While the Organisation for Economic Co-operation and Development (OECD) and other entities welcomed Telkom’s announcement to reduce tariffs as a “good sign”, they said that the fixed-line monopoly’s proposed tariffs remain high by international standards.
Telkom last week filed its tariff adjustments with the Independent Communications Authority of South Africa (Icasa) in which the monopoly wants to effect an overall tariff reduction of 3%.
Icasa is aiming to make a decision on the proposed adjustments within a week ahead of the implementation on September 1.
“Even with the current reductions, they [Telkom] are not approaching the levels that we would expect to find in a competitive telecommunications market for fixed lines for example,” said Paris-based OECD economist Taylor Reynolds, who addressed a South African colloquium on global developments in telecommunications pricing this month.
“I don’t know if the change in prices had anything to do with the colloquium but it does highlight how operators react under pressure. While this recent pressure may have come from the government, the pressure that comes from competitive entry in the market is much more pronounced than simple 3% to 10% price cuts.”
The Democratic Alliance’s (DA) Dene Smuts welcomed the new framework — a price cap of 3,5% below CPI — governing Telkom’s pricing but lamented the late introduction and blamed Communications Minister Ivy Matsepe-Casaburri for not introducing the price cap which would have, from 2001, engendered “affordable” tariffs.
The DA, the Communication Users Association of South Africa and the Congress of South African Trade Unions (Cosatu) were among several groups that criticised the company for hiking tariffs in January. The increases were followed by President Thabo Mbeki’s promise in February that the high fixed-line tariffs would soon be a thing of the past.
After accusing Telkom of “milking the locals” in January, Cosatu on Thursday hailed the reductions, albeit small, but reiterated its view that the company still charges some of the highest tariffs in the world.
“We have always called for the re-nationalisation of Telkom to provide efficient and affordable service for everyone in the country,” said Cosatu spokesperson Patrick Craven.
Service costs due for a hike include installation for residential customers which will jump 8% to R316 while monthly analogue line rental is due to rise to R92 from R87.
Telkom has proposed that fixed-to-mobile and international call tariffs remain unchanged while the rates for post-paid local (50km radius) and long distance (national) calls are expected to fall by 5% and 10% respectively.
It will be the second time that the costs of long distance calls have declined this year while local call costs will rebound after a 5,5% hike in January. – I-Net Bridge