One of the more interesting questions asked of Telkom was what makes the local market so different from the international market. As usual Telkom only came up with excuses and instances where it is continuing to abuse its position as the sole provider to further its own goals.
When asked about high prices, Telkom’s response was as follows:
John Joseph, the executive for marketing at Telkom, responded that there have been price reductions over the last 2 years due to the significant growth in the ADSL sector. He stated that as the network grows towards the quantities they need, the prices will go down. He stated that current uptake of the service was reaching the critical demand stage.
Basically, when enough people have subscribed at these outrageous prices, Telkom will drop their prices. Why do it this way? Well, presumably when Telkom reaches the subscriber base it is aiming for, it won’t hurt its profits if it drops its prices.
When asked when these price reductions could be expected, Telkom implied it required a comparable amount of time required by its international counterparts to build up to price reductions and wouldn’t give any idea when that would happen:
The Regulator continued to probe Telkom for a basic outline of their long-term broadband strategy, focussing on possible price reductions.
Here Josephs urged the panel to look at time frames within international countries when comparing Telkom’s service to overseas offerings.
“When you start comparing South Africa to other countries you need to look at the time when these countries started offering broadband. We are now at the phase when we are rolling this service out. We need to look at it from a timing perspective,” said Josephs.
The Authority requested that the incumbent provide some sort of time frame for when South Africa could be compared to international pricing considering the service has been around since 2002.
Vincent Maleka, a lawyer representing Telkom, responded that if the Authority wanted a response from the corporate entity they would provide it in writing within 7 days since only the board of the company are able to provide timelines regarding the strategic future of the company.
I fail to see why Telkom couldn’t leapfrog ahead of whatever challenges were faced by international telcos and provide cheaper broadband at comparable levels to what is available at the moment. Actually, I believe that Telkom could do this if it was serious about serving us customers, which it isn’t.
The clincher, for me, is the following paragraph from the MyADSL article:
The access portion is paramount to the high pricing of ADSL in South Africa, and it is not surprising that Telkom wanted to stop this questioning as quickly as possible. How exactly does one justify pricing structures that are many times more expensive than international standards?