues that a number of regulatory issues need to be clarified before the unbundling can get under way. However, ICASA says it is aware of the issues raised by the incumbent and remains confident of the November deadline.

Clarification

The operator's main concern lies in the lack of clarification as to whether the local loop can be considered an essential facility.

“Notwithstanding that the Electronic Communications (EC) Act includes local loops in the indicative list of potential essential facilities, it is arguable whether the local loop is indeed an essential facility,” argues the operator.

“Specifically, the EC Act states an essential facility 'cannot feasibly be substituted' and it is Telkom's contention that a wireless local loop these days is more than a substitute for both voice and broadband communications,” argues Telkom.

But ICASA says it is well aware of the ramifications around the definition of essential facilities vis-à-vis LLU and will address the issue in due course, in line with the set time frame.

“What, however, is critical, from the point of view of the authority, is to ensure access to the LLU is facilitated. In any event, the local loop, as a facility, is already legally obliged under chapter eight of the EC Act.”

Telkom also argued against the lack of clarification around how the authority would conduct and conclude a market review process for LLU. But ICASA explains it will explore the relevance to LLU of section 67 of the EC Act, in terms of significant market power and related numbers.

While ICASA has renewed its commitment to ironing out the necessary regulations before November, senior Frost & Sullivan analyst Vitalis Ozianyi remains sceptical of the actual implementation of the regulations this year.

Complicated process

Ozianyi maintains that, despite the issues raised by Telkom, it is possible the regulations concerning LLU will be in place this year still.

However, he questions whether the regulations will have the necessary clarification to begin the implementation of LLU this year.

ICASA councillor Thabo Makhakhe explains that, while the authority is committed to having resolved the regulatory issues, and the possible publication of LLU regulation before November, the actual unbundling process will take time.

Makhakhe would not indicate how long the implementation would take, but stated it is a complicated process. He pointed to the 10-year period it took British Telecom to unbundle its local loop.

Ozianyi argues that other LLU-related issues, such as the costs of leasing the local loop, as well as maintaining the infrastructure, will need to be addressed.

As such, Ozianyi explains that the implementation will be slow and incremental, with benefits being realised only in later years.

Local loop unbundling 'unlikely' in 2011

Local loop unbundling 'unlikely' in 2011
By Leigh-Ann Francis
Johannesburg, 5 Jan 2011

Industry's hopes that the local loop will be unbundled by November this year may be dashed, as fixed-line operator Telkom has already warned that regulatory and business hurdles make the deadline highly unlikely.

Late last year, communications minister Roy Padayachie committed to the November deadline, noting that local loop unbundling (LLU) remains a critical and important intervention.

The last mile, or local loop, is the copper link between the end-user and Telkom's network and is currently owned by Telkom.

The rationale behind LLU is to foster competition and reduce telecommunications costs by eliminating large investments by competitors to build their own infrastructure for last mile connectivity.

However, the process has been repeatedly delayed, after initially being mooted at least five years ago.

Regulatory hurdles

Telkom says it has embraced LLU and is working with both the Department of Communications, as well as the Independent Communications Authority of SA (ICASA) towards completing the process. However, the company argues that a number of regulatory issues need to be clarified before the process can get under way.

The operator believes a declaration of essential facilities must, by necessity, precede any potential local loop unbundling process.

“Notwithstanding that the Electronic Communications Act (EC Act) includes local loops in the indicative list of potential essential facilities, it is arguable whether the local loop is indeed an essential facility,” argues the operator.

“Specifically, the EC Act states an essential facility 'cannot feasibly be substituted' and it is Telkom's contention that a wireless local loop these days is more than a substitute for both voice and broadband communications.

“Even if local loops were indeed essential facilities, there are no provisions in the Act which stipulate the terms and conditions by which such facilities are to be unbundled,” Telkom continues.

Furthermore, argues Telkom, the process that would have to be followed to unbundle the local loop would be the market review process, as per Chapter 10 of the EC Act.

“To the degree that a local loop can provide one of three services, ie, voice, broadband and partial private circuits (half-leased lines), it is uncertain which market review ICASA would be required to use, since a remedy must not only relate to a market, however, further be confined to that market only,” explains Telkom.

“Even if, to be sure, all three market reviews were simultaneously undertaken, the list of pro-competitive remedies that may be imposed at the conclusion of a market review does not include unbundling of networks or facilities.”

Hence, there is much uncertainty on the regulatory process which should or could be followed to deliver local loop unbundling, presuming that a legitimate process exists in the first place, the operator maintains.

Comment from ICASA was not forthcoming at the time of publication.

Tight timelines

Secondly, having concluded the relevant regulatory process, Telkom will still need to undertake a product development process.

Telkom must determine the technical parameters of the service; the business rules and processes of the service; the prices of the service elements; the commercial and contractual conditions associated with the service; and the product relationships between local loop unbundling, facilities leasing and other network services.

