kaspaas
Expert Member
Mr White wrote many things, including:
"It will be unfair to benchmark Telkom prices for broadband services against USA and Europe due to the imbalance in economies of scale, and the fact that they do not have to pay for expensive international connectivity."
I would like to comment on this:
Firstly, it has been pointed out that if the international going rates are stretched, the ISP portion of ADSL (R219 for Prolog) Telkom charges, could be considered something close to reasonable. This portion includes the International Traffic - if I'm not mistaken. The way I understand, and I'm no authority on this, is that Telkom is legally required to separate its "infrastructure" and "services" operations. Providing the line should be done without regard for the bandwidth costs associated. The line cost is the component which is far out of scope when compared with other countries, not the bandwidth cost. In Germany the line cost is advertised at around E20.
So, on the surface, the argument of expensive international bandwidth does not stand up to reality. Unless Telkom subsidises "ISP" operations with "ADSL line charges".
I might be wrong on the above, and if I am, please correct me. But the few facts that readily available due to Telkom's reluctance to communicate, does not add up.
Secondly: Mr White claims that elsewhere economies of scale makes ADSL much cheaper to offer than Telkom could. Why does Telkom then not go for the target of creating the scales of economy to compete with overseas?
If Telkom ADSL (Line + ISP) was in line with other countries, (USD30-40 for homeusers = about R 250 - 300), many home users would opt for ADSL rather than their current dial-ups. Forgive me if I'm mistaken, but this would again not fit the Telkom way of doing business:
ADSL generates a fixed monthly fee.
Dial-up and ISDN generates a variable monthtly fee: Basic subscription and most important, no matter which ISP you are using, Telkom bills the call units while you are online.
It is therefore to me obvious that it is not in the interest of Telkom's profit model to offer an honest basic ADSL service at a price that would generate the scales of economy mr White refers to.
It is nice to be a statutary monopoly. You can do what you like, and no-one could do much against you.
"It will be unfair to benchmark Telkom prices for broadband services against USA and Europe due to the imbalance in economies of scale, and the fact that they do not have to pay for expensive international connectivity."
I would like to comment on this:
Firstly, it has been pointed out that if the international going rates are stretched, the ISP portion of ADSL (R219 for Prolog) Telkom charges, could be considered something close to reasonable. This portion includes the International Traffic - if I'm not mistaken. The way I understand, and I'm no authority on this, is that Telkom is legally required to separate its "infrastructure" and "services" operations. Providing the line should be done without regard for the bandwidth costs associated. The line cost is the component which is far out of scope when compared with other countries, not the bandwidth cost. In Germany the line cost is advertised at around E20.
So, on the surface, the argument of expensive international bandwidth does not stand up to reality. Unless Telkom subsidises "ISP" operations with "ADSL line charges".
I might be wrong on the above, and if I am, please correct me. But the few facts that readily available due to Telkom's reluctance to communicate, does not add up.
Secondly: Mr White claims that elsewhere economies of scale makes ADSL much cheaper to offer than Telkom could. Why does Telkom then not go for the target of creating the scales of economy to compete with overseas?
If Telkom ADSL (Line + ISP) was in line with other countries, (USD30-40 for homeusers = about R 250 - 300), many home users would opt for ADSL rather than their current dial-ups. Forgive me if I'm mistaken, but this would again not fit the Telkom way of doing business:
ADSL generates a fixed monthly fee.
Dial-up and ISDN generates a variable monthtly fee: Basic subscription and most important, no matter which ISP you are using, Telkom bills the call units while you are online.
It is therefore to me obvious that it is not in the interest of Telkom's profit model to offer an honest basic ADSL service at a price that would generate the scales of economy mr White refers to.
It is nice to be a statutary monopoly. You can do what you like, and no-one could do much against you.