The Independent Communications Authority of South Africa (Icasa) is extremely generous to its problem child Telkom compared with French and Mauritian regulators, which also set prices on South Africa’s key Internet link to the rest of the world, the SAT-3 undersea cable.
All three regulators control prices on SAT-3, setting tarriffs for South Africa, Réunion and Mauritius respectively.
The South Africa bandwidth price on SAT-3 is 5,5 times that of Réunion and more than twice as expensive as Mauritius.
Price listings on Telkom’s website show that the monthly access cost of one megabit per second (mbps) of bandwidth capacity on the SAT-3/WASC/SAFE cables will cost R73 133.
A similar one mbps monthly bandwidth package in Mauritius will cost the equivalent of R36 208, while in Réunion, which is regulated by the French telecommunications authority, it costs the equivalent of R11 354.
Mweb’s regulatory affairs manager, Richard Heeth, says the exorbitant bandwidth access costs in South Africa are a direct result of Telkom’s monopoly pricing and the failure of Icasa to manage the situation.
“Our regulator is not managing these things properly and it has been a problem now for many years. Until it does regulate this issue we will continue to be subjected to monopoly pricing from Telkom,” says Heeth.
“Where competition does not exist the regulator has to step in, but ours has failed in this regard, leaving us to pay these ludicrous prices.”
Independent consultant Jon Oliver says Telkom being the major shareholder in the SAT-3 cable means that it can do exactly as it wants, owing to the way the shareholders’ agreement for the cable is structured.
Oliver says Telkom has exclusive rights to on-sell SAT-3 bandwidth capacity in South Africa. It uses the power given to it by the shareholders’ agreement to make sure that the pooled spare capacity is sold at a similar rate to that offered by Telkom.
In May 2004, the French Telecommunications Regulatory Authority (Art) ruled on three disputes regarding access to bandwidth capacity between Réunion Island and metropolitan France.
The disputes involved the SAT-3/WASC/SAFE cables that connect the west coast of Africa to Europe and Asia. France Telecom was one of the major investors in the cables, with a $72-million investment in the $600-million project.
Art announced two rulings on May 12 2004, stipulating that France Telecom would have to provide operators in Réunion with a carriage-leased line for a monthly cost of â,¬1 550 (R11 354) per mbps.
Art said at the time that the rulings would result in lower access costs and would stimulate competition.
In January 2006, Africa Internet (www.balancingact-africa.com) reported that the Mauritian government had asked the Mauritian Information and Technologies Authority to appoint consultants to look into ending Mauritius Telecom’s monopoly on the SAT-3/WASP/SAFE cables.
The current access cost for a two mbps link in Mauritius is R36 208, but the government has deemed this too expensive and wants to end the monopoly in order to bring the bandwidth price down.
Mauritius Telecom invested more than R200-million in the cables and part of the scope of the consultants’ mandate was to look into ways to compensate the telecoms monopoly for its investment.
As with South Africa, the Mauritian government is a major investor in the telecoms monopoly, holding a 60% share. This places the government in a curious position, as it will have to decide whether to compensate itself or defend its asset’s value.
JP Farhina, the chief operating officer for the Media24 website (www.24.com), says Telkom owns all the landing rights for bandwidth capacity from the SAT-3 cable and everyone else is merely reselling capacity sold to them by Telkom.
“It is hugely expensive for leased lines here in South Africa, and these costs are a direct result of what Telkom is charging,” says Farhina. He adds that the only justification for the expensive access costs could be Telkom’s infrastructure costs.
The Mail & Guardian attempted to get a response from Icasa but all officials were out of the office, attending a planning session in the Drakensberg Mountains.