The company explains that this process will take time, and given the number of variables both from a regulator perspective, as well as a business perspective, the operator does not believe the November deadline is realistic.


Too late

Meanwhile, industry believes it is already too late for LLU to make any real difference to competition in the industry.

Richard Hurst, senior analyst at Ovum, says local loop unbundling is a bit too late. “By the time it's done, it's not going to matter anymore. All the other operators will have rolled out their own infrastructure.”

Telcos are now in the process of connecting customers to their networks by technologies that cut out the last mile.

Neotel currently bypasses the copper infrastructure through wireless technology, and Vodacom has plans to eventually cut out the loop by running fibre directly to clients. In addition, Telkom is starting to eliminate the need for copper in its own network by putting in wireless connections.

Chris Gilmour, Absa Investments analyst, says ICASA has dragged its heels for so long that there is no real need to unbundle the last mile. He says copper will become a “deteriorating asset in the ground” and competitors will either role out fibre or wireless to connect.

8ta readies BlackBerry offering

By Leigh-Ann Francis
Johannesburg, 26 Nov 2010

Fourth mobile operator 8ta is testing BlackBerry smartphones on its network and will likely be ready with an offering early next year.

The operator is also in discussions with Apple to offer its iPhone smartphone range, but was unable to give any details at this point as it is bound by a strict non-disclosure agreement.

The BlackBerry play will be a significant one for the newcomer, as it has been recognised as a fast-growing cellular brand in SA.

BlackBerry smartphones were rated as the second “most popular cellphone” in the annual Sunday Times Generation Next Survey 2010. In 2009, BlackBerry smartphones were ranked fifth, and in 2008, the brand was ranked seventh.

8ta has already come to market with a strong smartphone play, including an extensive range of Nokia, HTC, Samsung, Motorola and Sony handsets.

The operator has not given any details around how it will structure its BlackBerry deals. However, on 8ta's highest-end contract deal, customers receive 500 free on-net minute calls, 200 free minutes to other networks and 50MB free data.

Vodacom, MTN and Cell C already offer the BlackBerry smartphones. However, only Vodacom and MTN offer Apple's iPhones.

Telkom faces fixed-line flop | ITWeb

Telkom is losing fixed-line customers at a faster rate in comparison to previous years, according to Business Monitor International's (BMI) latest report on SA's telecommunications sector.

In its fourth quarter report on the local telecoms market, industrial research group BMI envisages a total decline of 3% in landline usage. The research group says SA incumbent Telkom, in its results for the financial year ending 31 March, reported a decline in demand for prepaid PSTN lines.

According to BMI, this had been an important growth area for the operator.

Cellular takeover

Telkom spokesperson Pynee Chetty says the decline is “simply because of the uptake of mobile phones”.

Pieter Kok, a senior research analyst at IDC, agrees, saying Telkom will continue to experience a decline in the number of landline users, primarily due to people becoming more used to making their voice calls from a mobile phone rather than a fixed line.

“I see the trend being irreversible because of the dramatic increase in cellphone usage over the years”, says Kok.

He adds that the perception people have about Telkom is the other reason why customers are shunning the fixed-line operator. “Generally, the public has this perception of Telkom as being expensive while offering poor service to the clients. It is going to be a mammoth task for the fixed-line provider to change the public's view of it.”

Stiff competition

From a broadband point of view, Kok says there are more attractive mobile broadband options than Telkom's ADSL. “I can't really say the fixed line will soon be obsolete, but people are becoming less and less dependent on it.”

Cell C said this week it will unveil faster broadband in the form of '4Gs', which is an improvement on 3G, although not full 4G, as the standard hasn't been clearly defined by industry. Kok says he doesn't see Telkom fixed-line competing with this.

Telkom recently upgraded its network and now offers customers ADSL speeds of up to 10Mbps.

Presenting its financial results for the year ending 31 March, Telkom said the continued competitive pressure in the voice market had resulted in the decline in traffic revenue streams. “This is as a result of our drive to offer significant value through annuity products, managed network services and virtual private networks, which shifts traffic revenue into other revenue streams”.

The fixed line operator added that market penetration, which was at 9.1% in March 2009, had dropped to 8.7% after a year.

Growth spurt

BMI says SA's broadband penetration rate had seen an increase from the close of 2009 to the fourth quarter in 2010. “Subscriber base was around 1.12 million at the end of 2009. This is equivalent to a penetration rate of 4.3%”.

The firm adds that during 2009, the SA broadband subscriber base expanded by over 185%, and attributes much of this growth to the rapid increase in the number of mobile broadband customers.

“By the end of the year, mobile broadband customers accounted for 70% of the total market,” says the report.

