Telecoms report slams Telkom
By Stephen Whitford
Posted: 2 April 2004
Telkom is trying to “screw the consumer” with its exorbitant call prices before the second national operator (SNO) is launched, says George Rahr, MD of global telecommunications consulting firm NUS Consulting.
Rahr says this is the conclusion that can be drawn from NUS's latest telecoms report and cost survey released last month.
The survey compared call costs between 14 countries, including Australia, the UK, the US, Germany and SA. The survey report states the price of calls for a three-minute call in US cents as of 2 February, excluding applicable taxes.
Rahr says SA faired worst in the local call stats, moving from fifth- to second-most expensive, with the cost rising by 2% to 14.2 US cents per three-minute call. Only Belgium's local calls are more expensive. SA was also the only country in the survey to have increased its call costs over the past year.
Nationally, SA moves up one spot to the country with the most expensive national calls over a three-minute period. Once again, SA went against the norm of dropping call costs by making no change to tariffs. Only the US, in fourth position, and the Netherlands increased international call costs by 3.9% and 3.4% respectively.
While SA was one of 10 countries to reduce its international call costs, it still has the most expensive call cost of 125.4 US cents, beating second placed Finland at 48.5 US cents.
Rahr says SA faired reasonably in mobile call costs compared to the other countries. SA was placed fifth here with mobile call costs dropping by 6.2%.
Telkom rejects survey findings
Telkom has dismissed NUS Consulting's claims that SA's call charges are more expensive than other countries' charges.
Pinky Moholi, Telkom's chief sales and marketing officer, says research by international pricing research body, Tarifica, demonstrates Telkom's call rates are highly competitive and among the most affordable in the world.
"Tarifica's latest research shows that Telkom's call charges are internationally competitive, and that there is no substance to NUS Consulting's contention that Telkom's call charges are hampering the competitiveness of South African organisations," she says.
Unlike NUS Consulting, which only surveys 13 First World countries and SA, says Moholi, Tarifica's information is based on a mix of 26 developing and developed countries, including the UK, Germany, France, Sweden, and emerging market peers Argentina, Poland, Mexico and Hungary.
“Our local off-peak call charges for a three-minute call are the fourth cheapest of the 26 countries surveyed by Tarifica, costing less than the same call in Hungary, the UK, France, Sweden, Greece, Belgium and Spain.
“Telkom's residential and business rental charges were also below the average of 26 countries,” she says.
Rahr agrees that SA's costs may be lower than other developing countries, but says SA should not compare itself to them.
“Telkom has complained that the report compares SA with First World countries, but not emerging markets like Argentina and Hungary. But as the premier country in Africa, we have to compare ourselves with the people we are really doing business with. If Telkom compares itself with Africa, it won't develop,” he says.
SNO delay killing market
Rahr says NUS Consulting expects the SNO to begin operation at the end of 2005 at the earliest.
“That means that until then, Telkom is going to screw the consumer over,” he says.
Rahr adds that Telkom's stranglehold over the market will mean that the SNO will only get about 15% of the corporate market and a small share of the consumer market.
“While prices may come down after the SNO's launch, the drop may only be a slight one. Alternatively, the user may only see lower increases as opposed to seeing decreases.”
Rahr says the number of people who are paying people to list their cellphone numbers in telephone directories is an indication that in future, many users who do not have computers will abandon their landlines in favour of a cellphone.
Hampering Internet growth
Arthur Goldstuck, MD of World Wide Worx, says the high call costs are also having a negative impact on Internet growth in SA.
According to Internet World Stats, SA's Internet growth increased by 29.2% last year as opposed to Africa's growth of 123.6% and Europe's growth of over 100%.
“There is no question that call costs are a retarding factor for Internet growth. The consumer perceives them as expensive and because of the Internet's affect on monthly expenses, the Internet becomes somewhat of a luxury,” says Goldstuck.
An Internet Service Providers Association of South Africa (ISPA) report given to the Independent Communications Authority of SA last year shows that Telkom telephone call charges are gradually consuming the overall cost of connecting to the Internet.
The report shows that Telkom's call charges rose from being 59% of the average consumer's combined telephone and ISP bill in 1993, to 85% of the bill by 2003.
Telkom was not available for comment on Goldstuck's remarks or the ISPA statistics at the time of publication.
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