M-Web files complaint against telkom

[gljackson]

M-Web, Telkom


M-Web, SA's largest consumer-focused Internet service provider, has filed a complaint against Telkom at the competition commission, accusing the monopoly fixed-line operator of "margin squeeze" in broadband services. It also wants Telkom to pay for an upgrade to the "peering" link between Telkom and Dimension Data's Internet Solutions, which provides its bandwidth.


CEO Kim Reid says that because of the way Telkom structures its tariffs, it is not possible for M-Web to make a profit selling Internet access using the operator's broadband lines.


Reid thinks M-Web's complaint is the first case of alleged margin squeeze to be brought before the commission. Several incumbent operators in Europe, including Germany's Deutsche Telekom and Britain's BT Group, have faced similar allegations.


Telkom spokesman Xolisa Vapi says the carrier cut its broadband line rental fees on August 1. This, he says, undermines the basis of M-Web's complaint.


Sentech


Sentech is in talks with a wide range of potential partners as it seeks a capital injection of as much as R1,5bn to accelerate the deployment of its national 3G network, called MyWireless. The state-owned enterprise is understood to have approached as many as nine companies, including JSE-listed IT distribution and services group Datatec, German telecom carrier Deutsche Telekom and Detecon, a division of Germany's T-Systems. It's not clear what role Sentech hopes each of these parties will play.


A source familiar with Sentech's plans says it is considering several options. It may simply seek a loan on commercial terms from a bank, or it could sell equity to one or more partners in the private sector. An announcement is expected before the end of the year.


BT Group


Britain's BT Group has held preliminary discussions with potential partners, including Wireless Business Solutions, the operator of the iBurst wireless broadband network, as it weighs up whether to do an empowerment transaction involving its SA subsidiary. BT's SA office provides a range of services to multinationals, to telecom operators, and to the corporate sector. "We've been in talks with a number of parties," says Brian Armstrong, BT's GM for the Middle East and Africa.

http://free.financialmail.co.za/05/0819/technology/ctech.htm

 

[Vio]

I have got too wonder what does cutting line rental fees have todo with pricing structure...

 

[Franna]

Can anybody please explain "margin squeeze" in laymans terms.

 

[Clipse]

You honestly think mr. Vapi uses his brain to think? I bet he thinks with his wallet.

 

[stoke]

You see - teklom are selling at least 2 products from MWeb-s point of view:
- a dedicated line of x capacity.
- adsl/dialup products.

Now - MWeb is trying to sell adsl/dialup products that compete with teklom's adsl/dialup products. In order to provide the bandwidth for these products, mweb MUST (by law and so that they can do value-add service addons) use teklom's dedicated line of x capacity.

Now - the costing structure of the dedicated line of x capacity with n users using it, and still providing the user with a level of service, is so close to the costing structure of a standard teklom adsl/dialup product that there is no room for movement. MBeb's product ends up being so much more expensive than teklom's that it is not sustainable.

i.e. Teklom's dedicated line of x capacity is too expensive for it to be used as intended.

Well - that's what I think it means...

 

[morebroadband]

Telkom are subsidizing their profits by charging for the Line Rental. This was proven very clearly by MTNS, MWEB & others at the Hearings held at ICASA.

The are the only ones able to charge the line rental fee in addition to their ISP fees.The line rental fee goes directly to their bottom line (i.e. Profit) It was also proven that the ISP can only make a profit of R28 by selling ADSL services. This R28 is gross, as they still have to provide e-mail services!

This is why ICASA have recommended that the line rental be scrapped, and this is exactly what RPM and all the others have been fighting for.

I assume MWEB have become impatient waiting for this recommendation to become law, and hence have launched this complaint.

I say the more pressure put on Telkom the better. I jus wish all the other ISP's would do the same.

 

[Raithlin]

I say the more pressure put on Telkom the better. I jus wish all the other ISP's would do the same.

True, but MWeb is certainly a good start, being the largest provider of internet services in SA...

 

[stoke]

/me seez the light - yea - LINE FREAKING RENTAL - the unfair bit.

 

[The_Right_Honourable_Brit]

Originally Posted by morebroadband
I say the more pressure put on Telkom the better. I jus wish all the other ISP's would do the same.

The problem is some operate on small margins and can't afford a big legal battle between them and Telscum

 

[doobiwan]

I wonder which would be more effective: Multiple law suits from all the ISP's or a single class action suit from a few of them / ISPA?

 

[LoneGunman]

I think what would also be effective, would be cheerful emails to the Print Media, and TV News, pointing out this latest action by Mweb, and suggesting that this is newsworthy and should be covered and explained to the public.

A rising tide of articles, features and news items dealing not only with lawsuits against Telkom, but also its assorted grubby practices - will be useful in helping destroy their carefully cultivated PR image - as well as add fuel to the lurking ICASA story..

-LoneGoebbels

 

[lewstherin]

MWeb is also probably the worst affected by the SAIX/IS peering issues, since MWeb is running on IS backbones.
Being on IS has probably also emboldened them to an extent, since Telkom is less able to "influence" their service delivery.

A small ISP is usually heavily reliant on the Telkom diginet and the SAIX backbone at some point for its services.
I have it on good authority that such ISPs have discovered "sudden bugs" take down their lines and that Telkom becomes even slower in maintenance and installation when a formal complaint is logged.

ie. Basic intimidation by our local Godfather of telecoms keeps complainant's mouths shut.

 

[BTTB]

Dark Ages.

$izwe and Ivy: proud sponsors of the SA telecoms dark age

I think that is appropriate.
One day in the not too distant future we will look back at this period as the dark ages of Telecommunications.
I hope someone makes sure to capture this bit of history so that later generations can look back and laugh at us and the rubbish that Telkom dished out to the not so well informed general public.

Perhaps Sizwe has realised that he doesn't want to be part of this history in the making?
Ivy should retire. End of story.

 

[Muzzel]

ok so now explain this to me ... Mweb wants to stop Telkom from price reductions, but Telkom gets bashed in the process? Surely it's the biggest ISP that wants to force it's bad pricing model on the whole industry and we all end up bashing Telkom instead of big old Mweb ....

 

[mccrack]

My impression is that the manner in which Telkom structured the ADSL product makes it hard for other ISP's to resell the accounts, with added services with any sort of decent profit. Someone correct me of i am wrong.

 

[antowan]

Margin squeeze

"The combined alteration of interconnection/access prices on the part of the incumbent which affect (squeeze) the margin of an alternative operator which uses the intermediate goods provided by the incumbent to generate its own offer to the end users."

It is important to note that there can be margin squeeze even in a market of dropping prices... Telkom can thus not protect itself using the "but I dropped prices in August" tactic.

1st November is looming anyway...

 

[MaD]

Ivy should retire. End of story.

They have wonderful retirement villages on other parts of the planet.

 

[Clipse]

I would pay for her retirement home, if we can replace her with someone with Grade 1 education in telecoms. Over time I would not lose money doing this, since the better telecoms/cheaper telecoms would subsidise her retirement home fees ;-)

 

[morebroadband]

Telkom spokesman Xolisa Vapi says the carrier cut its broadband line rental fees on August 1. This, he says, undermines the basis of M-Web's complaint.​

This guy does not seem to have a clue. To make a statement like that in view of the complaint shows he is on another planet...maybe the same planet where Poison Ivy will retire!

 

[Celemasiko]

http://free.financialmail.co.za/05/0819/technology/ctech.htm

Vapi as usual only rubbish....