Different reason for Telkom pricing and service

Valerion

Expert Member
Joined
Oct 13, 2003
Messages
1,967
Reaction score
36
Location
::1
On my way home I've been thinking about Telkom and their pricing scheme (scam?). I know Telkom now uses outside contractors to install ADSL (I've dealt with them myself last year), and according to rumours I've heard they have a backlog of 30,000 lines, with an average wait time of 6-8 weeks. I can't recall ever waiting less than 15 minutes on the ADSL helpline for someone to answer my call.

Given all that, combined with Telkom's pricing, limiting it to a small segment of the total market, could the real reason for the high prices be as simple as resources? They don't have the capacity to get the current flood of applications serviced, if ADSL prices fall to more acceptable levels, would that leave them completely unable to cope, manpower-wise?

And then there's the issue of backhaul. If ADSL becomes more mainstream, will Telkom's local backhaul infrastructure be able to cope with the increased demand?

Of course, a reasonable company, facing such a dilemma, will use at least some of the R10bn+ of profit they make and address these issues, to increase future profitability, so it definably is no excuse for their service levels or pricing.

Maybe the real issue is a corporate mindset, I don't know. Telkom used to be a parastatal. People in such an environment frequently look out for just themselves. How big an "empire" you have (people working for you) defines how successful and important you are. There will always be customers, after all, why care about giving good service? Where else would they go?

A mindset like this in middle management could easily lead to what we see today with Telkom, especially if upper management doesn't care / is incompetent. And the ground-level staff doesn't care, they just need to get their own empires together so they can rise in the ranks too.
 
It just baffles me that shareholders (with the exception of government) haven't all stood up and demanded that something changed.

There are a couple of possible explanations that I can think of, anybody care to contribute more?

Perhaps the government's stake in Telkom (especially when you consider the possibility of shares being indirectly owned by government officials) is big enough that any proposals for change are automatically vetoed, because the government wouldn't want anything to change.

Why don't they want anything to change? Either:
1. They don't care if Telkom is run into the ground because they've already become stinking rich, or
2. They think that Telkom's monopoly will be protected forever, or
3. They expect enough people to remain with Telkom (out of habit or contract) that they won't be impacted when cheaper and better alternatives arrive.
 
3. They expect enough people to remain with Telkom (out of habit or contract) that they won't be impacted when cheaper and better alternatives arrive.

The sad thing is a lot of people probably will.
 
Next time someone uses the manpower argument to explain Telkom's ADSL "policy", remind them about the 35 000 workers they have fired over the last 10 years...

Sympathy = 0
 
Ultimately its classic monopoly behaviour, sell less of a product at a higher price and you can have higher profits with lower expenses. They're doing it because they can get away with it and nobody's stopping them.
 
Ultimately its classic monopoly behaviour, sell less of a product at a higher price and you can have higher profits with lower expenses. They're doing it because they can get away with it and nobody's stopping them.

Yet.

I'm not saying that things are going to change for them tomorrow, but they're pissing off more people every day and if they want to retain customers into the future they should have started fixing things 6-12 months ago.
 
Yet.

I'm not saying that things are going to change for them tomorrow, but they're pissing off more people every day and if they want to retain customers into the future they should have started fixing things 6-12 months ago.

I agree but its amazing how people don't realise just how bad they are, maybe when they see the contrast they will, hopefully there will be a contrast!
 
Next time someone uses the manpower argument to explain Telkom's ADSL "policy", remind them about the 35 000 workers they have fired over the last 10 years...

Oh, but outsourcing is SUCH a hot new topic ... you don't need to pay 35,000 people to do the job, you can get CONTRACTORS to do it. Think of the cost savings in salaries alone. And no need to deal with pesky labour unions either.

[/sarcasm]
 
I believe Telkom has an equation built into a spread sheet somewhere with all their products listed with their pricing in it.

They simply put in what their profit needs to be and then they adjust every products price so that it doesn't compete with another and also doesn't affect the profit. If one thing goes up something else comes down and so on. To make things even easier to manage they will even go as far as to cripple a service as is the case with ADSL.

They don't want it to affect their profit due to loss in per second billed dialup. What do they do? They make it expensive and also cap it so that you need to buy regular bandwidth updates. ADSL might enable you to fix the monthly internet expense and make the net a little nicer to use, but it is not a major cost advantage.
 
Top
Sign up to the MyBroadband newsletter
X