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ISPA takes Telkom to task with Competition Commission

By   |  December 13, 2005

The Internet Service Providers\’ Association (ISPA) lodged a complaint with the Competition Commission of South Africa today, claiming anti-competitive behaviour by Telkom in the Internet services market.

According to a press release issued by ISPA today, a large number of Internet service providers (ISPs) compete with Telkom for the provision of Internet services. But at the same time, most ISPs are forced to obtain their underlying telecommunications services from Telkom.

\”ISPA\’s complaint to the Competition Commission follows an increasing stream of complaints from ISPA\’s members,\” says Masedi Molosiwa, joint-chair of ISPA. \”From the smallest ISPs right through to the largest, the reports are the same: Telkom is using its dominant market position to take business away from other ISPs. We want the Competition Commission to take a good, hard look at the way the market is structured, and make sure that our members are able to compete fairly to provide reasonably priced services to their customers.\”

In the retail market, says the press release, Telkom determines the price that resellers must pay for Saix ADSL accounts. But it also competes directly with those resellers in the guise of TelkomInternet. This enables Telkom to squeeze the margin between the wholesale and retail price, so that competitors cannot afford to stay in business, claims ISPA.

Similar problems are purported to exist in the wholesale market. ISPA says Telkom controls access to key facilities such as international bandwidth, and to local loop access services such as ADSL. By controlling the price that ISPs pay for these services, says ISPA, Telkom makes it difficult for large ISPs to compete with Telkom\’s wholesale offerings.

\”Telkom\’s position as both a supplier and a competitor allows it to force other ISPs out of the market,\” says Greg Massel, joint-chair of ISPA. \”Fewer viable competitors means that Telkom is in a position to keep the price of services such as broadband at an artificially high level. Ultimately, the consumer is paying the price for Telkom\’s tactics.\”


3 Responses to “ISPA takes Telkom to task with Competition Commission”

  1. brokenMan
    December 14th, 2005 @ 12:00 am

    Let\’s hope our democratically elected officials will do something this time around. But when one of them makes a public statement saying, \”There is not fuel shortage\” on the day I spend going to 5 different stations trying to look for petrol, I am not too confident.

  2. Bonobo
    December 30th, 2005 @ 12:00 am

    What is the solution? It is all very well lodging a complaint crying that big bad Telkom are making it hard for other ISPs to compete with them. Telkom owns and maintains the the vast majority of the core, underlying infrastructure. Until someone else comes along and starts doing the same, this situation will always exist.

  3. Doug
    January 5th, 2006 @ 12:00 am

    The only way out that I see is to kill the TelkomInternet component. Then Telkom provide back-end services and the ISPs do client facing. The ISPA has every right to complain, given that Telkom has them by the proverbial ….., but the situation cannot change without Telkom being legislated out of the retail space.

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