The SA SMME Forum has criticised Telkom`s new Internet bundles, saying it will take the matter to the Competition Commission because the product takes business away from small Internet service providers (ISPs) and PC dealers.
Telkom`s recently launched bundle includes a PC, installation, Internet access and phone line, paid for over a 36-month contract.
In a statement issued last night, SMME Forum president Tebogo Khaas slams the move, describing it as "another blatant case of the fixed-line monopoly`s anti-competitive behaviour and the now-patented cavalier manner in which [Telkom] regards consumers of its products".
Khaas notes that the bundled offering can cost up to R29 000 over a three-year period.
"They are clearly not designed with consumers as beneficiaries in mind but with the sole intention to further milk the helpless cow the South African telecommunications consumer has come to be regarded by Telkom."
He says rural or township households could not afford the bundles.
"For Telkom to claim...that 'the bundle is an attempt to bridge the digital divide through an increased penetration of PCs per household and stimulate Internet usage` is, at best, an oxymoron of epic proportion and, at worst, an insult to the collective intellect of the consumers."
Khaas says Telkom has realised it is losing market share on the home dial-up market to others, including SMEs and start-up ISPs. He claims it has sought to leverage on and abuse its PSTS licence to continue its "onslaught on the hapless consumer" and in the process obliterate a burgeoning SME sector that provides PCs and Internet dial-up solutions to both home users and other SMEs.
"It is in this regard that the SA SMME Forum rejects Telkom`s abusive conduct and mischievous ploy with all the contempt it deserves."
Khaas says the SMME Forum will seek legal opinion on Telkom`s alleged anti-competitive behaviour and will also approach the Competition Commission and authorities for possible intervention.
Telkom 'surprised`
Rikus Matthyser, Exective Telkom Business Integration Services, says: "Telkom is surprised at the reaction of the SMME Forum, given the overwhelming response that it has had since Friday from very well-informed customers ordering the PC bundle and praise that has been received from the consumer community at large."
Matthyser notes that the SMME Forum statement contains certain inaccuracies. He says in terms of affordable Internet access, TelkomInternet has not had a price increase in the last 3 years and still ranks below the market average for Internet access in the South African market, significantly contributing towards affordable Internet services in the South African environment.
"TelkomInternet addresses the convenience aspect of PC and Internet services in South Africa by providing home delivery and installation inclusive in this bundle, gives customers peace of mind by adding a two-year walk-in warranty for the hardware and provides 24/7 support on all elements of the bundle. This comes at a single monthly fee that also includes call minutes for the dial-up bundles."
Matthyser says the amount that a customer will be billed for the high-end PC over 36 months, for example, is R 6 582.92 inclusive of VAT (R182.97 per month), which is a far cry from the R12 000 estimated by the SMME Forum.
"Taking into account that financial charges are included in this number, it is evident that TelkomInternet is providing a substantial subsidy on PCs to reduce the barriers of entry for affordable PCs in the South African environment," he says.
"What the SMME forum has missed in their calculation is that the specific bundle includes the monthly rental for the DSL access service (DSL384 is R359 per month) and TelkomInternet 3G access service at R249 per month. The sum total of these rentals over 36 months amounts to R21 888. Should the SMME Forum add all the individual components of the bundle together over 36 months it could clearly be shown that customers making use of the DSL384 bundle with Gold PC will save at least R3 100 on the bundle price versus the individual components."
Matthyser adds that if the price of any of the telecommunications elements goes down anytime during the contract period, the reduction in the bundled price will be passed on to the customer . At the end of the three-year contract period, the PC belongs to the customer. If the customer wishes to discontinue the service they are free to do so and still keep their PC, likewise if the customers wishes to continue with the Internet service, they then only pay for the services as normal and keep their PC. The deal is great and the PC`s are selling very fast"
New dimension
Ray Webber, spokesman for the Communications Users Association of SA, says while he has not had time to fully study the new offering, on the surface, it looked like a fairly attractive option for consumers, if one included the PC costs, Internet hours and line rental.
"At first glance, it looks like it might be a way for an emerging middle-class to get their foot in the door of the world of PCs and the Internet."
"Three years is a fairly long time for a contract, considering competition is coming. And one has to question to what extent Telkom is cross-subsidising on services they have a monopoly on, which the small business can`t do."
"On the other hand, we must be realistic and remember competition brings innovation and a new dimension to the market. So let the buyer beware, and let`s not be too critical of everything Telkom does."
In response to questions about whether bundled deals on this scale were anti-competitive, Atul Gupta, MD of Sahara Computers, said: "We believe that this is great news for the industry and we must congratulate Mustek. The bundling option is not new to the ICT industry and if it is going to assist in getting more personal computers into households then we are definitely behind it. Sahara has always encouraged these opportunities and look forward to many more to grow its market share."
Related story:
Telkom offers PCs with Internet bundle
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