In a polite but barbed exchange, Telkom told the Independent Communications Authority of SA (Icasa) that forcing a cut in the wholesale fees that other operators paid to use its bandwidth would deter future investment in infrastructure and damage SA’s telecoms sector. <\/p>\n
Icasa is considering whether to regulate the fees the cellular operators, internet players and other voice and data carriers pay to run their own services over Telkom’s core facilities. Those include international bandwidth on satellites and undersea cables, a “national backbone” and the local loop — the copper wires that link telephone exchanges to homes and businesses. <\/p>\n
Telkom fielded Deloitte consultant Chris Williams to oppose any interference. Regulations were designed to benefit consumers, Williams said, yet Icasa had not conducted the necessary research to find out what effect its proposals would have. <\/p>\n
Icasa had simply decided that Telkom had too much dominance over various parts of the infrastructure, and had reached a pre emptive conclusion to impose heavy-handed intervention without assessing how competitive the markets were. <\/p>\n
“If you are not doing that first phase of homework it’s pretty difficult for Telkom. That’s the challenge for Icasa — to go away and define the market,” Williams said. <\/p>\n
Forcing wholesale prices down would remove any desire by Telkom to invest in more infrastructure, he said. <\/p>\n
An unexpected side effect of Icasa’s “remedy” would be to discourage other operators from building their own networks, further stifling the industry’s development, said Telkom’s specialist for regulatory and technical strategy, Richard Majoor. <\/p>\n
Operators would compete by offering rival services over the same infrastructure only if that was cheaper than building their own. This would restrict the choices open to consumers. <\/p>\n
Icasa councillor Tracy Cohen said Telkom should “dispense with the notion that we don’t consider the impact of regulation. It may come as a major shock to the industry but we do look at how other regulators address and resolve problems.” <\/p>\n
Second network operator Neotel urged Icasa to intervene. <\/p>\n
“Procompetitive remedies have to be imposed,” said Neotel regulatory affairs manager Phatang Nkhereanye. <\/p>\n
Neotel needed access to Telkom’s facilities at a fee based on the cost of providing the service, not at an arbitrary rate designed by Telkom, he said. <\/p>\n
Neotel could not cover all SA by itself. <\/p>\n
“We need access to critical elements of the incumbent’s network to compete effectively.” <\/p>\n