Prices not the only broadband hurdle — Telkom
|September 15, 2005|
TELKOM is defending the cost of its broadband internet access by saying that high prices are not the sole reason only a fraction of people in SA have high-speed internet access.
The cost of PCs and a lack of compelling content to persuade people to go online must share the blame for SA’s lack of connectivity, the company believes.
“It’s four times more expensive to do business in some parts of this country compared with Europe, but as long as PC penetration remains where it is, you will have serious challenges,” said Godfrey Ntoele, Telkom’s business market and government executive.
At the Southern Africa Telecommunication Networks and Applications Conference (Satnac) this week, Telkom once again argued it was unfair to compare prices in SA with the US or more developed European countries.
As PC penetration rose, the cost of internet access would fall, Ntoele said, while newer technologies would enable Telkom gradually to drop its fees. “You can’t say that if the price came down, all our problems would be solved. That’s not a panacea.”
All industry players had to “engage unemotionally” to work out how to bring down hardware costs and develop more content to increase SA’s technology uptake, Ntoele said.
But Science and Technology Minister Mosibudi Mangena became an ally in the calls for Telkom to cut its costs. Science advisers and university researchers were always complaining to him about the high cost of internet access, he said. “It’s an issue we are interacting with all the time.”
Only 10% of consumers had a computer and a mere 0,1% had broadband internet access, Satnac delegates heard.
That compared with western Europe’s PC penetration rate of 53% and broadband penetration of 30%, said Intel director Claus Bjoernsten. “Clearly there is a challenge ahead of us to grow PC and broadband penetration.”
Selling combined internet and PC packages, and offering long term payment terms would help, said Bjoernsten.
Televisions rather than PCs should also become a focus point for broadband services, he said, as almost everyone had a television that could be adapted for surfing the internet, sending e mail, viewing photographs, listening to music, playing games or receiving e-learning material.
New Telkom CEO Papi Molotsane said he had not been in the hot seat long enough to assess bandwidth fees, but he seems keen to make the company more customer-friendly.
Yet in his speech at Satnac, he implied Telkom would continue to oppose vehemently plans to force its hand. The draft Convergence Bill had to ensure affordable services reached all citizens, he said, but it had to balance the need for competition against the need to protect the rights of existing licence holders and their substantial investments in communications infrastructure.
Telkom is embroiled in two battles with the Independent Communications Authority of SA (Icasa) to prevent its profits being eroded. The first is an investigation into whether the undersea cable that carries SA’s communications to Europe should be declared a national asset. Telkom is frequently criticised for the high fees it charges other operators and internet service providers to use that bandwidth, which accounts for the high cost of international communications.
If it is declared a national asset, Icasa could force Telkom to slash its fees. In response, Telkom has threatened to withdraw its investment in a cable around the east coast of Africa, saying it will not invest in infrastructure if it cannot recoup its costs.
The second clash may see Icasa force Telkom to slash the cost of its high-speed ADSL internet services. Telkom retaliated by threatening to axe its ADSL services, which would leave SA even more short of high-speed access.
Molotsane would not comment on either situation, but said: “We will continue looking at our costs, and if that means we have to reduce the costs, we will.”
His approach would be to try to forge agreements: “I will make sure we balance the needs of our shareholders with the needs of our customers.”