Bizarre ADSL IPC pricing, Telkom double billing questioned

O for ****s sake Derek bring some meaningful to the table or admit to your board that you don't have the ability to do your job. Take Telkom to task on actual issues and cooperate and network where the opportunity presents itself. Being dishonest doesn't move the industry forward and really just destroys your own company. The IPConnect costing system is too high but it is still cheaper than for you to build your own network and there have been plenty of earnings from ISPs. Build a case that will see the infrastructure Telkom holds generate it more revenue than it currently is and which lowers the costs and then a refusal from Telkom to play ball can be dealt with but at this stage. But at this juncture you want Telkom to subsidize your operations (I think Ranger said it best in one of the threads a few days ago) and for the taxpayer through subsidies to end up topping up the model (paragraph 1.5.5) so if MWEB gets there way Telkom will subsidize them and we will subsidize Telkom and any notion of accountability will evaporate.

But lets face it, getting ICASA to beat on Telkom while MWEB margin squeezes is just a perfect bout of play for ol Naspers - nice trick on warding of ODM from bringing out porn packages.

As a side note I am not seeing additional submissions from MWEB on LLU just there sloppy attempt to turn SA into Hobbiton (they appended tomes of documentation on LLU implementation in New Zealand, probably collected by DSTV management during the Tri-Nations). It might be an ICASA thing but I am keen to see if additional comments were made following the explanatory note (I know I made supplementary submissions). The quotes in this article are from a document from November last year: https://www.icasa.org.za/Legislatio...ItemDetails/mid/1685/ItemID/1729/Default.aspx
 
Paul Hjul said:
Being dishonest doesn't move the industry forward and really just destroys your own company. The IPConnect costing system is too high but it is still cheaper than for you to build your own network and there have been plenty of earnings from ISPs. Build a case that will see the infrastructure Telkom holds generate it more revenue than it currently is and which lowers the costs and then a refusal from Telkom to play ball can be dealt with but at this stage.
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I don't think Derek needs to/has to/should come up with ways for Telkom to better leverage their infrastructure and increase their revenue. Telkom has a CEO as well.

IPConnect is exorbitant, and reducing the price on that benefits all ISPs and end users. In the past when IPConnect pricing has dropped it's directly resulted in price drops from one or more ISP. Even if you don't like MWEB and have issues with Derek, it still comes through for us.

Artificially charging more for crucial interconnect to subsidize other parts of your business needs to be stopped, and we've seen the benefit having ICASA step in can bring in the mobile market with Cell C/TM vs MTN/Vodacom.
 
Telkom's CEO is doing a fine job of finding revenue for his company. He isn't the one demanding that somebody lower the pricing. If you want to get a supplier to change their pricing for you, you pretty much need to make a case that it is in their interests to do so - having another supplier you could turn to would be one.

Asking for more regulatory intervention as a monopolistic player is really just poor form.
 
km2 said:
I don't think Derek needs to/has to/should come up with ways for Telkom to better leverage their infrastructure and increase their revenue. Telkom has a CEO as well.

IPConnect is exorbitant, and reducing the price on that benefits all ISPs and end users. In the past when IPConnect pricing has dropped it's directly resulted in price drops from one or more ISP. Even if you don't like MWEB and have issues with Derek, it still comes through for us.

Artificially charging more for crucial interconnect to subsidize other parts of your business needs to be stopped, and we've seen the benefit having ICASA step in can bring in the mobile market with Cell C/TM vs MTN/Vodacom.
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I think you are missing the gist of Paul's post. It revolves around facilities leasing...
 
Paul Hjul said:
Asking for more regulatory intervention as a monopolistic player is really just poor form.
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Ok, it's Naspers. They've got a lot of fingers in a lot of pies and various tentacles of their media empire do a lot of things I don't particularly like them. But I have no love for Telkom either.

IPConnect is too expensive for what the product supposedly is, carrying trunk data from the local exchange to the ISP, because they're using it to cross-subsidise other parts of the business. We have Telkom continuing to try and delay proper LLU due to concerns about the access line deficit, so I feel the sooner they start accurately putting the costs in the correct place the sooner we can have a functioning market.

