Telkom defends pricing structure

Telecoms service providers participating in the telecommunications pricing colloquium have defended their prices.

Speaking during a panel discussion at the Department of Communications` pricing colloquium at Gallagher Estate in Midrand yesterday, Telkom`s chief sales and marketing officer, Pinki Moholi, said: "Telkom service prices are not out of line with best practice."

Vodacom MD Shameel Joosub, Sentech MyWireless portfolio manager Winston Smith, and Cell C head of regulatory affairs Karabo Motlana also presented their companies` viewpoints on the pricing of telecommunications in SA.

"Telkom is not making super economic profits," Moholi said. She argued that significant investment is made in infrastructure and that adequate returns are needed to provide incentives to investors.

She did, however, acknowledge there are services in the company`s bouquet, such as ADSL, with high prices and that telecoms pricing affected the cost of doing business in SA.

In his presentation, Ray Webber, a Communication Users Association of SA spokesman, objected to Telkom`s repeated defence of its position. He accused the company of ensuring its "profits will remain the same no matter what".

Webber compared SA`s ADSL prices to the rest of the world and found them to be very high. Consequently, ADSL remains out of reach for most users, he said.

Joosub defended Vodacom`s pricing structure, saying the company`s rates are "comparable", and suggesting players "compare apples with apples".

"It`s no use comparing us to China when they have economies of scale that we only dream about," he said.

Joosub cautioned against looking at price regulation in isolation from influencing factors. "We must avoid price regulations based on assumptions," he said.

Joosub also touched on the investment required to roll-out mobile networks.

"Mobile networks are extremely expensive to roll-out. Last year, Vodacom invested R22 billion in infrastructure. This year, an additional R3.3 billion investment will be made. Shareholders want adequate returns," Joosub said.

He added that investor confidence must be nurtured.

"Government must recognise the inexplicable linkage between investment, competition and price. New technologies are also changing the shape of the industry. Sufficient time must be provided to allow markets to respond to the liberalisation of the telecoms sector."

[VIDEO]Motlana said: "The current legislative and policy framework provides adequately for the consideration of tariffs. However, in order to deal with affordability of services, a proper independent cost study of telecommunications must be undertaken."

Moholi agreed that the framework is already in place. "It is the effective implementation of the existing regulations that is needed."

She also pointed out that a number of policies and regulations have not been implemented yet, and the success of these laws depends on the effectiveness of the regulatory body.

In an earlier presentation, Tracy Cohen, an ICASA councillor, assured delegates that the cost of communications services is at the heart of the regulator`s mandate. She said part of ICASA`s renewed research imperative is to ensure affordable communications services and that the regulator needs to assist with cutting the costs of operational services.

Policy must provide incentives to invest, Moholi said. Cell C suggested that a proper independent cost study of telecommunications be undertaken.

Breakaway sessions, covering policy and regulatory framework, affordable broadband and affordable universal access, continue today.