Nice post djrwb. The problem is that the majority of posters don't have enough understanding of how business owners think and how capital allocation decisions are made and the pricing of these products based on these capital investments. Before I elaborate, just to be clear, I do think Telkom needs to reduce their ADSL access charges, this will come, because the spread and absolute levels of pricing between the different speed options are not optimal.
Your ADSL internet cost is made up of 3 basic costs:
1. Telkom copper voice line rental
2. ADSL port charge for ADSL infrastructure inside the exchanges
3. ISP charge for bandwidth usage
I want to concentrate on the first 2, since competition has driven the last one down dramatically recently and this is set to continue.
As regards to 1, many think because something is already paid for, in this case the physical copper line infrastructure, there is no costs anymore. This is the same as saying because your landlord has already paid for his house, that he is not allowed to charge you a market related rent anymore! Is this reasonable?
Further, there is of course ongoing maintenance costs and operating costs as well as overhead costs involved in maintaining a fixed copper line infrastructure and providing services over this infrastructure. I actually think the line charge is not expensive and if anyone thinks different, they are of course welcome to build their own network these days. The new legislation made this possible, but I dont see any big players rushing out to build their own copper line network! I certainly wont, because I dont think I will get a good return on my investment.
and then there is of course copper line theft of hundreds of million a year ...
Then lastly, the ADSL port charge. Now here I agree wholeheartedly that the costs are too high. The extra investment in infratructure for ADSL DSLAMS and other networking equipment, backups etc, was needed , but the charges are not economical with the costs in my opinion. These charges will come down I think, maybe very soon, because R400 for a 4mbps ADSL port is way too expensive.
One of the only posts in this thread that actually seems to know how Telkom's network works.....I wholeheartedly agree with this.
Very few people seem to realize that there is more than a dude on roller-skates who runs around with a cable to connect your call. Some things to take note of when paying the rental on your line.
I can easily see how R300 can be reached on line rental. Consider
The hourly rate of each employee maintaining the Network including those behind the scenes, in accounts, Data centers, Cable maintainer, Carrier system techs, Submarine Cable monitoring and so many more. A portion of rent goes there.
Battery back ups, computer systems, imported German and French Exchanges and other systems with constant upgrading and field testing and maintenance for every exchange in the country including under performing areas and remote areas.
Vehicles, fuel, test equipment, fiber redundancy and as recently witnessed SAT 3 redundancy (I still had internet while Seacom was down)
All this and Telkom still makes a profit? Yes, they still bill for calls, cell inter-connects, PABX rentals ATM networks, Cell back haul, Network Management (NNOC) etc etc etc)
Overseas companies can do it cheaper why?
They dont have to import parts, skills, etc and line distances are alot shorter due to the nature of the geography.
South Africa has one of the highest lightning incidences in the world - your rental pays for maintenance with that too
To supply a farmer with a telephone service could cost Telkom around R30 000 (Poles, batteries, towers solar panels, remote power...etc) But they will still only pay a flat fee for installation. (around R450 or sometimes a little more) Your rental carries those costs
To summerize, Telkom does not bill rand per item, but instead distributes its costs relatively across its paying customers. This is perhaps where the fault lies, but very few people can see past the cloud of the ADSL router.
And yes, I did work for Telkom 7 years ago and understand the network and billing system quite well:wtf:
