lucifir
Expert Member
Hi,
Got this from somewhere else .. so not sure if it is 100% accurate .. just thought I'd share though
Steven White: Executive, product development, Telkom
Alec Hogg
Posted: Tue, 02 Aug 2005 17:00
MONEYWEB: Time to bring in Telkom and Steven White, the executive of
product development at Telkom. Well, Steven, you've come in for quite a
lot of stick in the last little while. Last night we had a gentleman in
the studio who was our Champion of Change for being the David against
the Telkom Goliath. It's all to do with broadband or ADSL - and
obviously there's another side to the story. The Regulator has put
forward a recommendation that Telkom needs to come into line, in its
opinion, with the international situation - where there shouldn't be a
fee for access and for Internet provision on these ADSL lines. And in
fact it's going to cut the cost substantially. What is the official
Telkom position on this?
STEVEN WHITE: Good evening, Alec. I think the official Telkom position
is today we have a finding from the Regulator, which we find
fundamentally flawed. As a result, of course, we don't accept that
finding, and we're happy to acknowledge the report - and as long as it
remains a finding we'd like to encourage the regulator to make time to
come and meet with us so we can point out the misunderstandings that
have taken place when it comes to the exact cost allocation and where
these costs are [indistinct] providing such a high-speed broadband
network. So, as such, you know, we acknowledge the finding, but of
course as I've stated, we actually find it flawed and fundamentally
incorrect.
MONEYWEB: Steven, I guess the argument from the others is that the line
is in place already. So, from that perspective, if you like, you've got
the network.
STEVEN WHITE: This is where all the misunderstanding comes in. The line
is in place already. It's essential to provide the ADSL service.
However, no cost element is recovered again in the line rental versus
the DSL line rental. The DSL network that we've put into place is where
all the cost elements are recovered as a separate rental charge to a
customer. Now one has to bear in mind that, while Telkom could have
bundled these together, we simply decided not to do that, to show the
customer that if you have a normal line rental - I think it's R87 a
month VAT exclusive for a residential line, that's what you pay for a
typical voice line - when it comes to adding a DSL service on top of
that line, that line is simply used to convey the DSL signals to your
home. However, the DSL network portion, which you need to pay for on a
separate line rental ...
MONEYWEB: But what are you adding, what value are you adding so that you
charge more?
STEVEN WHITE: Well, there's a whole network deployment taking place,
Alec. As a matter of fact, I can tell you Telkom has spent close to a
billion rand in the network deployment to provide DSL services - that's
to date to provide service to close to 100 000 customers, never mind the
ongoing operational expense attached to that customer. And this is what
Icasa has failed to acknowledge in our submission to them on their
Section 27 enquiry.
MONEYWEB: So if Icasa forces you to cut your fees or to cut what you're
allowed to charge on ADSL, does that mean that you - we had the argument
the other night from Allan Knott-Craig on the cellphone side - does that
mean that you would simply not invest any further in it?
STEVEN WHITE: Absolutely. You know, we have as I said, 100 000 customers
almost on board, and we have an investor community which has invested
R1bn of their capital almost. We have got plans to go, you know, way
further forward with that in the future. We believe we can reach half a
million customers in this country and really get to cross the broadband
issues and [indistinct] and so forth. It's a simple base of economics.
If a regulation which has not been well thought through is promulgated
or brought to bear, that we cannot recover the cost of our investment,
we simply cannot look our shareholders in the eye and say, "We'll
continue to invest in this business". That's obviously not an option.
MONEYWEB: Steven, isn't the big problem here that you are a monopoly, on
the wired side, that you are the only - or if you like, as the SAB
language, you're sole supplier here - and when you do get a competitor,
it might be a lot easier for you to be able to charge differently?
STEVEN WHITE: Alec, let's take it on two fronts. Let's take broadband.
There are five service providers in the country.
MONEYWEB: On the wired side?
