Telkom resolves to fight LLU

This should be interesting LLU is almost a done deal , I wonder how the minister of communications Yunus Carrim is going to take this .

"The new resolutions included, amongst others, the authority to purchase back a maximum of 10% of Telkom shares if needs be, as well as the authority to provide financial support to Telkom employees – both in order to implement an employee reward share scheme.

These changes were made to ensure “greater alignment between shareholders, the board and management”, according to Telkom chairman Jabu Mabuza."

Is this more money for management ??
 
How is not taking an increase gonna make a significant dent unless the increases was to be huge?

Kinda surprised that their strategy is gov taking further ownership AND opposing LLU. To me this means only one thing.. No LLU as it hurts their investment kinda like dropping eToll..
 
Opposing LLU is a BIG MISTAKE the legislation is clear - and it really is going to be an uphill battle to change.

If Telkom wants to prevent a free rider problem on the local loop they need to drive the process - simply start making facilities leasable etc ... - rather than have a cat fight at ICASA where they are inviting others to lobby for a free ride
 
Paul Hjul said:
Opposing LLU is a BIG MISTAKE the legislation is clear - and it really is going to be an uphill battle to change.

If Telkom wants to prevent a free rider problem on the local loop they need to drive the process - simply start making facilities leasable etc ... - rather than have a cat fight at ICASA where they are inviting others to lobby for a free ride
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I want to see the official minutes of the AGM before commenting. I think the reporter left out a piece...
 
MickeyD said:
I want to see the official minutes of the AGM before commenting. I think the reporter left out a piece...
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I strongly suspect that a lot is not being said - had I not I would have said Telkom is being a stupid head or that I am most disappointed that the CEO has turned out to not be what I was hoping. Regardless of what was said though opposing a proper basis LLU process is a big mistake and the opposition stance of 2011 doesn't help Telkom -- there is an opposition stance to the current draft regulations that I think everybody with sense will have to take.

I have also got the suspicion that the very term LLU has acquired multiple conflicting meanings and has become loaded. Supporting LLU to many investors may mean doing what MWEB wants Telkom to do for others it means obeying MTNs regulator imposed splits (the AT&T disaster springs to mind - as I tell my brother in law people did stupid things and spawned monsters in 1983, things created in 84 however ...). All and all there is this unfortunate notion that Telkom must bend over and let incumbent ISPs get a free ride on some misguided notion about the funding of the copper network. The reality is that Telkom's local loop copper assets are underutilized and an appropriate last mile leasing product to ISPs and a general robustness in the market is good for Telkom.


What I would like to see is something along the lines of:
Telkom is opposed to persistent regulatory interference in the market and the inevitable rent seeking and jostling for advantage that accompanies such interference. The provisions of the ECA and FLR accompanying ECA form the necessary and sufficient framework for network operators and network service providers to have access to facilities in both the local loop and forms the basis of Telkom's on going modernization and resale/wholesale split. Telkom is committed to complying with the pre-existing legal framework and will develop its operations in accordance with the ruling of the CCC following the Neotel complaint.
 
Paul Hjul said:
Opposing LLU is a BIG MISTAKE the legislation is clear - and it really is going to be an uphill battle to change.

If Telkom wants to prevent a free rider problem on the local loop they need to drive the process - simply start making facilities leasable etc ... - rather than have a cat fight at ICASA where they are inviting others to lobby for a free ride
Click to expand...

Selective reporting is a pure form of propaganda aimed at misconstruing facts. I doubt Telkom will oppose the LLU; however I guess they will be arguing for a reasonable price and fairness when this materializes. Issues like access deficit remain unresolved. All facts will be revealed soon...
 
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Line Access Deficit is another issue that really is a bit of a misnomer. The deficit exists only in the context of line rental being lower than assessed line access cost and so we should only really concern ourselves with what the line access cost is on a wholesale basis. The fact that a service provider reduces the access cost to lower the barrier to entry in order to generate both originating and terminating voice revenue is irrelevant to a wholesale operation and so a split in accounting between wholesale and retail at Telkom would mean wholesale has a line access cost which it charges itself and other service providers and its own retail arm can do the math to lower access costs to make voice revenue. With fixed broadband the incentive to lower access barrier to generate revenue from services largely evaporates, from Telkom's perspective using DSL to draw fixed voice customers could be a good thing and sufficient cause to run promotional pricing on the line costings but I don't see that as being grounds for other incumbent providers to benefit from the same. On top of which it actually isn't in Telkom's interests for people to be receiving voice calls on Telkom fixed line if it detracts from Telkom Mobile terminations as a result of the massive gap in fixed to mobile call terminations.


