Telkom dinosaur rouses itself
You can still make a voice call if you really want to, but in Barcelona nobody does. Not unless the voice is part of a live video call, or sent along with photos of the latest gadgets or a colourful presentation describing a rival’s services.
If you really have to make an ordinary phone call, at least have the sense to do it by wireless, not over some archaic strand of copper. As the latest mobile technologies go on display at the 3GSM World Congress, placing a call over a standard phone line seems akin to standing in the car park and turning the cranking handle to start your car.
Last week Telkom CEO Papi Molotsane caused something of a rumpus by saying he had met some Dimension Data shareholders with a view to making a bid for the company. That was rather disconcerting for Didata, SA’s largest IT player. Bad blood between them means Didata would likely lose a fair few staff in protest if Telkom took control.
But the fact that Telkom is looking to acquire an IT company is no surprise.
Telkom’s media people quickly played down Molotsane’s advances towards Didata, but they reaffirmed that growth and expansion for the fixed-line operator would involve acquiring an IT company. The question is not why or when, but who?
Last year Telkom made a play for Business Connexion, but failed to offer what the company believes it is worth.
Telkom has made itself enormously unpopular in the IT sector. Its hardline efforts to quash numerous rivals offering internet services or clever ways to avoid Telkom’s call fees have involved bullying, legal threats, predatory pricing and alleged illegal cross-subsidies, so any company approached by Telkom must wonder what it would be getting into.
Voice is no longer the way to make money from a communications network. The revenue now lies in value-added services such as delivering internet access, data information services, the ability to transfer documents without being in your office, and perhaps television and video-on-demand too.
That involves many diverse technologies and an equally diverse pool of expertise. Telkom does not have the skills to do it alone. It could build up the skills in-house but buying an existing player is faster and far more likely to succeed.
Timing is becoming critical. In December, Vodacom began delivering television to its cellphones. All three cellular operators are offering internet access and exploring more data services. MultiChoice and M-Net will soon test television broadcasting to cellphones.
Suddenly the fixed-line telephone — in fewer than 5-million homes — is at risk of becoming a dust-gathering antique. And most consumers probably have a fixed phone only out of habit. For emergencies, perhaps, or for dialling up to the internet. Many people find a cellphone more useful, yet still pay more than R100 a month in line rental and tax for maybe a couple of calls and a few hours online.
This month Wireless Business Solutions launched relatively high-speed internet access for about R195 a month. Since that is a wireless service, you can rip out the Telkom line, save money and get faster internet speeds. With prices becoming ever lower, it is just a matter of time before most people do.
If Telkom was not actively looking for other revenue streams, its life could possibly be counted in months, not years. Its executives are keenly aware of that, and in July a “triple play” trial will see 300 users testing the attraction of voice, internet access and television delivered over their Telkom line.
“Telcos throughout the world are already bundling voice minutes, broadband internet access and pay-TV,” says Godfrey Ntoele, Telkom’s corporate global and government markets executive. Telkom is a market leader in the internet and voice components of triple play, he says, and the trial aims to add video and other entertainment content to that.
Telkom is not a particularly laudable leader in internet access, it just has the monopoly thanks to some outdated legislation. In a more liberal market, Telkom’s slow and expensive services would not be able to claim that dominant position. It cannot fail to be a leader when all its rivals have been forced to lease its facilities to carry their own data offerings.
So far Telkom has installed fewer than 130000 high-speed ADSL lines capable of carrying the extended offerings. It does have a large backlog of customers waiting for ADSL, however, some for as long as 14 months. Hopefully its focus on triple play will see a far more concerted effort being made to convert its traditional copper lines to carry the high speed services. It is working with Microsoft and Alcatel for the trials and expects the project to deliver television and video-on-demand, games, music and educational content.
Even Telkom’s obligatory corporate description on the end of its e-mails looks old fashioned. Although it claims to be the largest telecommunications service provider in Africa by operating revenue and assets, much of that is attributable to its 50% stake in Vodacom.
As a solo entity, Telkom’s fixed-line voice and data services are supplied through just 4,8-million telephone lines. Which is peanuts when the cellular operators can add as many new subscribers in a year. Its subsidiaries include Telkom Directory Services, which is also having to reinvent itself, as printed directories are under threat from online and on-the-cellphone rivals.
While it is easy to take pot shots, Telkom has made huge strides in customer service and has shown the agility to cut its fees when necessary. Its operating revenue of R43,1bn for last year makes it a formidable player, as does a cash pile of more than R1bn.
Telkom now has to spend some of that to create new revenue streams for the future. That means bringing in technicians who can marry voice to text and images, are intimate with the internet’s possibilities, know what people want and what they will pay, and can create compelling services in a world where everything is still evolving.
INet-Bridge || Discuss this article
Loading ...