Business Report - Watchdog finds Telkom abused dominance

About BR

- About Us
- Contact Us
- Online Advertising
- Terms & Conditions

Free Newsletter

Subscribe Now

Features

- New SA President
- Global Credit Crisis
- Leaders of Distinction

Market Indicators
Top 10 Stories
News by Sector
- News by Sector Home
  - Economy
  - Finance
  - Labour
  - Mining
  - Property
  - Technology
Free Newsletter
Financial Tools
Currency Converter
Su Doku

- IOL Dating
- IOL Entertainment
- IOL Jobs
- IOL Motoring
- IOL News
- IOL Parenting
- IOL Property
- IOL Sport
- IOL Travel
- IOL Technology
- Personal Finance

Mobile

- IOL on your phone
- Cellphone Fun
- Mobile Games

Newspapers

- Subscriptions
- Cape Argus
- Cape Times
- Daily News
- Isolezwe
- Post
- Pretoria News
- Sun. Independent
- Sunday Tribune
- The Independent on Saturday
- The Mercury
- The Star

HOME

Watchdog finds Telkom abused dominance

October 28, 2009

By Justin Brown

Submit your comment

The competition commission has referred its findings of abuse of dominance against Telkom to the competition tribunal for adjudication.

The watchdog has asked the tribunal to levy a penalty of 10 percent on Telkom’s annual turnover for the ended March.

The investigation follows five complaints that were lodged by the Internet Service Providers Association (ISPA) and other internet service providers or ISP‘s, namely, Verizon South Africa, Multichoice Subscriber Management Services (MWeb) and Internet Solutions (IS).

These complaints were lodged at different times during the period 2005 and 2007 but for purposes of investigation the commission combined the complaints, as they raised overlapping issues.

During the investigation the commission engaged with and received cooperation from the Independent Communications Authority of South Africa (Icasa), in accordance with the Memorandum of Understanding between the two regulators.

The cooperation of the two regulators will continue during the prosecution of this matter, particularly with respect to remedies for the conduct.

In its investigation the commission found that Telkom abused its near-monopoly position in the market for the provision of telecommunications network facilities.

It did this by charging excessive prices for the basic infrastructure needed by its downstream competitors, the ISP’s, to access a range of telecommunications services, while keeping its own ISP service charges low.

In this way, Telkom also raised its downstream competitors costs, making it difficult for them to on sell cost effective services to end consumers.

The commission concluded that Telkom charged excessive prices after comparing Telkom’s prices to its costs, prices in other countries, prices of other operators offering similar services and prices to customers of Telkom who posed a competitive threat to it.

These comparisons indicated, amongst other things, that in 2006 Telkom’s prices were more than double the average of South Africa’s major trading partners.

Furthermore, in 2007, Telkom’s prices were 30 percent more expensive than the average of a basket of 14 countries.

Significantly, the commission also noted that Telkom’s downstream competitors have been consistently losing market share while Telkom’s share has been increasing over time, pointing to an inability on their part to compete effectively with Telkom.

The excessive prices charged by Telkom affect the prices which ISPs charge their customers.

Given the widespread use of the internet and the extensive use made of virtual private networks (VPN’s) by medium to large businesses to link various locations of a single enterprise, there is no doubt that these high prices detrimentally affect consumers and hinder economic development in South Africa.

SUBMIT YOUR COMMENT!

Showing page 1 of 1 comment pages, 9 total comments

1 Week ago Gatvol wrote :

Worms! My line's been down for three whole weeks now. No voice or data at my office. I've logged the call 13 times over the last 3 weeks without a whisper from Telkom...hey...maybe their phones are down as well!!

3 Weeks ago Citizen wrote :

You are wrong Jako. Telkom is very effective at stealing from us, their clients. They are only useless at providing a service for the money that they overcharge everyone that is forced to deal with them.

3 Weeks ago Anonymous wrote :

blood sucking vermin

3 Weeks ago Jako wrote :

FINALLY! Been waiting for this moment for years! Just hope this does not fade into the night sky again... I always said if I had Bill Gates's money I would buy Telkom and close it down... useless organisation.

3 Weeks ago Anonymous wrote :

Hurray! As someone who has had to deal with Helkom's poor service on a regular basis I am overjoyed! Suffer you worms - may your market share dwindle to nothing.

3 Weeks ago Charles Ash wrote :

Best news I've read in ages! It's about time really. Telkom has been really pillaging this country and holding us back. As an Internet entrepreneur, this finding is music to my ears.

4 Weeks ago Tired of caps wrote :

TELKOM - RESISTANCE IS FUTILE YOUR MONEY IS OURS ;( WHERE IS OUR 8MB LINE TELKOM, AND PLEASE OFFER UNCAPPED ACCOUNTS, NO NOT LOCAL, FULL INTERNATIONAL WITHOUT ANY LIMITS, WE PAY YOU ENOUGH

4 Weeks ago Anonymous wrote :

And this will also just fall by the wayside, its mostly government owned....sigh

4 Weeks ago Dave wrote :

There's a surprise?!?

OPINION/ ANALYSIS


	Business Watch Adcock's choice of partners makes healthy change Adcock Ingram's choice of black economic empowerment (BEE) partners is refreshing. Except for the common feature of including an employees' trust, the external partners have vast experience in health care but they are not your "usual suspects".[Full Story...]
	Features Succession plan is a key measure of any leader's real success I recall hearing Raymond Ackerman suggesting that corporate leaders should be judged on the performance of their institutions after their tenure had ended rather than during their tenure. He was underlining the importance of succession planning, something of great concern to him.[Full Story...]
	Inside Business Benefits of growth stop far short of townships Until two weeks ago De Doorns had limited fame as a small nondescript town at the edge of the spectacular Hex River Valley. [Full Story...]

More Opinion & Analysis stories

NEWS BY SECTOR


	News Rate cuts back on the agenda: Roux Inflation is now heading towards the mid-point of the 3-6 percent target band, which should put further rate cuts back on the agenda.[Full Story...]
	Company News Discovery Invest to reach R10 billion in assets The investment unit of South Africa's Discovery Holdings is expected to reach R10 billion in assets under management in 2010.[Full Story...]
	News Cosatu wants overhaul of economy The Congress of SA Trade Unions (Cosatu) wants a complete overhaul of the South African economy, its general secretary Zwelinzima Vavi said.[Full Story...]
	Finance Rogue debt collectors surface in tough times Many debt collection agencies and lawyers are abusing employer ignorance of garnishee orders to charge excessive fees and bend the law, a debt counselling firm claims.[Full Story...]
	News SADC central banks work towards single payment system The central banks of the Southern African Development Community are setting up systems that will ultimately result in a single payment and settlement system.[Full Story...]