-- The best way for a reasonable price to emerge is to let the "market do the math" rather than price setting at a regulator, nothing stops Telkom from right now leasing copper from exchange to premises from certain exchanges (ones which are ready hence the right now part) to customer premises at the price Telkom calculates the line access cost on such copper is over a 24 month term. It is on the ISPs then to lease space for an access medium (DSLAM for the most part) and to design products. I doubt the ISPs will come to the party because that entails laying down infrastructure to the unbundled last mile. At that point we have the figure for full loop unbundled lines and MWEB have their "naked DSL" product - which my math puts will cost about R800 per month as an entry point for the consumer.
 
If I am not mistaken, was the Local Loop not built with Tax Payers Money, and the national Fiber and Exchanges built by Telkom.

This would mean Telkom are getting a free ride as well, Not that there is much copper left in South Africa. I am sure 30% if not more has been stolen and not replaced...
 
and even if it were the case:
Telkom has had its shares sold with the ownership of such assets - so the State has sold the investment. Telkom's impairment earlier this year wiped any such argument aside.

The issue is not who spent what money (or who spends what money on maintaining) in building the network, the question is how the relevant legislation directs the owner of an electronic communications network operates and in my mind the legislation and framework is clear: the owner of a network is entitled to a return on the assets that they lease out and are obliged to lease out on a non-discriminatory manner assets deemed essential facilities. All IECNS licence holders have essential facilities that ought to be leasable but point-to-point network connectivity (which is what bitstream involves) is not mandated by the law.

There is a terrible habit of trying to expropriate Telkom's essence and redistribute that amongst the other incumbents in the industry when instead they should be held accountable to the actual regulatory framework and an open table to move forward is needed.
 
FFS give us Naked ADSL then and keep it all to yourselves Telkom....but sadly...

Paul Hjul said:
and MWEB have their "naked DSL" product - which my math puts will cost about R800 per month as an entry point for the consumer.
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@ Paul,i'd be interested in knowing how you worked out the math,just curious on my part.Thanx.
 
Okay the math is based on what the pricing would be rather than what it could be following some more competition along various chains etc ... But there are broadly two ways of getting to that figure - ish:
The line access costing on the copper for the last mile - before the impairment is fully calculated in - was put at over R400. Lets say Telkom lease that copper at R350 per month ex VAT on a 24 month contract wholesale to ISPs (with full maintenance). Okay so that covers the copper from exchange to premises but at exchange DSLAMs etc ... of some shape or form are needed. Lets assume the same sorts of efficiencies as Telkom in the whole chabang and they get down to R200 ex Vat for a port and so on but national transit is needed so that adds probably R100 per customer onto the price and then international transit and profit.
The other is to look at existing pricing and add up what a 4 meg line and 4 meg uncapped account costs - so discount the voice line rental - and you get to R899

Ideally the pricing from Telkom for the last mile should be R200 per month ex VAT on a 24 month contract and so naked DSL will come in at R700 as an entry level. The reality is that NakedDSL won't be cheaper - especially not for home entry level usage: a voice operator can subsidize home users on the basis of voice calls received (so if anything the ISPs should be championing leveling of mobile and fixed call termination rates in exchange for a lowering of voice line rentals) - but it will introduce options
 
Wow thanx Paul, now to digest all that math and make sense.Just a general observation before I try to make sense with regards to UK prices and Naked dsl.

From http://www.plus.net/home-broadband/

And it goes like... broadband only. = 12.49GBP + 14.50GBP(line) = 26.99GBP (I'm assuming this would be naked dsl)
broadband + phone = 9.99GBP + 14.50GBP(line) = 24.49GBP

Therefore a price difference of....10%?

And back home....

R157(line)+R165(ADSL)+R197(Afrihost uncapped) = R519
= R800 your calculated estimate Naked DSL

And.....a whooping 54% difference.:wtf:

Only in South Africa if that be the case.WHEW!!!

Anyway let me re-read your post and try make sense.Thanx
 
Well there are two major reasons for that - (1) our voice subsidization figures are probably a lot more aggressive and (2) geography etc ... count against us

My pricing math is on what I imagine it would be not what it should be and involves MWeb not Afrihost ;) Moreover the entry pricing you've set out is for 1 meg uncapped whereas I am assuming at least 6 megs uncapped would come in but this is the problem: there may well be value to be had from ISPs on higher end products but it LLU won't lower the entry level price precisely because the incumbent can have incentive to run entry level broadband products as a loss leader. It doesn't change the fact that LLU is both legally required and a good thing
 
RichardG said:
Telkom is to blame nobody else if they didn't sell their shares*Vodacom* none of this would have happened in the first place.
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why? LLU and the VC share unbundling are entirely unrelated. LLU is a fixed line concern required by the regulatory operating framework for electronic communications networks.
 
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