Telkom thinks its broadband service is so good it charges you twice for it.
Customers who have a fixed line pay a rental of just under R100 for the copper line that delivers their voice service.
Telkom then performs a slight upgrade to this line estimated to cost under R40 in order to allow the customer to receive broadband through the existing copper line. However, Telkom then bills the customer R680 per month for the broadband access in addition to the R100 rental.
The customer also has to pay their chosen Internet Service Provider (ISP) about R250 a month for a three-gigabyte package.
Consumer Activist website MyADSL has called this double billing for the copper line “ridiculous”, adding that it is unique to South Africa because, internationally, ADSL is a “one-price service”.
MyADSL spokesperson Rudolph Meyer says the upgrade to the line is certainly not worth R680. He said that Internet Solutions, an ISP that competes with Telkom in the broadband market, estimates that these upgrade costs are less than R40.
Not only does Telkom charge twice for that broadband connection, its pricing limits bandwidth packages to three gigabytes per month against the norm of 30 gigabytes or unlimited usage, which is typically the case internationally.
An international price comparison conducted by MyADSL for its presentation at the Independent Communications Authority of South Africa (Icasa) public hearings, shows that, when compared with two incumbents from each continent, Telkom was over 4 000% more expensive than the cheapest country, India, and almost 500% more than the most expensive country, Chile.
Meyer says that, of the 12 countries used in the price comparison, Chile and Egypt had the most expensive price for a 30-gigabyte package at R819 while a similar package from Telkom would cost you in the region of R4 000. In India, this package would cost you a mere R95.
The average price across all 12 countries was R441, almost 10 times cheaper than Telkom’s offering.
Icasa stipulated in its draft ADSL regulations published in December 2005, that operators would only be able to charge an ADSL access charge on a once-off basis and that a bandwidth charge paid to an ISP and a line rental charge could be the only fees billed on a monthly basis.
Icasa subsequently held public hearings on the draft regulations and sources say the regulations have been finalised, but are currently being checked against the recently promulgated Electronic Communications Act.
Telkom is facing charges of anti-competitive practices from the Internet Service Providers Association (Ispa) which lodged a complaint with the Competition Commission at the end of last year.
Ispa claims that Telkom squeezes its broadband profit margins to make sure that smaller ISPs cannot compete with them.
Geoff Rehmet from Internet Solutions says Telkom is the only supplier of facilities such as the leased lines that ISPs use to build their national networks and services such as Internet Protocol (IP) connect which it uses to connect ADSL users to their network.
Rhemet says the sum of these costs is R68 per gigabyte. Telkom’s wholesale branch, the South African Internet Exchange, meanwhile sells the equivalent service for R57, making it hard for competitors to compete.
Rhemet says in the United States ISPs pay an equivalent rate of $2 (about R14) per gigabyte. He says Telkom’s fees are an “exclusionary act” as they preclude other players from competing in the market for providing Internet access to ADSL customers.
Internet Solutions proposed a number of measures to create effective competition in the broadband wholesaling and retailing sectors, which include the regulation of facilities inputs used by ISPs to provide retail services.
It called for a mandatory wholesaling pricing structure for leased circuits, international bandwidth and IP connect services and said there needs to be a move away from Telkom’s monopoly of facilities provision.
Ispa spokesperson Gregg Massel says the group is still waiting for the Competition Commission to conclude its investigations and report back to them.
Telkom did not respond to the M&G‘s queries at the time of going to press.