STEVEN WHITE: I'll get there in a second. On the broadband side, you
know, we provide the best service for way the cheapest price, and are
acknowledged for that with many fold the market share and, quite
frankly, an order book that we can't manage, and we had to [indistinct]
skill up to meet demand. On the wired side, the fact that the next
operator hasn't been licensed or is about to come into being, the
fruition, is something that we welcome. But I urge all involved to
consult with the next network operator and say, "How do you feel about
the fact that this massive investment you have to make to take Telkom
head-on to compete with ADSL, if you are not allowed to - you won't be
allowed to, but you have to be treated similarly - you won't be allowed
to recover that investment in the form of a rental?" I think you're
going to find a very negative response or a sedated response from such
an operation.
MONEYWEB: There are always two sides to every story. Piet Viljoen, you
follow Telkom, and I'm sure you're on top of this story as well. But
from a broader perspective, Steven seems to have a point.
PIET VILJOEN: Yes, but I do think if one looks at the structure of the
market, I think the argument as far as I can understand boils down to
the fact that if they don't charge this fee for ADSL then, if a
competitor comes in, they won't be able to afford the capital
investment. So, in other words, what they're saying is that they are
effectively preparing the ground for a competitor to come in. That
doesn't sound like a rational competitive response to me. You know, if
it was a competitive market, I would expect Telkom to cut those prices
to the bone to stop anybody else from coming in. So it just sounds a bit
illogical.
MONEYWEB: Hmm. Steven?
STEVEN WHITE: A good point. Maybe I can put some light on that. You
know, we're always on record for saying apparent responsibility towards
shareholder and customer, you know, and that's what we're trying to
maintain. If you look at our price decreases this year, it's almost 50%
if you take a business, a 5.2 kilobit customer. A DSL network lends
itself tremendously to economies of scale and to cost efficiencies pre
unit of sale. And, as we grow the product and as we put more customers
on the network, it gets cheaper and cheaper. And we've gone on record as
saying that that's the case. And if you look at our track record this
year with two price reductions, significant price reductions, and the
expectations, if we can maintain the same market share and growth in
network to carry it on in a linear fashion going forward, the commitment
is there to provide that cost-effectiveness back to the customer, and to
reduce prices.
MONEYWEB: So you're looking to grow the volumes and in that way you can
make it cheaper for everyone?
STEVEN WHITE: The DSL network is pretty much like a bus company. If you
have five or ten buses and 100 customers, and you get 1 000 customers,
you don't need to go to 10 times the amount of buses - you can get away
with double. And hence the huge cost-efficiency coming in if you
oversell that network. And that's exactly what happens and exactly what
we plan to pass on to our customers. So, if a regulation which has
clearly not been well thought through is passed, it prevents us from
doing that. It's really going to stagnate the broadband market. And I
think our stance this time round is going to be fairly aggressive in
that we have a significant investment, we have a lot of customers out
there relying on us, and we will not allow that to happen. We'll use
every recourse available to make sure that this thing is revisited and
sanity will prevail.
MONEYWEB: Steven White, executive for product development at Telkom.
David, there are always two sides to every story.
DAVID SHAPIRO: There's one thing that I can't come to terms with,
because I've been looking very carefully at ADSL - it's something like
R700 a month. If it was offered to me ...
MONEYWEB: Yes, but they're cutting it, they are ...
DAVID SHAPIRO: Yes, but if it was offered to me at R300 or R400, I
wouldn't have even thought about it, I would have taken it. And I'm sure
that they would have been able to double/quadruple their base without
even thinking about it.
MONEYWEB: Let's just see - Steven, are you still with us?
STEVEN WHITE: Well, I think we need to say our prices start at R270 as
from the 1st of August.
MONEYWEB: You see, they've cut it - you've already reduced it by 50%?
STEVEN WHITE: We have, but I'd like to raise this issue. Funnily enough,
talking to a journalist today, people don't understand or have all the
facts available. I can understand the frustrations of people when there
are perceptions of high prices and poor delivery, which are, quite
frankly, not the case, and our entry-level product now starts at R270 a
month and our 512 kilobit product is now R477 a month - and that's for
business and residential.
