Telkom gears up for policy debate

By Phillip de Wet for Telkom
Johannesburg, 25 Jan 2001

Monopoly fixed-line operator Telkom will make its voice heard when a new telecommunications regulatory framework for SA is discussed in February, and it expects little argument from government.

Telkom has publicly called for facilities-based competition and a single fixed-line competitor, and says it will put these views to the Department of Communications during a public debate on the form of future regulation.

"As Telkom, we would prefer facilities-based competition," group executive for regulatory and government relations Victor Moche told ITWeb in an interview, echoing comments he recently made in a speech at the University of Cape Town.

"We approach competition from a developmental perspective, both as a company and for national economic development, and believe this is the best option."

He argues that forcing a new licensee to build its own network instead of leasing capacity from Telkom would extend physical coverage to areas that fall outside the current physical network and would also create employment.

"It is the one certain option that provides you with huge demand for manufactured equipment. If this is sourced locally, it immediately injects a whole lot of oomph into the local manufacturing industry, creates jobs and gives you a better market for consumption."

Price reductions

Telecommunications analysts are generally divided on the pros and cons of facilities-based competition when compared to services-based competition, but some believe significant price reductions can come only when the latter forces innovative offerings from competing operators.

There is also doubt as to the willingness of large international operators likely to be involved in a competing consortium to invest the billions needed to establish a full-fledged national network.

Moche, however, says services competition without a pervasive national network is simply "cannibalising customers".

He says Telkom is also in favour of licensing only a single competitor, although some telecommunications scholars have warned against the dangers of a duopoly in a developing market.

"From a developmental perspective, the logic for us is one new licence. If you go with more than one, you degrade the value of all licences in the market. All telecoms licences, not only the fixed ones."

Moche believes the government will agree with Telkom on these two points, as it is responsible both for the economic development of the country and, as majority shareholder, for the welfare of Telkom.

"It is the one area where we would not have a dispute," he says. "There is rather pressing logic for it in terms of developmental issues."

Should Telkom`s suggestions be accepted, interconnection and facility-leasing guidelines between networks are likely to be hot topics at the upcoming telecommunications policy colloquium, which has been moved to the first weekend in February.

Moche would not comment on the probability that a competitor will also be granted a cellular operating licence, and the likely change that would bring in the relationship between Telkom and Vodacom, in which it holds a 50% stake.