ISPA takes on Telkom

By Damaria Senne, ITWeb senior journalist

Johannesburg, 14 Dec 2005

The Internet Service Providers` Association (ISPA) says it has lodged a broad-ranging complaint with the Competition Commission against Telkom for alleged anti-competitive activities in the Internet services market.

ISPA says in a media statement that the complaint relates to Telkom`s dual role as both supplier and ISP.

ISPA says that in the retail market Telkom determines pricing for sellers for SAIX ADSL accounts. However, Telkom is also a competitor with those resellers through TelkomInternet.

"This enables Telkom to squeeze the margin between the wholesale and retail price, so that competitors cannot afford to stay in business," the statement says.

Telkom is also the provider of facilities such as international bandwidth and access to local loop services such as ADSL. This makes it difficult for large ISPs to compete with Telkom`s wholesale offerings, ISPA says.

ISPA joint chairman Greg Massel says Telkom`s position allows it to force other ISPs out of the market. This leads to few viable competitors, putting Telkom in a position to keep the price of services such as broadband at an artificially high level, he says.

"Ultimately, the consumer is paying the price for Telkom`s tactics," he says.

ISPA`s other joint chairman, Masedi Molosiwa, says ISPA`s complaint came about as a result of an increasing stream of complaints from the organisation`s members.

"From the smallest ISPs right through to the largest, the reports are the same: Telkom is using its dominant market position to take business away from other ISPs."

He says ISPA wants the commission to "take a good, hard look at the way the market is structured" and ensure that a fair competitive environment is created.

In a short media statement, Telkom says it has noted the complaint lodged.

"The Competition Commission will now investigate the matter and due process will follow. At this stage, Telkom cannot comment on the content or allegations made in the complaint," the statement says.

However, in previous interviews with ITWeb, Telkom`s executive of business markets, Rikus Matthyser, has said that he does not believe that TelkomInternet`s position gives it unfair advantage. He emphasised the independence of the business units and stated that like every other ISP, TelkomInternet also has to negotiate with the wholesale division for price.

Matthyser also noted TelkomInternet is regulated as a Value Added Network Service and as such, its activities are regulated by the Independent Communications Authority of South Africa (ICASA) and they are aware of their pricing model. He also noted that ICASA and the competition commission had not found TelkomInternet guilty of transgressing regulations.