MONEYWEB: Well, I think, as I said earlier, there are two sides to every
story and we thank Steven White from Telkom for coming on tonight. If
only we could get SAA to perhaps give their point of view on the flak
that they're taking at the moment
Got this from somewhere else .. so not sure if it is 100% accurate .. just thought I'd share though
Steven White: Executive, product development, Telkom
Alec Hogg
Posted: Tue, 02 Aug 2005 17:00
MONEYWEB: Time to bring in Telkom and Steven White, the executive of
product development at Telkom. Well, Steven, you've come in for quite a
lot of stick in the last little while. Last night we had a gentleman in
the studio who was our Champion of Change for being the David against
the Telkom Goliath. It's all to do with broadband or ADSL - and
obviously there's another side to the story. The Regulator has put
forward a recommendation that Telkom needs to come into line, in its
opinion, with the international situation - where there shouldn't be a
fee for access and for Internet provision on these ADSL lines. And in
fact it's going to cut the cost substantially. What is the official
Telkom position on this?
STEVEN WHITE: Good evening, Alec. I think the official Telkom position
is today we have a finding from the Regulator, which we find
fundamentally flawed. As a result, of course, we don't accept that
finding, and we're happy to acknowledge the report - and as long as it
remains a finding we'd like to encourage the regulator to make time to
come and meet with us so we can point out the misunderstandings that
have taken place when it comes to the exact cost allocation and where
these costs are [indistinct] providing such a high-speed broadband
network. So, as such, you know, we acknowledge the finding, but of
course as I've stated, we actually find it flawed and fundamentally
incorrect.
MONEYWEB: Steven, I guess the argument from the others is that the line
is in place already. So, from that perspective, if you like, you've got
the network.
STEVEN WHITE: This is where all the misunderstanding comes in. The line
is in place already. It's essential to provide the ADSL service.
However, no cost element is recovered again in the line rental versus
the DSL line rental. The DSL network that we've put into place is where
all the cost elements are recovered as a separate rental charge to a
customer. Now one has to bear in mind that, while Telkom could have
bundled these together, we simply decided not to do that, to show the
customer that if you have a normal line rental - I think it's R87 a
month VAT exclusive for a residential line, that's what you pay for a
typical voice line - when it comes to adding a DSL service on top of
that line, that line is simply used to convey the DSL signals to your
home. However, the DSL network portion, which you need to pay for on a
separate line rental ...
MONEYWEB: But what are you adding, what value are you adding so that you
charge more?
STEVEN WHITE: Well, there's a whole network deployment taking place,
Alec. As a matter of fact, I can tell you Telkom has spent close to a
billion rand in the network deployment to provide DSL services - that's
to date to provide service to close to 100 000 customers, never mind the
ongoing operational expense attached to that customer. And this is what
Icasa has failed to acknowledge in our submission to them on their
Section 27 enquiry.
MONEYWEB: So if Icasa forces you to cut your fees or to cut what you're
allowed to charge on ADSL, does that mean that you - we had the argument
the other night from Allan Knott-Craig on the cellphone side - does that
mean that you would simply not invest any further in it?
STEVEN WHITE: Absolutely. You know, we have as I said, 100 000 customers
almost on board, and we have an investor community which has invested
R1bn of their capital almost. We have got plans to go, you know, way
further forward with that in the future. We believe we can reach half a
million customers in this country and really get to cross the broadband
issues and [indistinct] and so forth. It's a simple base of economics.
If a regulation which has not been well thought through is promulgated
or brought to bear, that we cannot recover the cost of our investment,
we simply cannot look our shareholders in the eye and say, "We'll
continue to invest in this business". That's obviously not an option.
MONEYWEB: Steven, isn't the big problem here that you are a monopoly, on
the wired side, that you are the only - or if you like, as the SAB
language, you're sole supplier here - and when you do get a competitor,
it might be a lot easier for you to be able to charge differently?
STEVEN WHITE: Alec, let's take it on two fronts. Let's take broadband.
There are five service providers in the country.
MONEYWEB: On the wired side?
