South African telecommunications giant Telkom has denied that its tariffs are too high following accusations by the internet business community that the parastatal is stifling development and the growth of the internet.
The Online Publishers Association (OPA), which represents South Africa’s top 16 online publishers, said on Tuesday the high cost of calls is taking its toll on its businesses.
Saying it is comparing “like with like”, the OPA mentioned the case of online recruitment company Career Junction, which is now doing business in the United Kingdom and in South Africa.
The OPA offered this “straightforward comparison”:
UK: 500-gigabyte traffic bandwidth availability — R2Â 875 per month using an exchange rate of R11,50 to the British pound.
South Africa: 200-gigabyte traffic bandwidth — approximately R40Â 000 per month (more traffic bandwidth increases costs).
Nkenke Kekana, Telkom’s group executive in charge of policy and regulation, told the Mail & Guardian Online on Wednesday that it is important to “locate the debate in the South African context” and that it is not useful to take isolated cases and then “pass judgement on Telkom”.
Admitting that it is a “difficult debate”, he said: “Let’s not just isolate particular cases to simply drive one particular view. Let’s look at the total picture.”
Kekana said Telkom’s tariffs are competitive and studies conducted by independent researchers back this up.
He said Telkom’s charges for local calls, compared with those made using British Telecom (BT), are cheaper. He said its telephone installation costs are cheaper than BT, which are “far, far too expensive”. He said Telkom line rental and international calls are also cheaper, compared with BT.
“I can go on and on and on. Stats do not tell the whole story.
“The OPA [is] welcome to talk to Telkom and I’m prepared to engage them on this particular discussion,” Kekana said.
Kris Jarzebowski, managing director of Career Junction, told the M&G Online on Wednesday that “tariffs in [SA] are crazy”.
“If my costs are going to spiral upwards because I’m becoming more popular, I’ll have to look at [other] options. And the options at the moment are that there are overseas environments that are more favourable for my type of business. My business is no different from anyone wanting to do business.
“Ask any OPA member. Bandwidth costs are a big problem.”
Jarzebowski said he would like sit down with Telkom and debate a “fair” cost for bandwidth.
“When I see [Telkom’s] profitability of R3,8-billion I think, that’s great, they’re squeezing companies like mine of my profitability margins.
“If there was competition here this would not be the case. Every single ISP [internet service provider] in this country has an issue with Telkom.”
Kekana said the Independent Communications Association of South Africa (Icasa) will be conducting a tariff review this year and that Telkom is cooperating with Icasa in this regard.
He said Telkom is looking forward to “making a contribution to the whole, entire review” and “the outcome will be positive for everybody”.
Kekana said Telkom tariffs are controlled through a tariff regime imposed by Icasa.
He said the formula implemented by Icasa is based on the year-to-year historical movement of South Africa’s consumer price index, September to September, less a productivity factor of 1,5%.
Kekana also pointed to Telkom’s “e-rate” for schools that will halve the cost of internet access for schools from next year.
“This is a very positive contribution towards the growth of the internet in South Africa.”