For 2010, BMI also anticipates SA's broadband development to experience 50% growth, enabling the penetration rate to reach 6.4% by the end of the year.

Focusing on the 3G subscriber base in SA, BMI forecasts the mobile market on the whole to remain static during the last quarter of 2010.

This trend, notes the report, will partly be a reflection of moves by the operators to deduct inactive prepaid customers from their reported totals.

Where to, Telkom?

[By Duncan McLeod]

Telkom is a fixed-line operator with ambitions to get into mobile telecommunications. Analysts aren’t sure it should be investing in a mature cellphone market. Do they have a point? Should Telkom be sticking to its knitting in fixed lines?

Pity whoever is appointed to replace Reuben September as the next CEO of Telkom. The new head will be inheriting a difficult business facing its biggest-ever competitive and regulatory threats.

Telkom isn’t the same company it was in the late 1990s, when, led by a foreign management team, it was able to hike prices out of all proportion, milking SA consumers for all they were worth, all the while abusing its monopoly and chasing off the slightest hint of competition.

Today, Telkom is threatened. Vodacom and MTN are demanding a piece of the action. And the industry regulator, emboldened by a department of communications that wants to see action on telecoms rates, is starting to talk tough.

With a fixed-line business that is in accelerating decline — the number of fixed lines in service declined by 4% between March 2009 and March 2010 — Telkom is turning to mobile to make up for it.

It says it will invest R6bn over five years building a second- and third-generation cellular voice and data network.

But many analysts have expressed doubt that Telkom has what it takes to take on two powerful incumbent operators — Vodacom and MTN — and a re-energised Cell C. Telkom, they say, has little or no experience in mobile, and its forays into other business areas, most notably pay-TV, have proved to be disastrous.

Now the company has lost its CEO, the very man who led the decision to offload Telkom’s 50% stake in Vodacom, a company over which it had little or no say, and to build its own mobile network.

There are real dangers ahead for Telkom. It could be the big loser if it succumbs to obvious temptation and, seeking to grow its mobile subscriber base quickly, starts a price war with the incumbent mobile players.

And there are already worrying signs that it could be distracted from its traditional core business of providing fixed lines.

Management mustn’t make the mistake of thinking Telkom can stop investing heavily in the access layer of its fixed-line network — the mainly copper-cable infrastructure that connects consumers to its core network.

If anything, it needs to be investing more heavily in the fixed-line side, replacing copper with high-speed fibre optics where it can. Fibre, not wireless, is the real future of broadband. It’s a space Telkom can own, if it has the foresight now to invest before its rivals take the market.

The company also needs to react faster to market changes. MWeb introduced uncapped broadband recently, and other Internet service providers have slashed per-gigabyte bandwidth prices. Yet Telkom hasn’t reacted. It’s like a deer trapped in the headlights.

And it’s losing broadband customers to the mobile networks — or not winning those customers in the first place. It should be up there, competing like hell to hang on to every single customer.

What the company needs now is a CEO who can shock the organisation into change. That would probably require an external candidate able to shake things up and shrug off the last vestiges of the parastatal mind-set.

Certainly, whoever is appointed needs to be visionary, empowered to take big but calculated risks.

Unfortunately, it also needs to be someone adept at managing politicians. Government has stubbornly and stupidly held on to nearly 40% of the company’s shares. This, ultimately, could prove to be Telkom’s downfall.

Duncan McLeod is editor of TechCentral; this column is also published in Financial Mail

Telkom spills beans on mobile strategy | TechCentral

Telecommunications group Telkom will leverage its existing customers, offering mobile products to them as it gears up to launch SA’s fourth mobile operator.

The company has finally begun to provide some details of its plans in the mobile space, where it is spending R6bn over five years to build a network to rival those operated by Vodacom, MTN and Cell C.

The traditionally fixed-line operator has ordered 2 000 base stations, which will be constructed over the next 12 months. It will spend R6bn building the network over the next five years, it says.

“Telkom is at an inflection point, with growth in traditional fixed-line voice revenues declining,” it says in notes alongside its annual financial results for the year ended 31 March 2010.

“The majority of global fixed-line incumbents have discovered that a successful operation requires an integrated mobile business,” it says. “We believe there is a market opportunity in SA as mobile voice and especially mobile data are still experiencing growth.”

Analysts, however, remain sceptical, with some questioning whether the group should be considering mobile at all. They argue that Telkom is investing in an already mature market.

But Telkom says it has a “competitive advantage by virtue of its existing business and customer base”.

“This is particularly so as wireless growth slows and converged data becomes more prevalent,” it says. “A product range spanning both the mobile and fixed value pools will assist Telkom to defend itself more effectively against competitors and to grow revenues.”

It says also that the mobile business is designed to assist it in addressing “fixed-line cost challenges and to position Telkom more competitively in the market”.

“To this, end Telkom will undertake best endeavours to attain the market share required to achieve its required internal rate of return.”

