Telkom ADSL under fire
The Internet Service Providers Association (ISPA) lodged a complaint with the Competition Commission (CC) against Telkom on 13 December 2005, complaining about Telkom using its dominant market position to take business away from other ISPs.
While many extensions have been awarded to the CC to thoroughly investigate the case, a finding on the ISPA complaint is expected soon.
Retail market
In the retail market Telkom determines the price that resellers must pay for SAIX ADSL accounts. But the company also competes directly with those resellers in the guise of TelkomInternet. This enables Telkom to squeeze the margin between the wholesale and retail price, so that competitors cannot afford to stay in business.
The margin on ADSL accounts has long been a problem for ISPs, and although this situation has improved since the initial complaint in late 2005, ISPA said that far more can be done to create a fair retail environment.
Wholesale market
Similar problems exist in the wholesale market.
Telkom controls access to key facilities such as international bandwidth and local loop access services such as ADSL. By controlling the price that ISPs pay for these services, Telkom makes it difficult for large ISPs to compete with Telkom's wholesale offerings.
ISPA’s Ant Brooks further questioned why ISPs must pay very high fees for Telkom’s IPConnect product – which allows them to use their own network to carry their client’s bandwidth – when ADSL subscribers are already paying for the access portion of the service.
Brooks further highlighted that while ISPs like Internet Solutions – which compete against SAIX in the wholesale ADSL market – must pay IPConnect fees SAIX is exempt from these charges. This makes it very difficult for any provider to compete at wholesale level with SAIX.
"Fewer viable competitors mean that Telkom is in a position to keep the price of services such as broadband at an artificially high level. Ultimately, the consumer is paying the price for Telkom's tactics,” said ISPA’s Greg Massel.
Conclusion very close
Brooks said that while ISPA has awarded the CC a few six month extensions it is confident that the end is near. A finding on their complaint – and the similar complaints from Internet providers – is expected before 13 June.
Brooks highlighted the fact that the Competition Commission has decided to investigate all the complaints related to the alleged anti-competitive practices by Telkom in the Internet space simultaneously which necessitated the extensions.
Telkom ADSL pricing discussion
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