Here is Switch Telecom's response:
> When did this +44 8xxxx pricing change come into effect?
Telkom Wholesale first started charging these rates to its wholesale customers on 21 March 2012.
That being said, most Telkom Wholesale customers did NOT increase tariffs to customers on that date and elected to either subsidise calls to that destination or make use of alternate international routing instead so as to ensure more reasonable pricing to their customers.
> I dont get it, if its cheaper somewhere else, why doesnt he kill off his telkom links??
We have routed to the affected international destinations via international carriers instead. In that respect you are correct.
The reasons we're making noise, however, is (a) that there is FRAUD going on in relation to this, involving Telkom staff, that Telkom's fraud department is turning a blind eye to; (b) there are many operators who don't realise whose attention we'd like to bring this to; and (c) because it is causing distortions in the market in a manner that is damaging towards new entrants and therefore reduces competition and causes a knock-on effect of inflated pricing to end users.
Keep in mind that Telkom's notice period for rate changes is 7 days. Negotiating new international interconnects can take many months. For many new entrants to the market, that exposes them for an extended period.
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what the article doesn't mention is that the price is for a trunk and not an individual call. In a truck, depending on the size of the trunk and the codec you use you may get upto 1000 individual users. if you divide 1000 by the rate you will find out that you are ripping your own customers.
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That comment is entirely inaccurate. We are NOT talking about fixed data links here. We are talking about call termination. The rate is not divisible.
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how is Switch Telecom dependent on Telkom for international connectivity. Surely there is a flat charge for connectivity from any point on the SA voice network to Switch's breakout point and then they are free of Telkom?
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Insofar as we have to route calls to various international destinations. We interconnect via various carriers to do this and have to pay the applicable carrier to whom we pass the call for them to onward route it to its final destination.
There are instances where Telkom Wholesale offer a better transit rate and more reliable transit connectivity to some countries then other foreign carriers. This is, in fact, particularly so of some African (especially neighboring) countries, but not exclusively of Africa.
So we do, for example, still make use of them to terminate calls to Zimbabwe, rather than using an operator like BT/AT&T/etc.
More generally:
Many new entrants to the market use Telkom Wholesale to get to ALL international destinations, because, by-and-large, the rates are competitive with the global market and they come with the convenience of payment in Rands. Telkom Wholesale have actively won this business by, historically, charging exceptionally competitive rates, encouraging new entrants to make use of them for international transit rather than establishing relationships with foreign operators.
The thing that is happening now, is that they are randomly choosing destinations (e.g. +44 8 which includes most UK non-geographic services) and implementing massive increases (10,000% or more) on short notice.
As the increases are on only one or two destinations, many operators are assuming that this is normal for the destination in question and increasing their retail tariff accordingly, passing on the cost to consumer. This is where it is important for us to create awareness, so that this does not happen. It is unfair on both those operators and their customers. Only awareness can prevent that, hence noise.
Many operators are also unable to increase their retail tariffs immediately or elect not to so as to create a more stable pricing regime for their customers. As an operator, you cannot expect your retail customers to deal with rate changes every 7 days. To some extent, you have to subsidise losses on some destinations against profits on others up until the date that you can revise tariffs and advise customers well in advance. This is trivial in normal market conditions with minor currency-related fluctuations provided fraudulent and excessive increases are not occurring.
Telkom know that operators don't change their retail tariffs immediately. (They themselves generally revise RETAIL tariffs only once a year). Making a 10,000% increase on a destination then creates a massive arbitrage opportunity which fraudsters can exploit. And exploit it they do! And who profits? Well, the money flows towards Telkom Wholesale and Telkom's response to us has been that their charges are increased as a result of their suppliers charging more. But we know, for example, in the UK case, that one of their suppliers is BT and BT did NOT impose such an increase. Which means that, if Telkom's response to us that their suppliers increased tariffs is true, Telkom staff have authorised routing of that traffic via their most expensive supplier (not the trusted ones) and authorised rate increases, enabling the cash outflow of profits made from FRAUD to a rogue foreign supplier.
How do we know that Telkom staff are involved? Well, aside from the fact that they've had to authorise the increases and reclassify destinations on their tariff lists, we've seen fraudulent retail sign-ups within a couple of days of Telkom increasing rates to a destination which the fraudsters exploited. i.e. The fraudsters knew of the rate increase as soon as (if not before) they happened. Remember, wholesale rates are not made public; they are not on any web site; so, within two days, fraudsters knew of a confidential rate change that Telkom had applied?!
Telkom's fraud and ethics department were provided with full details. They allegedly investigated it and decided that nothing was untoward. Their response was that they had nothing to do with the retail customer that generated the fraudulent traffic. They neglected to deal with the fact that the beneficiary of the profits of the fraud was themselves.
So why, now, the noise? Well, Telkom are suddenly reclassifying new destinations (not just UK non-geographic) as premium rate, when they are not. i.e. the extent of the fraud is escalating.
And now is great time for changes in certain destinations to be missed. Why? Because, with the rand weakening, it is expected that there will be slight revisions of rates to almost all international destinations. So it's easy for an increase on one destination out of thousands to be overlooked. That is, unless, someone makes some noise and brings it to people's attention.
I have tried to co-operate with Telkom on this. I've had meetings with them. I've supplied them with the evidence. Over a year has passed. Can anyone expect me to sit quietly while more people fall victim to this?
