Is it all hype?
Telkom recently unveiled Telkom Media, a company which will focus on new developments in the telecoms space. This company has promised to compete head on with Multichoice by retailing its own IPTV and traditional satellite TV offerings, starting for as little as R 100 per month.
But this was not the only big announcement to be made by the fixed-line operator. Telkom further heralded the imminent launch of its commercial WiMax offerings. Great news for all consumers living in areas where ADSL is not available and where other subscribers like iBurst or Sentech may not have coverage.
Both of these developments sound very promising, and with the number of fixed lines in steady decline over the last few years investors may be happy to hear that Telkom is exploring other revenue streams to ensure future profitability.
The sad truth, however, is that these promises and so-called ‘new developments’ are in fact nothing new.
All hype?
Telkom’s great foray into the world of IPTV actually began in 2005 under the then-CEO Sizwe Nxasana. Telkom promised user trials in the first half of 2005 with a commercial offering to follow soon afterwards.
This did not transpire, but early in 2006 Telkom again caused a stir by circulating news that a triple play field trial would start in July of that year. Before anything was even off the ground, Telkom declared itself a market leader in the internet and voice components of triple play. It further pointed out that the Telkom Media trial is "aimed at launching the video and content services required for a successful triple play offering".
As was the case with the announcements in early 2005 and early 2006, the same promises about IPTV and triple play services are now making headlines again.
Telkom Media is still trying to acquire a licence, without which the whole exercise could prove to be a lesson in futility. Hopefully this endeavor will not turn out to be a case of Telkom putting the cart before the horse, but I for one will not be holding my breath to see these pay-TV offerings on the shelves soon.
The promise of WiMax is no different. Telkom launched its first WiMax trials back in January 2005 when it proudly declared that a select group of its customers were enjoying the full experience of next-generation WiMax broadband wireless connectivity.
The WiMax hype continued to excite consumers and investors in the following months and years, and made media headlines at regular intervals. The hype often overshadowed the sad reality that Telkom was losing fixed-line customers despite a burgeoning economy.
This trend has not changed at all with Telkom recently boldly declaring that it has launched their latest external WiMax trials in the Gauteng region in preparation for commercial roll out of these services.
Many experts feel that this time may be different though. Telkom is actually expected to announce its first WiMax offering in the next few weeks, but the path taken to arrive at this point has been long and windy leaving consumers circumspect whenever Telkom makes these bold announcements.
Action speaks louder than words
Telkom’s failure to deliver on many of their promises makes it increasingly difficult for the incumbent operator to incite the same sort of excitement generated back in 2005 when it first ventured down this path. But this is not to say that these PR exercises are futile.
Telkom may succeed in convincing the investor community that it is not sitting back waiting for competing companies like MTN, Internet Solutions, MWeb, DataPro and iBurst to steal their thunder. The hype gives the impression that it is indeed forging ahead and keeping abreast of changing trends in the telecommunications space.
Its attempts to lead the way are very necessary if it wants to stay afloat in a progressive telecoms environment. The new Electronic Communications Act allows for true convergence in the telecommunications arena, and with more and more players – including Neotel – entering a domain where Telkom previously had a very comfortable monopoly the fixed-line giant needs to explore other terrains to generate revenue.
One potential problem may be that Telkom is not well suited for this new competitive environment. The years of monopolistic comfort afforded to it by its biggest shareholder, government, may have left it impotent in an industry where fast action and dynamic leadership is required to stay ahead in the game.
Many people may be expecting or even hoping that Telkom will fail in its quest to launch a successful WiMax service and take Multichoice on, but I for one hope it succeeds this time, even if only to bring some much needed competition to the pay-TV industry.
Besides, watching one monopoly take on another could prove to be very entertaining.
First published on Moneyweb
Loading ...