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Send  Share  RSS  Twitter  30 Oct 2009

TELECOMS: Cape Chamber Slams Telkom


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THE finding by the Competition Commission that anti-competitive practices by Telkom have slowed the development of the whole telecommunications industry in South Africa and added unnecessary billions of rands to telephone accounts has come as no surprise to the Cape Chamber of Commerce.

Albert Schuitmaker, Director of the Chamber, said it was difficult to estimate the real cost to business of “the abuse of Telkom’s market dominance” but it had to be measured in terms of lost opportunities to develop the broader telecommunications industry and in direct costs to business in the form of high telephone accounts over the last decade. “To that we must add the way in which the high tariffs have made South African businesses less competitive in the export markets.”

In its latest finding the Competition Commission said that in 2006 Telkom tariffs were more than double those of South Africa’s trading partners and in 2007 the tariffs were 30 percent more than an average for a basket of 14 countries.

Mr Schuitmaker said other studies had come to similar conclusions so it was not unreasonable to assume that a third of Telkom’s annual turnover stemmed from the excessive charges. “With an annual turnover of between R30 and R40 billion a year, the cost to South African consumers over a decade has probably been in the order of R100 billion. That’s enough to pay for a big new power station.”

The question that should now be asked was why ICASA and the Minister of Communications let Telkom get away with it?

He said the Chamber had, since 2001, regularly pointed out that Telkom’s applications for price increases were usually based on misleading information. In 2001, for instance, Telkom had claimed that it was reducing the cost of calls but it also reduced the minimum duration of calls and when the Chamber analysed the figures it found that the cost of the average call was being increased by 33 percent and calls to Boland towns by 57 percent.

The Telkom tactic over the years has been to trumpet the fact that it was reducing fees for some of the more exotic services such as overseas calls where there was competition from call-back services and Skype and to quietly load the price of the basic local call. ICASA fell for it every time and this has had a huge impact on business telephone accounts and soaked up money which could have been spent more productively on growth or new projects,” Mr Schuitmaker.

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