If this was MWEB trying to do something that would benefit them to the exclusion of other ISPs (including TI) I would object. If they were somehow asking for IPConnect price drops to only ISPs of a certain size (i.e. MWEB or above), I would object. But right now they're raising what looks like are valid concerns about the price of IPConnect and results in benefits for other smaller ISPs as well as myself as an ADSL user.
 
MickeyD said:
I think you are missing the gist of Paul's post. It revolves around facilities leasing...
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I'm referring to the parts of his post that were related to the article this is about. Article isn't about facilities leasing and that is a whole bigger discussion that distracts from the current pricing of IPConnect.
 
I also battle to see how the claim can be made that IPC is exorbitant without a benchmark. MWEBs submissions to ICASA are almost as deceptive as Telkoms from 2011 on the ALD were. The IPC costs are certainly cheaper than the APN related costs.
They are high, the hurt the industry etc ... is all fine but the term exorbitant here is to suggest that Telkom is somehow milking money off the costs - which either means some shaddy underhanded dealing is taking place or Telkom needs new accountants.

The fact that it costs 15 times as much for last mile provisioning in London as it costs to carry the same bandwidth over to New York is a simple reality that anybody wanting to provide connectivity is well aware of.
(the number may have shifted but the core point is that this 4 times figure is complete hokum - distance isn't as big a deal when you are carrying a lot of data on fibre but your terminating equipment and having multiple hops ....)

I'd love to slap the CEO of Telkom with a wet fish - actually when I think about the opportunity that gets wasted I wish Marshal Erikson would just slap him right across the face. But that doesn't change the fact that the company is a venture that has to return shareholder value and is under so much regulatory scrutiny that it isn't even funny.
 
MickeyD said:
Curiosity question? If ISPs had more PoPs around the country would it decrease their dependence on IPC?
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Well if MWEB has its way Telkom would be forced to give massive discounts - remember the complaints that it is only 15% on the third PoP. The particular winger on that front was advancing the argument that the discount does not equal the cost of having the national backhaul to the PoP - so basically conceding the IPC includes a massive amount of national backhaul into its pricing.

On the other hand if Telkom adopted a policy of limiting the capacity of IPC at any given ESR that could be acquired the big boys would have to get more PoPs and build there own national network. This would greatly benefit competition and keep smaller and niche players in the market. Imagine the baby MWEB would have with such an approach.
 
km2 said:
I'm referring to the parts of his post that were related to the article this is about. Article isn't about facilities leasing and that is a whole bigger discussion that distracts from the current pricing of IPConnect.
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Article is about MWEBs response on LLU which until recently was all about facilities leasing. If there is facilities leasing there is scope for competition to set the IPConnect price - at the moment the price is only really to compete with mobile as a substitute. The current pricing of IPConnect only exists within the very narrow discussion of Telkom operating as a business. MWEB want both facilities leasing and Telkom subsidizing which is nonsense.
 
Paul Hjul said:
I also battle to see how the claim can be made that IPC is exorbitant without a benchmark. MWEBs submissions to ICASA are almost as deceptive as Telkoms from 2011 on the ALD were. The IPC costs are certainly cheaper than the APN related costs.
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Doing a quick search a number that stood out to me was from back in 2008 where Plus net had a post on what it cost them for their BT IPStream Connect portion.

http://community.plus.net/blog/2008...e-charged-for-broadband-the-cost-of-ipstream/

Which equates to a per Mbps cost of £126.86 per month before we consider any transit or routing costs on our own network.
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So back in 2008 that looks like roughly R2300 per Mbps per month for something that does the same thing as IPConnect. Comparing that then to the 2010 article about EASSy that brought further international connectivity price cuts I see:

http://mybroadband.co.za/news/broadband/15634-eassy-to-spark-another-bandwidth-price-war.html

According to a reliable source they can land an STM-1 (155 Mbps) with full onward Internet bandwidth from Djibouti (where EASSy terminates) to London and beyond for around US$360 (±R2 475) per Mbps per month. This price rivals the most aggressive pricing on SEACOM and SAT-3/SAFE.
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So yes, it's over a few years but I would think that over time prices would normally be falling per Mbps so 2008 numbers shouldn't be too much worse than now.
 
