Western Cape Business News

Send  Share  RSS  Twitter  24 Jun 2009

TELECOMS: Telkom Tariffs Welcomed


Recent Western Cape Business News

THE Cape Chamber of Commerce says it is pleased to see that real competition has at last produced increases in Telkom tariffs below the official rate of inflation.

Albert Schuitmaker, Director of the Chamber, warned, however, that Telkom’s claim that prices were to rise by an overall 1.7 percent was misleading and businesses could certainly expect telephone accounts to increase by a lot more.

The figure that really matters to business is the 4.2 cent increase in the per-minute cost of local calls. That is an increase of about 7.4 percent and it is this increase that will affect the bottom line of the monthly Telkom bill,” he said.

It was interesting to note that the tariffs which were not being increased were those where Telkom was exposed to competition from “Skype calls” over the internet. It was also notable that the cost of calls to cell phones was not being increased. The main reason was that cell phone contract rates and “least cost routing” of switchboard calls provided cost-efficient alternatives.

By increasing the cost of local calls Telkom was also increasing its income from long distance or international calls made by dial-up connections to the internet.

We still have very limited competition for the local call so this is where Telkom is looking to exploit the last days of its monopoly. We hope ICASA will understand this and not be distracted by the fictional ‘basket of tariffs’ which reflect Telkom’s income rather than the increases on the monthly telephone account,” Mr Schuitmaker said.

The Chamber said it was clear that it was competition that was curbing tariff increases and not the official regulator.

Unfortunately we have had years of an ineffectually regulated monopoly and above-inflation increases. This has given us some of the highest telecommunications costs in the world. The lack of competition also ensured that the local market was technologically stagnant with broadband services being made available at painfully slow and expensive rates,” Mr Schuitmaker said.

The result was that South Africa had been left behind by its global competitors and economic growth and job creation had suffered. Fortunately the new undersea cables and real competition would do for the country what ICASA has failed to do but it would not compensate for opportunities already lost.


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