Dear Telkom, we need to talk - TechCentral

Dear Telkom, we need to talk

Dear Telkom,

This was very nearly a public break-up between us.

It wasn’t me, you see; it was you. It took 12 working days and immense perseverance from me to get you to fix my dead phone line and practically useless DSL connection.

This is despite those two strands of copper netting you in excess of R40 000 in line rental fees over the past five or so years (that’s what I know about for this line, a tiny portion of which predates me).

In the end, my nagging paid off and the third technician to be scheduled on this fault solved the problem.

He was a proper veteran … been at it for 33 years he told me, in between lamenting the quality and application of his contractor colleagues.

I may not have been so lucky. Many aren’t. A casual glance at your @HelloTelkom (service/support) account on Twitter shows customers without a connection for months on end.

And so, we remain joined at the blue box outside the complex gate for a while. Next time, I’m not convinced I’ll be willing to invest so much time and effort to resolve your problem. Besides, I have this nagging feeling that fibre — something younger, faster, fitter and better than you in every way — will end up coming between us…

Yours (for now), Hilton

This experience over much of the past month (without going into much more gory detail) has laid bare Telkom’s operational, service and network challenges almost entirely. For a start, years of underinvestment in its access network has finally started to catch up to Telkom.

Its core network (backbone) has benefitted from deliberate significant investment in fibre backhaul and the next-generation network over the past five-plus years. It needed to upgrade the core not only to ensure that it was capable of dealing with the significant increases in bandwith utilisation by customers (direct, and indirect — via links it has resold to other operators), but also get it ready for the roll-out of fibre connectivity directly to homes and businesses.

In its 2016 financial year (April 2015 to March 2016), traffic volumes on its fixed network soared by nearly 40%, while the number of broadband subscribers increased by 2%. This means that on a per subscriber basis, broadband traffic volumes were up by 36% (from 338GB to 459GB). Its core and backhaul network is (largely) coping.

But the so-called “last mile” is a mess. And it’s arguably worse in residential complexes, where much of that infrastructure is shared and was installed a decade or more ago.

The inherent problem with DSL is that when it works, it works … and when it doesn’t, it doesn’t. There is no in between (and you’d expect this, given that connectivity is provided by a pair of copper wires).

Telkom’s Achilles’ heel is this last-mile access network, which is suffering from underinvestment (and the related inconsistent resolution of faults, but we’ll get to that).

The group’s capital expenditure on network “rehabilitation/sustainment” totalled R1,1bn in the 2015 and 2016 financial years, about the same as it invested in fibre-to-the-home (FTTH) rollout. But the pendulum has swung. By the first half of 2017, the FTTH capex spend was five times that invested on “rehabilitation/sustainment”!

This perfectly illustrates Telkom’s conundrum: for every R1m that it ought to spend on its legacy copper network, how much more value could it derive from investing that same amount in its next-generation fibre network? It’s obviously not quite as simplistic, but this is the crux of Telkom’s dilemma: how much should it be investing on a network that will effectively be obsolete in five years’ time?

Of course, customers — particularly those one million DSL subscribers — are stuck in the middle. Faults are creeping in a lot more frequently, if anecdotal evidence is to be believed (Telkom no longer discloses this data).

And this is where the chaos starts. Telkom, which faces the customer, is no longer in control of its network. This has become the problem of its separated wholesale division, Openserve. Theoretically, this is good for customers and for competition.

But, operationally, Telkom is now reliant on an amorphous service provider to resolve faults on its network. Not that only Openserve itself bears this responsibility! As part of Telkom’s much heralded workforce reduction, many of its field service technicians (those in the Telkom bakkies) are now independent contractors.

Huawei (and its contractors) is also involved to some extent as an outsourced service provider. Given this transition, there are bound to still be some misaligned incentives. Some technicians are employees, others contractors and these two groups are incentivised differently (contractors, for example, are paid for each fault resolved, not attended to).

For customers, this becomes potluck: have a good contractor arrive and chances are your fault will be fixed speedily. Otherwise, you wait.

Field service is hard. And Telkom admits that its speed in addressing faults has “not been what we want it to be”. Part of this lies in the contractor vs staffer (and Openserve) problem, the other in the systems and processes that manage and schedule these skills. Telkom says it will be “rolling out the next phase” of “new workforce management solutions … in the new year”.

Yes, it’s needed time to get the business into shape to compete. The major part of the overhaul of its business — and operations — support systems (tying together dozens of disparate systems so that it has a single view of its customers) is practically complete. For one, it finally has an automated fault reporting/tracking system that works (after years of trying).

But, the migration of customers from DSL to fibre is not progressing as quickly as Telkom might have hoped. As at 30 September, it reported just shy of 19 000 FTTH connections (versus a million active DSL lines).

It’s now time for Telkom to really double-down on fibre. It simply cannot afford to sustain the costs and frustrations of those customers on its copper network for another two years. It might not have much of a business left, given the aggressive competition its facing in the FTTH market.

  • Hilton Tarrant works at immedia. This column was originally published on Moneyweb and republished on TechCentral with permission

13 Comments

  1. This faster service or Bolt is like Donald Duck Trump! Its all “fake”. Why don’t they just plainly say “give me your dam money stop complaining”. THe ANC with the whole line of parastals are keeling over with a BRICS. Now the top countries in fraud and corruption. We follow jz783 as an example of ignorance to ethics.

