It is fitting that my first post after my rant about monopolies should be about Telkom’s warning to South Africans to expect increases in the cost of our local calls. ITWeb has reported that Telkom will be increasing its charges for, among others, local calls:
[Johannesburg, 22 March 2005] – Telkom says it is likely prices of local calls will rise in the short-term, citing the cost of managing the local loop.
A Telkom spokesman told ITWeb that the operator had spent a lot of money on rolling out its network and is still in the process of reaping returns on the investment, a factor that it says would continue to affect its price structure.
Prices will rise and remain higher until the company feels it has reaped those returns.
The fixed-line operator has seen a jump in long-distance and international traffic since it cut its tariffs in January, but insists it needs to raise prices again to protect its profit.
The company has chosen to stay mum on the specifics regarding how long the prices will stay high.
At least they are honest about the fact that they are interested in protecting their profits first. When many developed countries charge almost nothing for local calls, our one and only fixed line operator seeks to increase its charges to make sure it makes enough money! What happened to ideals such as universal service or simply making quality telecommunications cheaper and cheaper? Telkom also has the audacity to promise decreases in prices of its ADSL offerings and other services down the line, presumably in the hope that we will be so excited about these vaporous decreases and we will forget how overpriced Telkom’s services are in the first place.
If you would like to find out more about Telkom’s pricing structures and their disregard for their consumers, take a look at Hellkom.
Pretty much as I expected, there has been a swift response to the report about Telkom’s warning of increased rates. One of ITWeb’s columnists, Iain Scott wrote about the need for more telecoms operators in South Africa to compete with Telkom:
But not only consumers are feeling the pain. As local rates go up, the burden on small businesses also becomes increasingly unbearable. On the one hand, government is on a stated drive to nurture the small business sector, but on the other, moves like that of Telkom work to stifle those plans.
While we may be tempted to appeal to government to prescribe prices, this is not the answer. The only way costs are going to be lowered at home is for increased competition on the local front. The intervention by government must consist only of allowing for further deregulation of the market and permitting much wider competition.