Tipping point?
From 23 May, new voice operators such as Neotel, DataPro, Internet Solutions, Storm Telecom and the under-serviced area licensees (Usals) will be able to offer inbound traffic from Telkom to their customers – the final leg of a suite of services allowing them to provide a fully fledged voice offering.
It comes as Telkom filed the rates it will charge new operators to pass traffic from its network for termination on to theirs. Although there’s significant unhappiness with the rates, value-added network service providers (Vans), such as DataPro and Storm, wanted communications regulator Icasa to ratify the rates "warts and all" so they can offer a full suite of voice services.
DataPro CEO Doug Reed says any objections could delay the introduction of proper voice competition by another year. The effect on players that have invested in building voice networks could be significant.
However, Icasa councillor Tracy Cohen says, technically, the rates received approval on 30 April, 15 working days after they were lodged. As such the rates will come into effect from 23 May.
Until the necessary provisions of the Electronic Communications Act have been complied with, Icasa could only disapprove tariffs on the grounds of mathematical error or failure to comply with the licence conditions and rate regime, Cohen said. No formal complaints were forthcoming, although those might not necessarily provide an alternative.
The regulator is currently conducting hearings that will help it to define the various relevant markets to more accurately determine and police market dominance and ineffective competition. Cohen says that would help with tariff regulation under the new Act, because once those criteria were satisfied, a licensee could face the imposition of pro-competitive conditions.
In other words, they could be forced to lower their rates in line with the cost of providing the service instead of some unfathomable margin.
Storm joint CEO Tim Parsonson described Telkom’s rates as "anti-competitively high" but said it would nonetheless be good to be able to now offer a full suite of voice services.
However, Parsonson says that although things were going in the right direction, the Vans were still getting a raw deal. He says until there was geographic number portability, Telkom charged cost-based termination rates and a reasonable retail margin on their Vans rates. The Vans would continue as currently – unable to compete as fully-fledged communications providers.
Internet Solutions CEO Angus MacRobert says Telkom had deliberately made the rates too high so that nobody would call the Vans. But it had also not helped that the Vans had failed to meet to agree on a single termination rate. He says it’s still not too late to get the Vans, Telkom and Icasa to sit down together and agree on more realistic rates.
DataPro also says the rates are much too high. However, Reed says once there are a number of players competing with Telkom in the voice market, competitive forces will sort the rates out over time, whereas any challenge through the courts would merely represent a further cost to prospective new competitors and further benefit Telkom.
By charging high rates, Telkom wasn’t punishing the Vans but its own customers, Reed says.
Although DataPro already derives a large chunk of its revenue from voice traffic – 60% at the interim period – Reed says its voice services remained a niche, cost-saving offering because it could only offer outbound, not inbound, traffic until now.
Reed says its fully fledged voice offering would be in the market by July and the DataPro Group would then rename itself Vox Telecom, after its voice subsidiary, to better reflect its positioning as a fully fledged telco. Customers would have the ability to pre-select their preferred network based on cost and quality considerations using a cordless, high-end, but simple-to-use, instrument.
Reed estimates it would be able to save the average household spending R1 000/month on its calls and connectivity costs around R500/month. He says it won’t be competitive in terms of local calls but would offer simple, competitive packages to all other distances plus attractive bundled packages.
The effect of being able to offer a full suite of voice services could mean a doubling of its -VoIP margins from 12% to 25% over time, Reed says.
Finweek
Loading ...