ISPA welcomes prohibition of Telkom-BCX deal
“This decision marks a victory for both ISPA’s members and for consumers,” says Greg Massel, ISPA’s co-chair.
“As both the supplier of key services to ISPs and a direct competitor in the Internet market, Telkom has exploited its dominant position for more than a decade. Anti-competitive practices such as margin squeezing and vertical bundling have resulted in high prices for consumers and made it extremely difficult for independent ISPs to compete fairly,” he said.
ISPA was a key opponent of the BCX deal, raising concerns with the Tribunal that the acquisition would further entrench Telkom’s position in the market.
If Telkom were allowed to acquire BCX they would have been able to engage in vertical integration through BCX and provide attractively “bundled” services by using revenues gained from basic services to cross-subsidise its offerings in competitive areas.
Massel continues: “The Competition Tribunal’s decision gives us heart that the playing field in South Africa is finally beginning to level, and presents a clear message to Telkom that the authorities are committed to a fair and truly competitive communications sector.”
Sounding a word of caution despite this victory, ISPA noted that Telkom remains a dominant player in the market, and continues to engage in a number of practices that they believe to be anti-competitive. “In particular, pricing of wholesale ADSL accounts and wholesale access to ADSL services remains an area of key concern for the Association,” said ISPA.
ISPA stated that they remain committed to fighting for fairness and healthy competition in the sector, and hopes that with the Telkom/BCX matter now resolved, the Competition Commission will be able to move swiftly to deal with ISPA’s other complaints against Telkom, including resolving the 2002 complaint for which the Commission initially recommended a R3 billion fine for Telkom’s anti-competitive actions in the market.
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