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Thread: Telkom again the looser

  1. #1
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    Default Telkom again the looser

    http://www.bday.co.za/bday/content/direct/1,3523,1470291-6079-0,00.html

    <b>Call-back ruling deals new blow to Telkom profit</b>

    --------------------------------------------------------------------------------
    Technology slashes costs 40%-84%
    Information Technology Editor

    TELKOM's profits are facing a new threat after approval was granted to a form of call-back service that will let its customers make international calls without using Telkom's lines.

    The revenue of SA's three cellular operators could also be severely dented after the Independent Communications Authority of SA (Icasa) granted a licence to Pinnacle Technology, legalising its call-back service.

    Pinnacle claims its Call-OnDemand technology will slash the cost of international calls 40%84%. It works by letting a caller send a signal to an offshore operator, which calls them back with a dial tone. The caller then dials internationally on bandwidth supplied by a global player such as AT&T or Sprint.

    Pinnacle has formed a new subsidiary, eTel, to launch the service in December, and expects 80% of the top 500 companies to be using it by next April.

    That would be a huge blow to Telkom, which earned R1,28bn of its revenue in financial 2003 from international dialling. Cellular operators would also suffer if customers travelling abroad used the call-back service instead of paying hefty international roaming fees. ETel sales and marketing manager Charlie Smith said about R8bn a year was spent on international calls on Telkom and cellular networks, and eTel hoped to win 15% of that within a year.

    The potential damage to Telkom builds on the blow it suffered last week, when the Pretoria High Court declared that a similar practice, known as least-cost routing, was not illegal. That involves diverting calls off Telkom's lines and onto a cellular network.

    Now Telkom has lost another battle, as the licence granted to Pinnacle will let firms slash their international bills. It also throws into doubt a 1997 ruling by Icasa's predecessor which declared callback services illegal. Telkom media relations manager Andrew Weldrick said Telkom's view was that call-back services remained illegal under the 1997 ruling.

    The licence Icasa has granted to Pinnacle does not open the door for all call-back operators, however, since Pinnacle's technology is designed to bypass Telkom's lines completely.

    Legal clash looms: Page 3


  2. #2
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    One has to ask the question why people are designing technologies/products to circumvent Telkom's services.

    Very simply: Because Telkom creates the market opportunity with its attitude of charging hefty fees for little service.

    Their massive profits are based on super charged rates, not cost efficient operations.

    I wish Sentech, Pinnacle and all the others taking on Telkom all the luck they could have - as long as they provide service!

  3. #3

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    Storm have providing this service for a few years to the SA market now.

    It was their 1st product line before they added their ISP offering....

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