STEVEN WHITE: I'll get there in a second. On the broadband side, you
know, we provide the best service for way the cheapest price, and are
acknowledged for that with many fold the market share and, quite
frankly, an order book that we can't manage, and we had to [indistinct]
skill up to meet demand. On the wired side, the fact that the next
operator hasn't been licensed or is about to come into being, the
fruition, is something that we welcome. But I urge all involved to
consult with the next network operator and say, "How do you feel about
the fact that this massive investment you have to make to take Telkom
head-on to compete with ADSL, if you are not allowed to - you won't be
allowed to, but you have to be treated similarly - you won't be allowed
to recover that investment in the form of a rental?" I think you're
going to find a very negative response or a sedated response from such
an operation.
MONEYWEB: There are always two sides to every story. Piet Viljoen, you
follow Telkom, and I'm sure you're on top of this story as well. But
from a broader perspective, Steven seems to have a point.
PIET VILJOEN: Yes, but I do think if one looks at the structure of the
market, I think the argument as far as I can understand boils down to
the fact that if they don't charge this fee for ADSL then, if a
competitor comes in, they won't be able to afford the capital
investment. So, in other words, what they're saying is that they are
effectively preparing the ground for a competitor to come in. That
doesn't sound like a rational competitive response to me. You know, if
it was a competitive market, I would expect Telkom to cut those prices
to the bone to stop anybody else from coming in. So it just sounds a bit
illogical.
MONEYWEB: Hmm. Steven?
STEVEN WHITE: A good point. Maybe I can put some light on that. You
know, we're always on record for saying apparent responsibility towards
shareholder and customer, you know, and that's what we're trying to
maintain. If you look at our price decreases this year, it's almost 50%
if you take a business, a 5.2 kilobit customer. A DSL network lends
itself tremendously to economies of scale and to cost efficiencies pre
unit of sale. And, as we grow the product and as we put more customers
on the network, it gets cheaper and cheaper. And we've gone on record as
saying that that's the case. And if you look at our track record this
year with two price reductions, significant price reductions, and the
expectations, if we can maintain the same market share and growth in
network to carry it on in a linear fashion going forward, the commitment
is there to provide that cost-effectiveness back to the customer, and to
reduce prices.
MONEYWEB: So you're looking to grow the volumes and in that way you can
make it cheaper for everyone?
STEVEN WHITE: The DSL network is pretty much like a bus company. If you
have five or ten buses and 100 customers, and you get 1 000 customers,
you don't need to go to 10 times the amount of buses - you can get away
with double. And hence the huge cost-efficiency coming in if you
oversell that network. And that's exactly what happens and exactly what
we plan to pass on to our customers. So, if a regulation which has
clearly not been well thought through is passed, it prevents us from
doing that. It's really going to stagnate the broadband market. And I
think our stance this time round is going to be fairly aggressive in
that we have a significant investment, we have a lot of customers out
there relying on us, and we will not allow that to happen. We'll use
every recourse available to make sure that this thing is revisited and
sanity will prevail.
MONEYWEB: Steven White, executive for product development at Telkom.
David, there are always two sides to every story.
DAVID SHAPIRO: There's one thing that I can't come to terms with,
because I've been looking very carefully at ADSL - it's something like
R700 a month. If it was offered to me ...
MONEYWEB: Yes, but they're cutting it, they are ...
DAVID SHAPIRO: Yes, but if it was offered to me at R300 or R400, I
wouldn't have even thought about it, I would have taken it. And I'm sure
that they would have been able to double/quadruple their base without
even thinking about it.
MONEYWEB: Let's just see - Steven, are you still with us?
STEVEN WHITE: Well, I think we need to say our prices start at R270 as
from the 1st of August.
MONEYWEB: You see, they've cut it - you've already reduced it by 50%?
STEVEN WHITE: We have, but I'd like to raise this issue. Funnily enough,
talking to a journalist today, people don't understand or have all the
facts available. I can understand the frustrations of people when there
are perceptions of high prices and poor delivery, which are, quite
frankly, not the case, and our entry-level product now starts at R270 a
month and our 512 kilobit product is now R477 a month - and that's for
business and residential.
MONEYWEB: Well, I think, as I said earlier, there are two sides to every
story and we thank Steven White from Telkom for coming on tonight. If
only we could get SAA to perhaps give their point of view on the flak
that they're taking at the moment
