’Profiteering’ Telkom under fire over high cable rates

PRESIDENT Thabo Mbeki has taken a swipe at Telkom, accusing the telecommunications firm of “profiteering” due to the exorbitant rates it charges on the undersea fibre optic cable which connects SA to Europe and Asia.
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Ooooooooh! WHAT? No waaay? Look to your left lad .. see that Ivy growing there? Hu hu hu hu?
Lipservice.
 
Maybe Thabs got capped? :eek: I wish we could see some action for a change.
 
same old, same old.

should we have a summit to discuss it? Maybe somewhere in nowhere land.
 
PRESIDENT Thabo Mbeki has taken a swipe at Telkom, accusing the telecommunications firm of “profiteering” due to the exorbitant rates it charges on the undersea fibre optic cable which connects SA to Europe and Asia.
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No **** Sherlock. You only figure this out now. Don't you think it's a bit late?

In an interview with the Financial Times, Mbeki again expressed grave concern about the high cost of SA’s telecoms, saying a range of interventions were being put in place to reduce phone charges.
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Your intervention you smuck has WORSENED the situation. ICASA SAT3 investigation was delayed time and time and time again since 2003 when it SHOULD have taken place each time with government doing NOTHING. Now ICASA Chairman Paris "Compare Telkom with OJ" Mashile says the investigation does no longer need to take place since Mr Thabo "saviour of telecoms" has introduced competition and is putting measures in place. This sounds to my that you are doing the opposite of putting measures in places by having SQUASHED the SAT3 investigation in order not to humiliate yourself when the public finds out how long government allowed Telkom to charge "Criminal" rates for the SAT3 cable.

Mbeki labelled the charges as “absolutely phenomenal”. However, he said this was also because Telkom had limited capacity for planning. When the cable was laid, it did not take into account the rate of increase in demand for traffic on the cable.

He said despite all these attractions, SA was still not attracting call centres, due to the cost of telecoms. “So we say, Telkom you have got to do something about that.”
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Justifying the highest international connectivity cable prices in the world. Forget limited capacity for planning. Government has limited brainpower.

Mbeki you have recently proven you can talk but back that up with nothing. You treat Telkom like you treat Mugabe with quiet diplomacy and that don't help South Africa at all.
Shut up because you're just making things worse.
 
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accusing the telecommunications firm of “profiteering”

Read: "the government as a 38% stakeholder have been “profiteering”......."

Should make a good news headline:

"MBEKI ADMITS THAT GOVERNMENTS IN IT FOR THE MONEY"
 
All we can do is wait and see. Only time will tell.
It's good to hear the president talking about this again. So it's not just the "disgruntled hi-end users" talking about it. :)
 
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Oh look everyone, Mbeki farted again.
*yawn*

“Take this undersea cable (Sat-3). They are charging, I don’t know,,
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Herein lies the problem. None of the decision makers know ****.

Also very convenient timing to have a little dig at the beast to keep up appearances, after then end of their financial year so as not to upset the precious stock prices.

yawn yawn yawn
 
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I suppose I'd rather have him say something than nothing, since at least one of his speech writing cronies has noticed that there is a problem. In the end, though, it will all just boil down to the same old fart-in-the-wind lip service!
 
a little context on that pricing....bear in minds that facts are extremely hard to come by in this area but the "facts" below seem to represent a consensus view

The SAT3 cable (which is a portion of the SAT3/WASC/SAFE cable ) was launched in 2002 and is run as a “club consortium” / “closed access consortium” and the use and operation thereof is dictated by the terms of a closely-guarded and highly confidential shareholders agreement.

The cable was built by monopoly incumbent operators all owned by their governments. The club raised money through a combination of their own resources (often supplied by government) and donor funding to the weaker companies involved. In addition, a number of international companies participated. Money was raised against advance purchase of bandwidth, but each participating company was given a time-limited monopoly on the sale of that bandwidth in their own country. The participants also elected a managing agent – for SAT3 this is Telkom.

The shareholders agreement envisages a life-span of 25 years for the cable. The 36 members put up US$650-million to build and operate it for the life of the cable over the next 25 years. Telkom South Africa is the largest investor, contributing $85-million of the total $650-million development. This entitled it to 20% of the cable’s 40 gigabyte per second capacity, which can be upgraded to 120 gigabytes per second.

