'Consumers shouldn't subsidise Telkom'

23/02/2007 
Letter to the Financial Mail

Anriette Esterhuysen, director of the Association for Progressive Communications

The concern in "Undersea wrangling" (Features January 26) about Telkom's profitability being undermined in the event of new submarine cables being laid on Africa's east and west coasts is misplaced. Telkom's profitability has been subsidised by SA consumers since it received a period of exclusivity in 1996, which has yet to be broken by the entry of the second national operator, Neotel.

In the absence of competition, Telkom has been able to charge consumers monopoly prices for its services, as well as exorbitant prices for international bandwidth for its monopoly over the SAT3/WASC/SAFE cable. So it is a bit rich for Telkom to be concerned "that too much competition in the provision of international bandwidth could undermine the business case for all of the planned systems".

Telkom is the reason for there being a problem with high costs to consumers and business in the first place. At this stage, what matters is not Telkom's profitability but the quickest way of reducing the high costs of international bandwidth in Africa in order to stimulate local demand for broadband infrastructure and services. It is time to stop subsidising.