News24: Telkom's ADSL Threat

kifoth said:

"You also have investors and shareholders to consider and 100 000 customers you are serving. What do you say to them?

"You close down because you are not allowed to recover the R1bn you have invested?"


Let's break out the old calculator here

R1 000 000 000 invested

:divided by:

100 000 users

:equals:

R10 000 per user

:charging R300 per month gives us:

R1 080 000 000 over 3 years, after which its profit all the way.

Telkom can charge R300 a month for ADSL, increase its user base (and profit) dramatically in the process, and still recover its costs in less than 3 years if ICASA wins this.

Steve's key phrase here is "investors and shareholders to consider". They are going to recover their costs (in buckets), its just that they care more about their shareholders than their users.

Click to expand...

kifoth said:

"You also have investors and shareholders to consider and 100 000 customers you are serving. What do you say to them?

"You close down because you are not allowed to recover the R1bn you have invested?"


Let's break out the old calculator here

R1 000 000 000 invested

:divided by:

100 000 users

:equals:

R10 000 per user

:charging R300 per month gives us:

R1 080 000 000 over 3 years, after which its profit all the way.

Telkom can charge R300 a month for ADSL, increase its user base (and profit) dramatically in the process, and still recover its costs in less than 3 years if ICASA wins this.

Steve's key phrase here is "investors and shareholders to consider". They are going to recover their costs (in buckets), its just that they care more about their shareholders than their users.

Click to expand...

IFP COMMUNICATIONS DIRECTORATE

PRESS STATEMENT August 3, 2005

SUZANNE VOS MP [email protected] 083 303 0451

INKATHA FREEDOM PARTY - Spokesperson:

Telecommunications/Broadcasting/Postal Services ______________________________________________________________

Telkom's attack on the country's independent communications regulator, ICASA, and its threat to launch legal action as well as to scrap plans to upgrade the country's high-speed network cannot go unchallenged.

It is common cause that the costs of high-speed internet services (as well as ordinary fixed line telephony) in South Africa are "exorbitant" (now stated by ICASA) and an inhibitor to economic growth. Telkom disputes this.

That is to be expected.

However, ICASA has every right to comment on the industry as it sees fit.

It has chosen to criticize the pricing of Telkom's high-speed internet services. That is its job.

The Minister of Communications, representing the Government's shareholding in Telkom -- let alone South Africa's policies and programmes with regard to a declared national imperative to boost broadband outreach -- would be well advised to step in and to bluntly (and with the considerable means at her

disposal) attempt stop these bully-boy tactics in their tracks. ICASA cannot afford a costly legal battle and neither can the country.

In any democracy tensions between the public and private sectors and statutory organs designed to regulate independently and in the best interests of all industry players and citizens in general are healthy. In fact, independent regulation goes to the heart of growth and economic development and in building healthy and vibrant competition.

However, the buck has to stop with "somebody" and that somebody has been declared by Parliament to be the Independent Communications Authority of South Africa (ICASA). Parliament and the people of South Africa have entrusted ICASA to regulate this industry. It is simply outrageous that Telkom has made the threats it has and in such a manner.

Threats of crippling legal action against ICASA's decision-making and national economic sabotage (which would be the result of severing existing ADSL lines and disinvesting in upgrading ADSL networks) cannot be allowed.

Of course recourse to law is a constitutional right but citizens have rights too and it is now up to Parliament and its elected representatives to constructively protect those rights. Telkom's threats, if seen through, could have long-term and disastrous economic consequences for the country.

Telkom has for too long been able to use its monopoly muscle to cripple and often crush its competitors. It has entangled ICASA in costly legal action since its inception.

No matter how much Telkom may regret and allege the "technical ignorance" (as reported) of ICASA, it is then up to all parties to make sure all their facts are right.

If, indeed, Telkom's high-speed costs are not "exorbitant", as alleged by ICASA and users in general, then let us all have some transparency on the issue. ICASA must be enabled to examine the facts as they really are and not as Telkom would like them to be reflected.

The IFP has long recognised that ICASA lacks capacity. It may well be the case, now, that in respect to its analysis of Telkom's pricing, it needs to do some more homework and needs to be given more resources to more thoroughly examine the issue.

ICASA's report recommending that Telkom should charge a one-off fee for installing high-speed services has resulted in a highly emotive response from Telkom. Words like "obscene" and "we'd... be forced to pull the plug on the whole service" (if ICASA's decisions were implemented) smack of hysteria and are unbecoming of an incumbent of the size and nature of Telkom.

ends statement

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