While other organisations can buy into additional capacity (achieved through upgrading the fibre), they cannot buy into membership of the consortium. As a result they can't have any direct influence over the pricing and commercial strategy of the cable.

Changes in shareholding have to be approved by all consortium members and no member is likely to approve a new shareholder buying in if it competes with them. This inability to buy into a consortium is a distinct disadvantage in a world where the key players in the market will change over time because of higher levels of competition.

As each member country has a monopoly provider there is no incentive to lower prices and as a result the cost of international bandwidth has remained high. The monopoly encourages operators to adopt a “high-price, low volume” business strategy.

The price charged for international bandwidth in countries is entirely controlled by the SAT3 consortium member that has been granted a national monopoly. There is a general consensus that Telkom charges three to five times more per outgoing half-circuit than the incoming portion cost from an operator bringing traffic into SA.

According to an article in Balancing Act, rates on SAT3 have been as high as US$25 000 per mbps per month but are now around US$10-15 000. The actual cost to the operator is around US$2 000.

Prices vary enormously depending on the country involved: they can vary between US$7,000 – US$15,000. The Nigerian ISP Association (ISPAN) has negotiated a “bulk” deal for its members of US$3,500 per mbps per month. The Ghana ISP association made a deal with Ghana Telecom that gave its members (under certain conditions) the right to buy at US$8 000 per mbps per month. It is now in the process of negotiating a still lower price.

Telkom refuses to disclose either the basis for its pricing or the portion of the cable which it is currently utilising.
 
All I can say is that if Thabo takes a swipe at Telkom, something should happen. Nothing more embarrasing than a president attacking you.
 
It's pointless to hear the Pres speaking about it... As has been proven in the past, it means absolutley nothing.
 
gdi said:
All I can say is that if Thabo takes a swipe at Telkom, something should happen. Nothing more embarrasing than a president attacking you.
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Nothing is more embarrassing than a telecoms company not caring what the president are saying.
 
dominic said:
a little context on that pricing....bear in minds that facts are extremely hard to come by in this area but the "facts" below seem to represent a consensus view

The SAT3 cable (which is a portion of the SAT3/WASC/SAFE cable ) was launched in 2002 and is run as a “club consortium” / “closed access consortium” and the use and operation thereof is dictated by the terms of a closely-guarded and highly confidential shareholders agreement.

The cable was built by monopoly incumbent operators all owned by their governments. The club raised money through a combination of their own resources (often supplied by government) and donor funding to the weaker companies involved. In addition, a number of international companies participated. Money was raised against advance purchase of bandwidth, but each participating company was given a time-limited monopoly on the sale of that bandwidth in their own country. The participants also elected a managing agent – for SAT3 this is Telkom.

The shareholders agreement envisages a life-span of 25 years for the cable. The 36 members put up US$650-million to build and operate it for the life of the cable over the next 25 years. Telkom South Africa is the largest investor, contributing $85-million of the total $650-million development. This entitled it to 20% of the cable’s 40 gigabyte per second capacity, which can be upgraded to 120 gigabytes per second.

While other organisations can buy into additional capacity (achieved through upgrading the fibre), they cannot buy into membership of the consortium. As a result they can't have any direct influence over the pricing and commercial strategy of the cable.

Changes in shareholding have to be approved by all consortium members and no member is likely to approve a new shareholder buying in if it competes with them. This inability to buy into a consortium is a distinct disadvantage in a world where the key players in the market will change over time because of higher levels of competition.

As each member country has a monopoly provider there is no incentive to lower prices and as a result the cost of international bandwidth has remained high. The monopoly encourages operators to adopt a “high-price, low volume” business strategy.

The price charged for international bandwidth in countries is entirely controlled by the SAT3 consortium member that has been granted a national monopoly. There is a general consensus that Telkom charges three to five times more per outgoing half-circuit than the incoming portion cost from an operator bringing traffic into SA.

According to an article in Balancing Act, rates on SAT3 have been as high as US$25 000 per mbps per month but are now around US$10-15 000. The actual cost to the operator is around US$2 000.

Prices vary enormously depending on the country involved: they can vary between US$7,000 – US$15,000. The Nigerian ISP Association (ISPAN) has negotiated a “bulk” deal for its members of US$3,500 per mbps per month. The Ghana ISP association made a deal with Ghana Telecom that gave its members (under certain conditions) the right to buy at US$8 000 per mbps per month. It is now in the process of negotiating a still lower price.

