Telkom price increase questioned

In June this year Telkom announced that they filed for a 1.7% tariff adjustment with the Independent Communications Authority of South Africa (ICASA).  “As Telkom has consistently done in recent years in its continued drive to promote affordable telecommunications access, Telkom’s proposed overall annual tariff adjustments is well below the overall increase permitted by the regulator’s Price Control Formula,” the company said in a media statement.

Telkom also launched an advertising campaign in conjunction with their new tariffs, stating that “Telkom Rates 2009. Still affordable. Still flexible.”  This advertisement reiterated the fact that their overall increase is below the overall increase allowed by ICASA.

“In these tough economic times, it is becoming increasingly important to keep tabs on your budget. Which is why when government regulations allowed us to increase our rates by 4.9%, we insisted on keeping them at only 1.7% making Telkom the most affordable way to stay in touch with your friends and family,” the Telkom ad stated.

This advertisement did not go down well with one Telkom subscriber who lodged a complaint with the Advertising Standards Authority of South Africa (ASA), arguing that the advertisement is misleading because his line rental did not increase by 1.7% but by 35.87%.

Telkom could have argued that they were specifically referring to an overall price increase promoting a basket of services, but instead merely stated that the advertisement insert was a once-off promotion and will not be used again in future.

Telkom decided to capitalized on the ASA’s long standing principle “that where an advertiser provides an unequivocal undertaking to withdraw or amend its advertising in a manner that addresses the concerns raised, that undertaking is accepted without considering the merits of the matter. “

“The undertaking is therefore accepted on condition that the advertising is withdrawn in its current format and is not used again in future,” the ASA said.

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Telkom price increase questioned