Strong Regulation needed in wholesale ADSL market
The way to redress this imbalance, to reduce the cost of ADSL in a monopolistic environment, is regulation.
According to Dr. Angus Hay, CTO of Transtel one of the partners in the SNO, these regulations need to focus on the wholesale component of the service.
Speaking at the IIR 2006 Africa Broadband summit Hay proposed strong regulation by ICASA but only on the wholesale component of ADSL.
Hay highlighted the damaging impact of having only one player in the fixed line arena, Telkom and added that strong regulation is needed to inhibit the negative effects of this monopolistic behaviour.
Problems with the South African wholesale ADSL pricing model have been brought to light before by the Internet Service Providers Association of South Africa’s (ISPA).
Last year ISPA complained to the Competition Commission accusing Telkom of anti-competitive behaviour related o the complicated relationship between Telkom’s wholesale and retail division.
"From the smallest ISP’s right through to the largest, the reports are the same: Telkom is using its dominant market position to take business away from other ISPs,” said Masedi Molosiwa, joint-chair of ISPA.
Telkom’s biggest competitor in the ADSL arena, Internet Solutions, feel that regulations should focus on the arena of Facilities Provisioning where Telkom ‘charges excessive and non market related prices leveraging on its de facto monopoly status in the market’.
Comments of this nature, and there are a surprisingly large number of them, reveal that something is amiss in the ADSL arena, and that intervention is needed with many pinning their hope on the Regulator.
While Transtel’s Hay warned against the regulation of the retail ADSL market, he said that regulation of the wholesale component has been very successful in many countries.
Hay highlighted the need for competition in the backbone bandwidth market, something that the SNO should bring to South Africa.
The cost of international bandwidth is another problem that many believe will only be resolved when the new EASSy cable becomes operational.
A further intervention that Hay believes will make a big difference in broadband penetration is Government paying operators for each broadband connection that is installed.
This model, says Hay, has proven to be very successful in countries like Korea who really are the leaders in the field.
Hay’s belief that good regulation can play a positive role in broadband pricing and service delivery is certainly not new.
Many analysts, both local and international, have stated that there is a need for strong regulation until such time as true competition can regulate the market.
Now is the time for ICASA to show its teeth and ensure South African consumers get affordable and internationally comparable ADSL services.
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