Telkom refuses to disclose either the basis for its pricing or the portion of the cable which it is currently utilising.
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Wow! Thanks for the info!
 
dominic said:
According to an article in Balancing Act, rates on SAT3 have been as high as US$25 000 per mbps per month but are now around US$10-15 000. The actual cost to the operator is around US$2 000.

Prices vary enormously depending on the country involved: they can vary between US$7,000 – US$15,000. The Nigerian ISP Association (ISPAN) has negotiated a “bulk” deal for its members of US$3,500 per mbps per month. The Ghana ISP association made a deal with Ghana Telecom that gave its members (under certain conditions) the right to buy at US$8 000 per mbps per month. It is now in the process of negotiating a still lower price.
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Excellent post Dominic...thanks for sharing.

At a small seminar last year it became clear that there is not much consistency when it comes to pricing. Distance/location does not seem to play much of a role which really means that the pricing is basically a country-to-country scenario and is dictated by the monopolistic operator in the specific country.
 
Laying another cable is a longterm solution, we need a shortterm solution as well. Lay more cables and FORCE telkom to lower their prices now as well as make public how badly they ripoff the south african public.

and possessing a population that is largely English-speaking.
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Shame now Europe will also not be able to understand the call-centre operators anymore. "eish, how?" "I do not understand"
 
Wyzak said:
Laying another cable is a longterm solution, we need a short term solution as well."
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a short term solution sits right in front of us

International self-provision
The Minister – Budget speech 26/05/2006
“In accordance with the spirit of Section 3(2) of the ECA we will ensure affordable access to international broadband infrastructure. I will be consulting shortly with ICASA on my intention to issue a policy directive to the Authority regarding this matter.

This relates to the time-frame within which ICASA will ensure that, amongst others:
• all arrangements regarding access to, or use of, international cables and/or facilities do not unfairly exclude others,
• access to such cables and/or facilities is provided on a cost basis and
• access is duly regulated as access to essential facilities as provided for in section 43 of the new Act.

I hereby declare that as a matter of policy all holders of licences that will qualify to be converted into individual electronic licences will have the ability to self provide with respect to their international traffic within six months of the promulgation of the ECA.”

The deadline set by the Minister was 19 January 2007.

The italicised text is interesting. “Electronic licences” implies both electronic communication service licences and electronic communication network services licences. It follows that all VANS qualifying for either an individual ECS and/or ECNS licence would be affected by this policy statement.

[I think it would be fair to surmise that the Minister meant individual ECNS & that she will clarify this at a later stage...]

The Minister – speech to PPCC 20/02/2007
In answer to a question regarding her budget policy statement the Minister replied that self-provision was one aspect of the policies. It might be that this was another issue that might not take off.

Little progress appears to have resulted. ICASA says it is in negotiations with the DoC about implementation. Further enquiries have not as yet been responded to.

SAT3 as an essential facility
In February 2006 the DoC had already expressed its intention to declare landing rights for undersea submarine cables an essential service and ICASA stated that it was conducting a study into the legality of such an action.

According to ICASA it is currently finalising the project plan - due to start in first quarter 2007 and planned for completion by the second quarter - to prescribe a list of essential facilities in terms of Section 43 of the ECA, which would include the undersea cable. The process would also include formulating regulations.

Proposed regulations for Interconnection and Facilities Leasing were published on 19 January 2005, in General Notice 58 and 59 of 2005 respectively. Public hearings have been held and ICASA has stated that the further documents – probably in the form of a market determination - would be published in January 2007 . To date nothing has been released.

ICASA is not being forthcoming on any progress in this regard but plans to have declared SAT-3 and related facilities as being essential facilities and published a cost-based framework for the use of such facilities by end September 2007

There has also been no indication from the Minister regarding any consultation with relevant parties prior to the striking out of any exclusivity provision contained in the SAT3 shareholder’s agreement.
 
@Mr. President:

Sir, your company, RSA Gov, holds 38% share in Telkom. Together with elephants and other random animals, I am sure you can proxy about 70% of the vote at a General Meeting.

Why is it that you do not exercise your democratic right to appoint a board which will carry out the shareholder's wishes in regard of SAT-3?

Oh. you already have? Sorry, my mistake.
 
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