Telkom tariff increases cause turmoil

By Phillip de Wet for Telkom
Johannesburg, 28 Nov 2001

Whether or not Telkom will be able to implement its annual price hike in January is an open question after communications minister Ivy Matsepe-Casaburri this week approved a new rate regime for the company.

Telkom filed its planned annual increase in mid-November, saying it would increase the price on its basket of exclusive services by 5.5%.

At the time there was no regulations preventing the company from implementing whatever increases it saw fit. The ministerial determination on fees and charges which previously governed it lapsed in May, and a new rate regime devised by the Independent Communications Authority of SA (ICASA) had not yet been approved by Matsepe-Casaburri.

The minister refused to accept the new regulations as she felt a clause that would have seen Telkom`s increases kept at 3% below the consumer price index (CPI) was too onerous on the company. ICASA revised the regime to keep increases at 1.5% below CPI, as was the case under the previous regulations.

ICASA says the minister has now published these regulations, making them binding and creating an environment in which a Telkom application can be considered. The body previously refused to consider Telkom`s filing as it said the regulatory vacuum meant it had no power to do so. It has previously blamed the minister`s tardiness for creating the vacuum in the first place.

The regulator has now invited Telkom to file a new proposed tariff plan before 10 December, one which would have to see a number of substantial changes to keep it within the new regulations. Telkom, however, says it has yet to see such an invitation.

"Telkom has not received the invitation to file our rates by 10 December as per the ICASA statement," says media manager Andrew Weldrick. "Having neither received the invitation nor looked at the new rate regime, we are unable to comment."

The company previously said it would go ahead with the implementation of the new rate structure in January unless it saw legal grounds not to do so.

ICASA has criticised the planned increases, saying it would see consumers pay 23.9% for their phone services and not the 7.2% more Telkom calculated as a composite figure. Telkom, however, has been running a series of advertisements trumpeting the fact that it will be offering the lowest per-second rate available after implementing the new structure.