Karnaugh
26-02-2004, 12:52 PM
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<b>COMPETITION COMMISSION
MEDIA RELEASE NO. 6 OF 2004
24 FEBRUARY 2004 </b>
Competition Commission refers Telkom complaint to Tribunal
The Competition Commission has found Telkom’s conduct against value added network service (VANS) providers to be anti-competitive and has referred the matter to the Competition Tribunal for determination. This follows an investigation by the Commission into complaints lodged in 2002 against Telkom by the South African Value Added Network Services Association (SAVA), Omnilink and others.
A VANS is essentially a telecommunication service provided to a customer over a telecommunication facility (includes any wire or cable that may be used for telecommunication) by a provider who is licensed to do so (by ICASA), during which value is added for the benefit of the customer. VANS include e-mail, electronic data interchange and internet service provision.
Telkom is the de facto monopoly provider of telecommunications facilities required by VANS providers to enable them to provide services to their customers. In addition, Telkom also competes with the VANS providers, who must obtain facilities from Telkom, in the market for value added services. This places Telkom at a unique advantage strategically vis-à-vis its competitors, as it is able to leverage its position as the monopoly provider of facilities in the competitive market for value added network services.
Adv Menzi Simelane, Commissioner at the Competition Commission, says, “our investigation has revealed that Telkom has abused its dominant position by engaging in a pattern of anti-competitive practices. These include Telkom imposing unreasonable conditions for it to provide telecommunication services to the VANS. Telkom refuses to provide these facilities unless the VANS providers conclude contracts which subject them to Telkom’s dictates. As the VANS cannot operate without these facilities and must obtain them from Telkom, they have no choice but to subject themselves to Telkom’s dictates.
The effect of these practices, including legal actions and threats of service termination, has been to chill competition in the VANS market. This anti-competitive conduct is likely to have a serious impact on both the ICT sector and broader economic development”.
The Commission’s investigation revealed that as a result of its actions, Telkom has further entrenched its dominant position in the broader telecommunications sector, at the expense of competition for the provision of VANS, and consequently to the detriment of the development and growth of the ICT sector generally.
<b>The allegations </b>
SAVA’s complaints of anti-competitive conduct by Telkom are alleged on the following grounds:
Telkom’s refusal to provide telecommunications facilities to certain VANS providers to construct their networks;
Telkom’s refusal to peer with certain VANS providers, as well as its refusal to provide facilities to certain VANS providers for use in peering (the interconnection of separate networks by internet service providers (ISP) to allow communication by customers of ISP providers for the provision of the internet);
Telkom’s refusal to lease access facilities to VANS providers directly and insisting on VANS providers acting as agents of their customers in leasing access facilities from it;
Telkom’s discriminatory pricing with regard to leased line services; and
Telkom’s provision of bundled competitive services with monopoly services.
Omnilink alleged Telkom provided VANS to Nampak (previously Omnilink’s customer), at a price below the price Telkom would have charged Omnilink for the infrastructure and facilities required to offer the service, and which Telkom would also require in order to offer an equivalent service.
<b>The Commission’s findings </b>
The Commission found that Telkom has abused its dominance as alleged in 1 - 4 above and has referred the complaint to the Tribunal for determination. In respect of the bundling complaint, the Commission has decided not to refer it to the Tribunal, as the investigation did not reveal sufficient evidence of abuse of dominance by Telkom.
SAVA is a voluntary association established to represent the interests of VANS providers. Omnilink is a subsidiary of Internet Solutions (Pty) Ltd.
ISSUED BY COMPLIANCE
Information may be obtained from:
Karin Coode
Head of Communication
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http://www.compcom.co.za/Resources/Media%20Releases/Media%20Releases%202004/Jan/Med%20Rel6%20of%20%2024Feb%202004.asp
<hr noshade size="1">
"Since light travels faster than sound, people appear bright until you hear them speak."
