ISPs want Telkom's accounting separated

Johannesburg, 08 May 2002

The Internet Service Providers' Association and SA Value-Added Network Services Association (SAVA) are asking the Competition Commission to force Telkom to separate the accounting of its telephony and data businesses.

In a complaint lodged with the commission yesterday, the organisations cite Telkom's continued refusal to provide their members with the facilities they require as reason for penalties to be imposed on the company.

Telkom has not yet responded to the action.

ISPA and SAVA say one of the most important remedies they suggest is to force accounting separation, a move they believe would end the illegal cross-subsidisation or services as well as the discriminatory pricing they say Telkom engages in.

However, they will settle for whatever they can get.

"We are looking for anything that results in these anti-competitive elements being eliminated," says SAVA chairman Mike van den Bergh.

Should their complaint be upheld, Telkom could be fined up to 10% of its annual revenue as a penalty. The bodies also think there is a chance that Telkom could be ordered to split some of its data services from its main telephony business.

"If they [Telkom] cannot separate their accounts, they may be forced to divest from some of these businesses instead," says Van den Bergh.

This kind of result would not only benefit the ISP and VANS industries, says ISPA chairman Edwin Thompson. "The intention here is to ensure that consumers are not paying for services they are not getting."

He contends that the users of traditional telephone services, which includes many low-income earners, help pay for the data services Telkom offers.

Competition is the answer

Government has forced them into the complaint, the bodies say, and government could solve the problem.

"This situation was created by the failure on the part of government to licence the SNO [second national operator]," says Van den Bergh.

Should a licence be granted to a partially formed SNO, as state enterprises Eskom and Transtel are asking, ISPA and SAVA believe a competitive market would naturally prevent the abuse they accuse Telkom of.

Whenever the SNO is granted its licence, it is sure to get a boost from the mass defection of some of Telkom's biggest customers - the ISPs. Both ISPA and SAVA say Telkom continues to alienate their members through anti-competitive actions, and the SNO will find it easy to win their business, worth billions of rands a year.

Both organisations have put their trust in the Competition Commission, a body they say has the power and the capacity to do what the Independent Communications Authority of SA has never been able to achieve - to make a complaint against Telkom stick.