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[Johannesburg, 26 May 2006] -
Internet service providers (ISPs) have asked the Independent Communications Authority of SA (ICASA) to regulate ADSL tariffs in a manner that ensures they too have fair access to ADSL infrastructure owned by Telkom.
The ISPs, participating in ICASA's public hearings into proposed ADSL regulations this week, said the current price regime, where Telkom sets the access prices, is anti-competitive.
“Telkom has an undue level of control of the ADSL market, which it leverages against the interests of competing service providers and consumers,” said Ant Brooks, chairman of the Internet Service Providers Association's regulatory committee.
Cost components and revenue split
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ISP user pays Telkom
(access portion)
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ADSL user pays Telkom
telephone line/ports
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ISP pays Telkom for ADSL service
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Total Telkom revenue
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ISP margin
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R477
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R92.28
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R168.8
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738.10
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49.62
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94%
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6%
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Richard Heath, regulatory advisor for MWEB, noted that Telkom levies monthly access charges of R477 for the use of the same infrastructure that is used to provide voice services at R92.28.
He acknowledged that expenses are incurred to adapt the line for data use, and that there are ongoing maintenance costs. Nonetheless, the cost of including data circuitry does not justify the 500% increase in revenue, he maintained.
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Ant Brooks, chairman of the Internet Service Providers Association's regulatory committee. |
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Geoff Rehmet, a business development manager at Internet Solutions, estimated that it costs Telkom R38.96 per month (excluding overheads) to provide a 512Kbps package, which is priced at R477 (including VAT).
Rehmet suggested ICASA prescribes a mandatory pricing structure on national bandwidth, international bandwidth and wholesale access to ADSL lines. These measures are a necessary precursor to local loop unbundling, he said.
Telkom controls access to the final section of a phone line, which is known as the local loop and links homes to telecoms exchanges. Government officials have publicly stated that local unbundling would be key to lowering the price of telecommunications and increasing competition, but it remains unclear if and when Telkom will be forced to unbundle the local loop.
Related stories:
ICASA to hold ADSL hearings in May
ICASA eyeing international ADSL price model
ICASA urged to address ADSL pricing
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