Paul Hjul said:
I don't think you are helping make the case that IPC is to expensive with the figures you've presented

go to page 22 and you'll see a figure of under 2k a month per megabit
https://www.icasa.org.za/Legislatio.../ItemDetails/mid/1685/ItemID/933/Default.aspx

Since 2011 IPC costs have almost halved.
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It's based on figures from 5 years ago compared to international connectivity from the same kind of era, and it shows that it's possible to maintain some kind of parity between them, rather than being 4x more expensive.
 
yes it shows that the price of BTs equivalent product is priced around what IPConnect in SA was priced at - 126 pounds takes us to close to 2k - which matches the figure MWEB was quoting.

So it shows that the pricing of IPConnect (which is on a much bigger geographic basis)

I am sure current BT figures will show that their similar products are priced at about 30% less than what IPConnect is priced at by Telkom.

No its not possible to maintain parity for a very simple reason namely amount of data transferred. As I said it cost at some point 15 times more to get last mile connectivity in London a few years ago than to carry that traffic over to the US - it cost a lot on the US side to get it to the last mile as well. The last mile is where the costs are and there are costs in the middle mile (national backhaul). If it was cheaper ISPs would build their own network.
 
Paul Hjul said:
yes it shows that the price of BTs equivalent product is priced around what IPConnect in SA was priced at - 126 pounds takes us to close to 2k - which matches the figure MWEB was quoting.
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The BT figures being comparable from three years before, so indeed, if we can advance our pricing three years we'll be in a much better place.

Paul Hjul said:
The last mile is where the costs are and there are costs in the middle mile (national backhaul). If it was cheaper ISPs would build their own network.
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Then Telkom needs to accurately reflect those costs between what is last mile and what is middle mile, and that's what MWEBs complaint is about. Stop moving the last mile costs into the middle mile pricing. Once that happens there's far less reason for Telkom to fight the implementation of LLU tooth and nail and then we can properly see the market function with costs correctly allocated.
 
km2 said:
The BT figures being comparable from three years before, so indeed, if we can advance our pricing three years we'll be in a much better place.



Then Telkom needs to accurately reflect those costs between what is last mile and what is middle mile, and that's what MWEBs complaint is about. Stop moving the last mile costs into the middle mile pricing. Once that happens there's far less reason for Telkom to fight the implementation of LLU tooth and nail and then we can properly see the market function with costs correctly allocated.
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Because of the manner in which the network operates the national backhaul and exchange to ESR point is not really going to be up to being separated. What can however happen - and is what the ECA lends itself to envisioning is that Telkom unloads the IPC at a PoP and if the ISP isn't provisioned by somebody else they'll load up with Telkom and pay for same.

Telkom's tooth and nail fight against LLU in 2011 was irrational, bad and roundly criticized. Sadly ICASA have in this round mucked up and Telkom actually have a sound case. But facilities leased based LLU is what is long overdue - and I've always argued as much.
 
Paul Hjul said:
Telkom's CEO is doing a fine job of finding revenue for his company. He isn't the one demanding that somebody lower the pricing. If you want to get a supplier to change their pricing for you, you pretty much need to make a case that it is in their interests to do so - having another supplier you could turn to would be one.

Asking for more regulatory intervention as a monopolistic player is really just poor form.
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LoL !! yeah right Paul. Doing a fine job.Like using company money to get the CFO to buy shares before Fin release ( inside trading ). You`re blind hatred and subsequent frothing at the mouth with any ISP taking on Telkom WS are very entertaining but also pretty odd ? If Telkom`s milking the consumers via IPC cost I`m supporting anyone willing to take the fight to them. Very similar to the popular Multichoice argument that get`s discussed on here frequently.
 
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