  2. Greg Mahlknecht on

    >The inherent problem with DSL is that when it works, it works … and when it doesn’t, it doesn’t. There is no in between

    As someone who’s been in the ISP/Telecomms industry a long time, I feel the problem with DSL is exactly the opposite – and I have experienced it myself – the service degrades slowly over time (when I moved in to my house I got 8mbit, 5 years later it had slowly degraded to 3mbit sync.. technically not broken) – and this makes it hard to diagnose/maintain. FTTH on the other hand is binary – barring a few outliers, it either works or it doesn’t, and this GREATLY aids in maintenance of the network. Techies love fixing stuff that’s properly broken, not “kinda working”.

    >how much should it be investing on a network that will effectively be obsolete in five years’ time?

    I can bring you data from the front lines. I spearheaded the FTTH initiative in my area, and it was a very common complaint. When Telkom roll out FTTH in an area, their policy is basically to let the existing copper rot on the poles, customers must upgrade to FTTH. I happen to agree with this policy, but Telkom should do more to proactively get that FTTH in to the house without cost to customer.

    >It’s now time for Telkom to really double-down on fibre.

    Where the independent, and especially open, FTTH networks are rolling out, Telkom is pushing HARD To get fiber in. The race is most certainly on, but as you say in your piece, Telkom have been forced to do what they should have years ago. Unfortunately Telkom is screwing up again – in their haste to roll out, they’re installing aerial fiber as much as possible, rather than trenching everywhere – I have numerous anecdotal cases from my circle of friends that after a while, this aerial fiber starts succumbing to the elements and wildlife and spotty service is expected. I’ve had my subterranean ftth for about 18 months now, and barring 2 or 3 incidents where our amazing roads department dug up fiber backbones upstream, I’ve had zero seconds of downtime on my line.

    On paper, Telkom’s financials look great, but I believe Maseko has thrown away Telkom’s future by trading short term gains for long term strength.

  3. Telkom must be the worst service provider in South Africa! And I don’t even want to talk about their customer service! You cannot complain about their service….. BECAUSE THEIR IS NO SERVICE!!!!

  4. Report them to the Consumer Protection act, if they charge for line rental still, and fail to provide the service, then surely they are liable in law to reimburse the portion of the service not provided. Force some action, at least from the CPA.

  5. William Stucke on

    Oh dear. It’s more than 4 years ago that Telkom fought tooth and nail against the concept of actually deriving revenue from this obsolete and decaying asset, A.K.A LLU.

    Silly buggers. It’s not often that saying “I told you so” is so totally vindicating.

  6. The Telkom OUTSOURCING ‘innovation’ has proved to be the total disaster I anticipated.
    It’s a like herding cats, these contractors they employ are barely answerable (not open to disciplinary actions) to any managers and have a tremendous incentive to ‘borrow’ working pairs to make up their fault clearance productivity/salary. Does it happen? Of course it does, regularly, we are all adults and know the greed of human nature. This sharp practice should have been anticipated by Telkom.
    Here’s another thought for the great unhappy’s out there. Ever wonder why there is now so much cable theft of the copper network? Well, if you have vital-to-the-operation cable info/manhole keys being handed around to barely answerable ‘technicians’ don’t you think that could also lead to some collateral damage at some time? Think no more as it is the norm now.
    Telkom have dug themselves a hole and we, the customers have fallen into it!
    As for FTTH, I have a GIO gang cabling outside my gate right now and the going rate for ENTRY LEVEL FTTH is quoted at R800-00 per month or close on R500 000-00 for the time that Mr. Tarrant has been on his copper DSL!!!
    The nightmare on Elm Street just keeps on going. Maybe it’s all Ivy’s revenge? Who knows?

  7. Chatted to buds last night who volunteered similar story. After 5 months and multiple technicians their internet and landline came back on after 2.5 hours of tinkering by friend’s tech-inclined teenage son.

  8. I know that this may upset your argument, but basic fibre (where it is available from open-access suppliers) with an uncapped account is available for around R500. Which is actally cheaper than a Telkom DSL solution. The attached pic is from my first google search. A similar uncapped 4Mbps DSL line would cost around R459, and when you factor in the additional required rental cost of a mandatory voice line of R189 it becomes more expensive. In addition, on a like-for-like basis, it is more expensive to install a Telkom DSL line from scratch. If the voice line is a requirement, a VOIP service can be added to the fibre connection for around R50 per month.

    Total FTTH: R549 per month (R999 for installation)
    DSL: R648 per month (R1412 installation for line & DSL)

    There is no downside to the fibre connection in comparison to DSL (except maybe the inconvenience of the trenching process). It is more reliable, much more scalable, lower priced, offers superior network characteristics (jitter, latency etc.) plus, with any luck, you don’t have to deal with Telkom.

    https://uploads.disquscdn.com/images/4a0f35618e33715eaa28e655af2061b476ca7f2dc69bedf976777c7c6672efd7.png

  9. Yup, fibre is cheaper in every regard. The problem is that fibre needs economies of scale to make those prices viable. Until fibre companies start marketing more aggressively, fibre options might as well be on a different planet for most people.

  10. Marketing is not the issue. Ask around, the take-up of fibre in almost all suburbs where it is available is massive. The issue that most smaller FTTH providers have is scalability. They simply cannot keep up with demand.

  11. That is a skewed conclusion, since fibre has mainly been available in affluent areas. I struggle to find a lower-income suburb with fibre, let alone poll uptake. You risk arguing that everyone has Mont Blanc pens because Mont Blanc pens sell well in every country.

  12. Nonsense. If fibre providers can not keep up with demand, there is not a marketing problem. Marketing is a demand generation activity. The current situation is a supply constraint.

    Resolving a supply constraint would likely require the expansion of existing providers (which is capital intensive), the entry of new players (which requires capital investment) or some kind of technological breakthrough. Or (and most likely) the passing of time.

    Marketing can be blamed for lots of things, this isn’t one.

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