This is not your parents' Telkom - TechCentral

This is not your parents’ Telkom

Duncan-McLeod-180-profileOver the past 20 years, Telkom has been through the wringer. It’s been abused by politicians and by greedy foreign investors, and it’s made spectacular strategic and operational mistakes that have cost it billions.

But somehow, through all of this, it’s arrived at a point today under CEO Sipho Maseko and his leadership team where it’s making pretty smart decisions, decisions that have the potential to change not only Telkom for the better but improve South Africa’s broader telecommunications landscape.

Telkom has started talking a language one simply wouldn’t have expected of an incumbent fixed-line operator. It’s a big change in approach. Fifteen years ago, when Telkom was in effect controlled by America’s SBC Communications (now AT&T) and Telekom Malaysia, the company behaved like a playground bully, riding roughshod over the regulator and thumbing its nose at government by abusing its monopoly and forcing through huge price increases.

Today, its monopoly is all but gone. Telkom is being forced, through competitive pressures and regulatory oversight, to become more efficient, to improve its service levels and to ensure it doesn’t treat external service providers worse than its own retail division.

Telkom has realised somewhat belatedly that it must work with other Internet service providers (ISPs) if it wants to defend and grow its fixed broadband business. The number of in-service broadband lines based on copper digital subscriber line (DSL) technology has stagnated below a million. Telkom now says it wants ISPs to help it justify its planned investments in home fibre and higher-speed copper access technologies by identifying and stimulating consumer demand.

But remarks by Maseko this week go beyond even this rapprochement. He spoke of embracing the open-access model in its last-mile network into homes and businesses. Not only is Telkom’s wholesale division planning to make its fibre-to-the-home network available on an open-access basis to service providers when it’s launched later this year, but, if it works, it is entertaining the idea of making open access core to its operating philosophy.

Of course, words are cheap. ISPs that have been at the receiving end of Telkom’s anticompetitive behaviour in the past can’t be blamed for not believing that the leopard has changed its spots until there’s tangible proof of this. Still, the fact that Telkom is even entertaining the open-access model is significant.

Some will argue it has no choice. Rather than trying to do everything itself — the vertically integrated model that incumbents tend to favour — it needs an ecosystem of partners to help grow demand for next-generation broadband. Television, cloud computing, educational tools, home surveillance — the company can’t hope to provide all these services on its own, let alone supply consumers with best-in-class products in areas that are not its core business, such as video on demand. While open access facilitates robust competition at the services level, there’s less infrastructure duplication and the business case for home fibre networks is better.

Sipho Maseko

Sipho Maseko

In practical terms, consumers may not even engage with Telkom for fixed broadband in future. Even though they’ll use the company’s infrastructure, their relationship could be entirely with another company.

While ISPs may treat Telkom with scepticism, they should assume Maseko and his team are serious. Through their industry body, the Internet Service Providers’ Association, they should engage with Telkom on how it plans to implement open access. They should not let historical issues get in the way of an open discussion about growing broadband in South Africa.

“There needs to be a quid pro quo,” Maseko said this week. “It mustn’t harm the firm or destroy the goose that lays the golden eggs. From the start, we will ring-fence fibre and see how the market responds to it. We will then reflect on this, on how we deal with copper.”

Last month, Telkom chopped wholesale prices for its fastest copper-based broadband lines. Further price cuts to wholesale services are in the works. Maseko said Telkom wants to “rebase” its wholesale fees to stimulate demand. This, perhaps more than anything, demonstrates that this is not the company it once was.

  • Duncan McLeod is editor of TechCentral. Find him on Twitter
  • This column was first published in the Sunday Times

12 Comments

  1. Time to supply free internet to move the economy forward, and create 100 times more growth than a few exploiting for marginal gains! The mentality of Africanisim

  2. Unfortunately for Telkom, it’s way too late. The horse has bolted. Like many similar incumbents, it could have retained complete control over fixed line access, by allowing local loop unbundling, and could even have clung to its monopoly on backbone services, by offering proper wholesale pricing years earlier. Instead, it chose to ignore the competition, and stimulated a massive industry in new fibre build, from local access to national backbones, and even international cables. Today, it’s desperately trying to play catch-up, but it is a shadow of its former self, having lost up to 30% of its market share in some wholesale markets, and it will never be seen as the champion of the next generation of networks in South Africa, but just another player trying to grab market share.

  3. Either way… It’s good for us citizens.

    I have to agree that significant time was wasted, but all things said and done I will simply be happy when SA internet enters the realm of sanity.

  4. Yes Simba, number plates do seem to be a real ‘problem’ with our senior staffers. Such as a certain suspended SENIOR speed cop in Pretoria.
    I would also like some answers as to who p*ssed away all those billions on lunatic schemes at Telkom and why not one of them has been disciplined, much less dismissed for incompetence!
    Any shareholders listening I wonder?

  5. I love the statement about the goose that lays the golden egg. The idiot decision to sell off Vodacom 15% for R22 billion what ever happened to the other 35% and all the other decisions MultiLinks, Bain and Co, where is the accountability and level of commitment probably like the number plates attempted to sweep under the carpet but I see Adv Madonsela is looking at that incident. Time for answers enough is enough. The company is being run by the legal department and their crooneys and not management as would be expected. Always in and out of courts well lets see them get out of this web and attempting to outlitigate. Quite a circus but costing us shareholders and taxpayers plenty.

  6. Sipho will have to rebase a lot more before he again looses to the Competitions commission BCX deal bye bye.

  7. The billions were swept under the carpet which is now a mountain higher than Everest someone please give Sipho an oxygen mask or maybe a diving suit to paddle through all the sewerage

  8. Greg Mahlknecht on

    >He spoke of embracing the open-access model in its last-mile network into homes and businesses

    Same old Telkom. They’re pretty good at responding to competition (ie. not doing something unless they HAVE to), but are never the first movers, and this is no exception.

    >Last month, Telkom chopped wholesale prices for its fastest copper-based broadband lines

    How much of this is “the new Telkom” and how much is the price cuts that were forced by that competition commission ruling?

    The most important metrics – customer numbers and satisfaction – are still abysmal, and “the new Telkom” has made no difference here.

  9. Deon Labuschagne on

    First time n years a article is written with a positive toward Telkom.
    I will bite, and see if there is a change, it is about time.
    So lets hope and pray Telkom is actually getting better and it is not a illusion.

  10. Am curious.

    Free internet to who?
    Who pays for it?

    I am all for the Free Wifi projects to poorer areas (people that cant afford much internet anyway) BUT if we are going to pay for this we need the commercial offering to be solid. Companies and people need to be able to buy premium services so money can be earned to fund social projects

  11. Talk, talk and more talk. Show me the price cuts. Show me how access to the IPC is cheaper and easier. I can’t help but feel that Telkom is only changing it’s tune because the private sector has finally caught up. Now they’re just concerned that we might not need them for much longer.

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