The company says it will enter the mobile market with “simplicity, quality and value” as its three main guiding principles.

Earlier this year, Telkom signed an agreement that will allow Telkom Mobile customers to roam on MTN’s second- and third-generation voice and data networks. The company now says it will offer international roaming at launch through “another established and experienced international service provider”. It declines to name the party concerned.

Telkom says it is at an “advanced stage” of negotiating interconnection agreements with other local operators.

The company will offer prepaid, postpaid and what it called “hybrid voice and data” products to the market.

It has appointed China’s Huawei to build the network and the billing support service systems.

Telkom says it is negotiating finance structures with its suppliers in an effort to reduce its capital investment in favour of operating lease-type payments, which include technology renewal.

The radio access network — the bit that connects its customers to its cellphone base stations — is all Internet Protocol based. This will allow it to deploy newer mobile technologies quickly, it says. Initially, the network will use high-speed packet access (HSPA) technology capable of theoretical download speeds of up to 14,4Mbit/s.

— Staff reporter, TechCentral

Telkom warns it may keep rate cuts to itself | TechCentral

Outgoing Telkom CEO Reuben September has warned the group’s customers not to expect an automatic cut in fixed-to-mobile call charges that are directly in line with future reductions in wholesale mobile call termination rates.

In March, Telkom elected to pass on the entire 36c/minute saving when peak-time mobile termination rates were reduced from R1,25/minute to 89c/minute.

Mobile termination rates are the interconnection fees the cellphone operators charge each other and other telecoms companies to carry calls onto their networks.

Parliamentarians and government officials have lobbied hard for the rates to come down, in part because they’re seen as a barrier to new competitors emerging in the mobile industry.

Industry regulator, the Independent Communications Authority of SA (Icasa), wants the rates reduced to 65c/minute next month in both peak and off-peak periods. It wants further reductions to 50c/minute next year and to 40c/minute in 2012.

Icasa is set to hold hearings next week to consider submissions from the operators, some of which have argued for a longer “glide path” down to 40c.

Though Telkom passed on all the benefits of the initial and voluntary cut in mobile termination rates in March, September says there’s no guarantee the same will happen the next time the rates are cut.

“This matter requires further evaluation and we will make our position clear at the appropriate time,” he says.

However, Telkom may not have any choice in the matter. Communications minister Siphiwe Nyanda is keen to force down the cost of telecommunications and, given government’s nearly 40% shareholding in Telkom, there’s a fair chance the company will come under political pressure to pass on all the benefits to its customers.

— Duncan McLeod, TechCentral

Telkom leaves retail rates largely unchanged | TechCentral

Telkom has left its broadband line rental and post-paid call rates unchanged while hiking basic line rental costs by about 5%.

In its annual tariff filing with the Independent Communications Authority of SA, the fixed-line operator says it could have hiked its basket of rates by as much as 19,3%, but has declined to do so.

Telkom SA MD Nombulelo “Pinky” Moholi says Telkom has not taken advantage of the regulatory allowance because it has a “commitment to the process of ensuring affordable telecommunications access in the country”.

A more plausible reason, of course, is that competitive pressures and consumer distress in a tight economic environment are preventing it from increasing its rates.

Telkom’s broadband digital subscriber line (DSL) and monthly bandwidth charges remain unchanged.

Oddly, the company has made no mention of improving bandwidth allocations for consumers, despite the introduction by competitors like MWeb of uncapped offerings.

It has also given away no details about its plans to increase DSL line speeds. News of this may come on Monday when Telkom reports its annual results.

Telkom is increasing its entry-level Closer 1 calling plan by a modest R5, while leaving other calling plan prices unchanged.

The new tariffs, which become effective on 1 August, are likely to put more pressure on Telkom to cut costs as competitive pressures intensify. It can no longer rely on tariff increases to offset inefficiencies.

International call prices remain mostly unchanged, with some cuts, and increases in call costs to Namibia and Botswana.

The cost of calls to Neotel and other licensed operators remains unchanged, too, as do calls from payphones. However, changes in the metering periods for public payphones will be made to introduce a single tariff for local and long distance calls.

Prepaid users will see a hike in call costs of 4,5% for local and long-distance calls. Prepaid installation costs have also risen. Postpaid line installations rise 4,9% to R491, from R468,05 previously. — Staff reporter, TechCentral

Set Telkom free | TechCentral

[By Duncan McLeod]

Government often argues that it must retain its stake in Telkom because the telecommunications company is a “strategic national asset”. But with competition intensifying by the day, the best thing that could happen to Telkom — and its customers — would be for government to sell up.

When government partially privatised Telkom in the mid-1990s, it made a fatal mistake: it took a lumbering, state-owned monopoly and handed it to a sophisticated foreign management team without opening the market to competition.

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