Internet providers want Telkom to play fair

Johannesburg, 19 Mar 2003

The Internet Service Providers` Association (ISPA) today said it had filed a complaint against Telkom with regulators because it is pricing ISPs out of the market and using its de facto monopoly to compete unfairly.

The complaint, filed with the Independent Communications Authority of SA (ICASA), accuses Telkom of anti-competitive practices in the way it is offering a number of Internet products.

Among these are the SurfMore and BestFriends packages for Telkom customers, which allow cheaper phone calls to ISP dial-up points and cheaper calls to a small list of predefined numbers respectively.

ISPA says the launch of SurfMore in August was used as an opportunity to unfairly market Telkom`s own ISP, Telkom Internet.

"The initial advertising campaign for SurfMore gave the impression that SurfMore was only available if Telkom Internet`s services were used," it says in a statement. SurfMore, which offers dial-up calls at as little as 7c per minute, is available for calls to any ISP.

BestFriends, introduced this year, allows a 10% saving on five telephone numbers selected by the customer. But the association says the plan discriminates against ISPs.

"In the definition of the BestFriends calling plan filed with ICASA, Telkom specifically excludes calls to ISPs," it says. "It is ISPA`s view that excluding a particular type of business from benefiting from a call plan is an unfair and discriminatory practice."

The complaint also touches on an issue that has long bothered ISPs: the fact that Telkom can present Internet users with a single bill for telephone calls and Internet services. ISPA has called for billing to be separated and for Telkom to be obliged to "make it clear" to consumers that they have a choice of service providers when they sign up for SurfMore.

ADSL discrimination

ISPs have long had a beef with the way Telkom introduced asymmetrical digital subscriber line (ADSL) services and the ICASA complaint lists it as one of ISPA`s concerns.

ADSL is a high-speed, always-on Internet connection technology that uses existing telephone lines to provide better Internet access. Telkom launched the eagerly-awaited service on a limited trial basis last year.

While it is technically and legally possible for ISPs to provide their own ADSL service over Telkom`s infrastructure, none have yet done so. While several ISPs are reselling the Telkom service, major providers have shelved their plans to compete with it. Internet Solutions has indefinitely extended its free ADSL trial, which was due to come to an end in the middle of this month, and UUNet says it cannot offer a competitive service and will not attempt to do so.

The ISPA complaint reveals why.

The association says the launch of ADSL was "shrouded in secrecy, and lacked consultation with the Internet industry". It claims that the lack of information allowed Telkom an unfair advantage and also led to a "sub-optimal mechanism" for ADSL delivery.

"This means there is less choice for the consumer and a more limited ADSL service is available than in other countries."

It also says the ADSL system architecture makes it impossible to compete with Telkom on price. Any other ISP must connect to Telkom`s ADSL authentication servers through expensive links while the Telkom network is co-located with the authentication servers and requires no such links.

The double whammy

ISPA is also party to a complaint lodged with the Competition Commission in May, in which Telkom is similarly accused of anti-competitive practices. However, while the Competition Commission complaint is a broad argument that Telkom`s attitude is harmful to fair competition, the ICASA complaint deals with specific products and services.

"There is a very small amount of overlap between the two complaints," says Ant Brooks, ISPA`s regulatory head. "Obviously there are anti-competitive practices inherent in some of the issues we address, but this is about products."

The Competition Commission is still investigating the complaint filed with it and has taken no action as yet.

Telkom has not responded to the latest complaint but is expected to file an answering statement with ICASA soon.