NetLink Research
<b>COMPETITION COMMISSION
MEDIA RELEASE NO. 6 OF 2004
24 FEBRUARY 2004 </b>
Competition Commission refers Telkom complaint to Tribunal
The Competition Commission has found Telkom’s conduct against value added network service (VANS) providers to be anti-competitive and has referred the matter to the Competition Tribunal for determination. This follows an investigation by the Commission into complaints lodged in 2002 against Telkom by the South African Value Added Network Services Association (SAVA), Omnilink and others.
A VANS is essentially a telecommunication service provided to a customer over a telecommunication facility (includes any wire or cable that may be used for telecommunication) by a provider who is licensed to do so (by ICASA), during which value is added for the benefit of the customer. VANS include e-mail, electronic data interchange and internet service provision.
Telkom is the de facto monopoly provider of telecommunications facilities required by VANS providers to enable them to provide services to their customers. In addition, Telkom also competes with the VANS providers, who must obtain facilities from Telkom, in the market for value added services. This places Telkom at a unique advantage strategically vis-à-vis its competitors, as it is able to leverage its position as the monopoly provider of facilities in the competitive market for value added network services.
Adv Menzi Simelane, Commissioner at the Competition Commission, says, “our investigation has revealed that Telkom has abused its dominant position by engaging in a pattern of anti-competitive practices. These include Telkom imposing unreasonable conditions for it to provide telecommunication services to the VANS. Telkom refuses to provide these facilities unless the VANS providers conclude contracts which subject them to Telkom’s dictates. As the VANS cannot operate without these facilities and must obtain them from Telkom, they have no choice but to subject themselves to Telkom’s dictates.
The effect of these practices, including legal actions and threats of service termination, has been to chill competition in the VANS market. This anti-competitive conduct is likely to have a serious impact on both the ICT sector and broader economic development”.
The Commission’s investigation revealed that as a result of its actions, Telkom has further entrenched its dominant position in the broader telecommunications sector, at the expense of competition for the provision of VANS, and consequently to the detriment of the development and growth of the ICT sector generally.
<b>The allegations </b>
SAVA’s complaints of anti-competitive conduct by Telkom are alleged on the following grounds:
Telkom’s refusal to provide telecommunications facilities to certain VANS providers to construct their networks;
Telkom’s refusal to peer with certain VANS providers, as well as its refusal to provide facilities to certain VANS providers for use in peering (the interconnection of separate networks by internet service providers (ISP) to allow communication by customers of ISP providers for the provision of the internet);
Telkom’s refusal to lease access facilities to VANS providers directly and insisting on VANS providers acting as agents of their customers in leasing access facilities from it;
Telkom’s discriminatory pricing with regard to leased line services; and
Telkom’s provision of bundled competitive services with monopoly services.
Omnilink alleged Telkom provided VANS to Nampak (previously Omnilink’s customer), at a price below the price Telkom would have charged Omnilink for the infrastructure and facilities required to offer the service, and which Telkom would also require in order to offer an equivalent service.
<b>The Commission’s findings </b>
The Commission found that Telkom has abused its dominance as alleged in 1 - 4 above and has referred the complaint to the Tribunal for determination. In respect of the bundling complaint, the Commission has decided not to refer it to the Tribunal, as the investigation did not reveal sufficient evidence of abuse of dominance by Telkom.
SAVA is a voluntary association established to represent the interests of VANS providers. Omnilink is a subsidiary of Internet Solutions (Pty) Ltd.
ISSUED BY COMPLIANCE
Information may be obtained from:
Karin Coode
Head of Communication
<hr height="1" noshade id="quote"></blockquote id="quote"></font id="quote">
http://www.compcom.co.za/Resources/Media%20Releases/Media%20Releases%202004/Jan/Med%20Rel6%20of%20%2024Feb%202004.asp
<hr noshade size="1">
"Since light travels faster than sound, people appear bright until you hear them speak."
NetLink Research