Telkom on rapacious pricing: gov't let us do it - TechCentral

Telkom on rapacious pricing: gov’t let us do it

Don’t blame Telkom for using its monopoly to strangle the local Internet sector — the government allowed it to.  This seems to be a recurring theme in Telkom’s defence of its rapacious pricing being heard by the Competition Tribunal.

The telecommunications giant stands accused of abusing its dominance by charging excessive prices, refusing access to an essential facility and engaging in price discrimination, thereby making its downstream rivals less competitive.

The hearing kicked off on Monday this week, with the first round running until 28 October, but Telkom’s witnesses were absent and are only expected to take the stand in the second round from 1 to 9 December.

Behind the scenes at Telkom’s headquarters in Pretoria, head honchos were in negotiations with KT Corp (formerly Korea Telecom) to sell a 20% stake to the multinational.

But Telkom’s answering affidavit gave some indication of how it would defend itself.

Telkom legal adviser George Candiotes, who wrote the affidavit, said the “conduct of which the commission complains” was “justified by the relevant legislation”.

In the affidavit, Telkom stated: “I shall indicate below that, in relation to the majority of the complaints contained in the complaint referral, the Telecommunications Act and the PSTS [public switched telephone service]licence justified the performance of the very conduct of which the commission complains.”

Vans providers
Telkom, according to the affidavit, felt that its monopoly, created following several roll-out obligations it accepted from the government when it was privatised, gave it the power to prevent value-added network service (Vans) providers from delivering some services.

“Allowing Vans providers to take a share of the benefits of offering PSTS would have undermined the very essence of the regulatory deal,” said the affidavit.

“It would have put Telkom in the position of earning less from its exclusivity rights than expected while still having to incur the costs of the obligations.”

But it has been widely reported that Telkom did not meet those roll-out obligations.

It has also been reported that SBC (now AT&T), Telkom’s American shareholder at the time, temporarily transferred its entire San Antonio corporate office legislative team to SA to help draft the Telecommunications Act, to make sure the legislation conformed to its requirements.

In the affidavit, Telkom makes much of the time that has passed since the Competition Commission referred the case to the tribunal, arguing that the practices that were under the spotlight no longer existed.

But it was Telkom itself who caused most of the delays.

The case dates back to 2002 when a complaint was lodged with the commission by 21 entities, including the SA Vans Association, the Internet Service Providers’ Association and 19 other Vans providers.

By February 2004, the commission had completed its investigation and referred its case against Telkom to the tribunal. But Telkom challenged the commission’s jurisdiction in the supreme court of appeal, a legal move that resulted in a five-year delay to the tribunal hearing, which Telkom ultimately lost.

Several subsequent legal challenges followed based on the commission’s decisions to amend its papers, which have since been resolved, and the case finally reached the tribunal.

The hearing kicked off with the testimony of Mike Brierley, a tele­coms consultant and former CEO of MTN Network Solutions. The Mail & Guardian understands that Brierley’s testimony is key to the commission’s case.

On Wednesday, Telkom lodged objections to the tribunal hearing, arguing that the commission’s evidence was going beyond the scope of its initial complaint.

The M&G understands that the tribunal is waiting for the commission to respond formally to Telkom’s objections before they are heard.

When asked for comment on the tribunal hearing, Telkom spokesman Pynee Chetty said: “We don’t litigate in the media. We won’t comment before the hearing.”  — Lloyd Gedye, Mail & Guardian

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