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"Profiteering" Telkom under fire over high cable2007-04-03 PRESIDENT Thabo Mbeki has taken a swipe at Telkom, accusing the telecommunications firm of “profiteering” due to the exorbitant rates it charges on the undersea fibre optic cable which connects SA to Europe and Asia. In an interview with the Financial Times, Mbeki again expressed grave concern about the high cost of SA’s telecoms, saying a range of interventions were being put in place to reduce phone charges. This was part of a focus on microeconomic issues, which aimed to create the possibility for higher rates of economic growth. It has long been acknowledged that SA’s high telecoms costs have put a brake on economic growth, an issue raised by Mbeki in his state of the nation addresses on several occasions. However, government, which still holds a significant stake in Telkom, has been slow to open up the telecoms market, despite Mbeki’s promise to take “bold steps” to liberalise the industry in a bid to bring down prices. Mbeki said government had been talking to Telkom about the situation. Several interventions were under way, including building a new, and far larger, fibre optic cable along the west coast. The capacity would be far greater than the existing Sat-3 undersea cable, which Mbeki said would “radically reduce this cost”. “Take this undersea cable (Sat-3). They are charging, I don’t know, so many hundreds of percent more per unit of time than is being charged elsewhere in the world.” Mbeki labelled the charges as “absolutely phenomenal”. However, he said this was also because Telkom had limited capacity for planning. When the cable was laid, it did not take into account the rate of increase in demand for traffic on the cable. “That puts this consortium that runs the cable that includes Telkom in the advantage. It is a sellers’ market.” Mbeki said government had also been talking to Telkom about the establishment of call centres, a sector of the economy that could attract a lot of business. Many foreign companies, including some led by South Africans, such as Old Mutual, had indicated they wanted to do business with call centres in SA specifically. SA is a good destination for call centres, being in a similar time zone to western Europe, and possessing a population that is largely English-speaking. Mbeki said that the South African English accent was, in many respects, easier to understand than the accent of someone else in the east. He said despite all these attractions, SA was still not attracting call centres, due to the cost of telecoms. “So we say, Telkom you have got to do something about that.” Mbeki said a new telecoms company, Neotel, was expected to go operational this year. It is expected to provide extra competition for Telkom. Source: My Broadband |
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